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Strategic Management Accounting (Fundamental Concepts: Cost and Value…
Strategic Management Accounting
Fundamental Concepts: Cost and Value
Cost Analysis
Cost structure
High fixed cost structure
Low fixed cost structure
Contribution Margin Analysis
Contribution margin equations
Sale amount - variable cost
Profit + fixed cots
Costs
Variable cost
Fixed cost
Strategic Cost Analysis
Costs in strategic processes
Formulation
Identyfying SWOT
External cost focus
comparative cost position
customer profitability
Product service analysis
industry trend & market cycle
Anchoring Market Position
competitor's analysis
value chain analysis
cost structure
cost driver analisis
Formulating Strategies
value propositions
operation model
vranding and pricing
forecast model
cost to serve
Execution
Implementing plans
strategic control
strategic KPI's
benchmarking
operational controls
budgeting
Evaluating plans
KPI review
budget review
milestone review
performance review
market review
strategic value analysis
Attention to two major areas
strategic choice of cost drivers
structural
scale
scope
experience
technological choice
operation complexity
execution
management
employees
products
suppliers
customers
strategic positioning analisis
assess business risk of the market relative to the strategies employed
establish realistic timing of milestones
determine the amount of investment
set up proper performance evaluation
arrange effective incentive scheme for motivation
Cost allocations
Traditional cost allocation
easy to allocate direct costs to products
difficult to allocate indirect cost
Activity-based costing
cost pools (engineering, marketing, finance)
cost drivers (purchase orders, service hours, employees)
cost obfects (products, customers, business units)
Value Concepts
Horizontal Value Chain Analysis
Primary activities
Inbound and outbound logostics
Operations
Marketing
Sales
Services
Supporting activities
Human Resources
Research&Development
Administration
How to do value chain analysis
Identify the value chain activities in an organization
Identify cost drivers, cost pools for each activity component (ABC)
Separate core from noncore activities as descussed with the management
Select a representative period for the exercises
Find out the cost impact on each category
Compute the full-year impact on each component
Propose action plan for each categorical activity and calculate the forcast impact
Vertical Value Chain Analysis
Forward integration
Backward integration
Present Value
Managing customers
Cost to Serve and Customer Selection
Cost-to-Serve
CTS and Customer Life Cycle
Linking Customer Profit to CTS
Valuable Customers?
Customer Selection
Action Strategies
Sale Performance Monitoring System
From Customer Profit to Customer Value
Managing Competitors
Managing Corporate Value