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Unformatted text preview: Dr. Johnny Jermias, CMA
4 BUS 42 l eria Manag ng III ccounti A
WMC 3357 778 782 4257 [email protected] Bus 424 lecture #1 1 Managerial Accounting III (Bus 424 E1)
•Instructor: Office: Telephone: Email: Office hours: Johnny Jermias WMX 3357 778-782-4257 [email protected] Thursdays: Fridays: 14:00-15:30 13:30-15:00 or By Appointment •Course Email: [email protected] •Class Structure: Lecture/discussion: Break: One case presentations @ 45 minutes: Class summary Total
Bus 424 lecture #1 60-90 minutes 15 minutes 45 minutes 15 minutes 165 minutes
2 Managerial Accounting III (Bus 424 D1) •Textbook/course materials: •Management Control Systems: Performance Measurement, evaluation and Incentives, Kenneth A. Merchant and Wim A. Van der Stede, Second Edition, Prentice Hall, 2007 •Lecture Notes: www.bus.sfu.ca/courses/bus424-e1 •ID: your sfu ID •Password: your sfu password •Grading scheme: Relative performance measurement A:24%=8 B:46%=17 C:24%=8 DFN:6%=2 Bus 424 lecture #1 3 Higher of (i) or (ii) (i) One written report of a company One case presentations Participation/attendance Midterm exam Final exam (comprehensive) Total 15% 15% 10% 15% 45% 100% or (ii) 15% 15% 5% 15% 50% 100% Bus 424 lecture #1 4 Evaluation Criteria for Group Presentation 1. Coverage of the key issues in the case 2. Quality of analyses and recommendations 3. Ability to present to the class (clarity of presentation and presentation style) 4. Ability to answer questions and generate discussion about the issues Overall mark: 25% peer evaluation (group) and 75% by the instructor. (the highest and the lowest scores will be discarded) Bus 424 lecture #1 5 •Cases •Group efforts: One written report (15%) and one presentation (15%) •Presentation: •Randomly assigned to groups (today) •Presenters’ role: Consultant •Audience’s role: Board of directors (suggested questions will be posted one week before the presentation) •Written Report: Due on Thursday, November 27, 2008 •Same case for all groups •Max 10 pages (plus appendices), doubled space, 12 point font, one-inch margins •90% substance and 10% writing style
Bus 424 lecture #1 6 •Participation •Contribution during case presentation •Analysis, critique, questions, comments •Quality vs. quantity (range 0.5-3.0) •Attendance: •Minimum 75% (10 classes) •Inform me at least 24 hours in advance when you cannot attend class •Midterm exam (Thursday, October 16): 2 hours, closed book •10 MCQ •1 case •Final exam (Thursday, December 11, 2008): 2.5 hours, closed book •10 MCQ •1 case
Bus 424 lecture #1 7 Accounting
The process of identifying, The measuring, and communicating economic information to permit informed judgments and decisions by users of the information users 8 External (Financial Accounting) Users of accounting information -e.g., Investor, creditor, government Internal (Management Accounting) -e.g., management, employees 9 The Institute of Management Accountants defined management accounting as: Management Accounting Information A valueadding continuous improvement process of planning, designing, measuring and operating both nonfinancial information systems and financial information systems that guides management action, motivates behavior, and supports and creates the cultural values necessary to achieve an organization’s strategic, tactical and operating objectives. Bus 424 lecture #1 10
10 Management Accounting Information This definition contains two key attributes: Management accounting provides both financial and non financial information. The role of management information is to support strategic (planning), operational (operating) and control (performance evaluation) aspects of management decision making. Bus 424 lecture #1 11
11 Main functions of management accountants Record-keeping: sales, profit, assets, liabilities Attention-directing: Opportunities and problems Problem-solving: analysis of available choices (e.g., Investment analysis, executive compensation, international transfer pricing) Bus 424 lecture #1 12 Objectives of Accounting Objectives Information Information Strategy formulation: long term objectives of the company Resource allocation: choice of alternatives (products, customers, etc) Planning and control of operations Performance measurement and evaluation Satisfy legal and other requirements Bus 424 lecture #1 13 Management Accounting Information Note one very important distinction between financial and management accounting: There are no “generally accepted accounting principles” for management accounting preparation and the use of such information. Information is prepared and used if it will be relevant for decisionmaking. Bus 424 lecture #1 14
14 Management Accounting
Goals Strategy Planning Execution and Evaluation Reward/Penalty Revise Revise Feedback Bus 424 lecture #1 15 Management and its components
Objective Setting Strategy Formulation Management Control
Bus 424 lecture #1 16 Objective setting Objectives are
» a necessary prerequisite for any purposeful activities. Without objectives, it is impossible
» to assess whether the employees’ actions are to purposive; purposive; » to make claims about an organization’s success. Objectives can be » financial versus non-financial; financial versus » quantified, explicit versus implicit; quantified, versus » economic, social, environmental, societal. Bus 424 lecture #1 17 Strategy Formulation
Opportunities and Threats: Identify Opportunities Internal Analyses
Strengths and Weaknesses: Identify Core Competencies Match Competencies with Opportunities Competitive Strategy
Bus 424 lecture #1 18 Strategy Classifications to Gain Strategy Competitive Advantage Competitive
Porter (1985): Cost Leadership vs. Product Porter Differentiation Differentiation Miller & Friesen (1982): Conservative vs. Miller Entrepreneur Entrepreneur Miles & Snow (1978): Defenders vs. Miles Prospectors Prospectors CL Con. Def.
Bus 424 lecture #1 PD Ent. Pro.
19 Basis for Competitive Advantage
Superior Competitive Advantage Relative Differentiation Position Differentiation Advantage Inferior Performance Low Cost Advantage Relative Cost Position
Bus 424 lecture #1 20 Corporate and Business Strategy Corporate Strategy Allocation of corporate resources Business Strategy Create value in product market A Business Strategy Create value in product market B
Bus 424 lecture #1 Business Strategy Create value in product market N
21 Competitive market dynamics Potential entrance to the market Suppliers of inputs and resources Rivalry among existing competitors Buyers and customers of outputs Substitute Products or Services
Bus 424 lecture #1 22 Relationship Between Planning and Control Systems
Activity Strategy Formulation Types of End Products Goals, Strategies, Policies Management Control Implementation of Strategies Task Control Efficiency and Effectiveness
Bus 424 lecture #1 23 Management Control Management control is the process by which management: ensures that people in the organization carry out organizational objectives and strategies; encourages, enables, or, sometimes “forces” employees to act in the organization’s best interests. Bus 424 lecture #1 24
24 Management Control Management control includes all the devices/mechanisms managers use to ensure that the behavior of employees is consistent with the organization’s objectives and strategies. Bus 424 lecture #1 25
25 Function and benefit of MCS Purpose/function – get done what management wants to get achieve; achieve; – influence behavior in desirable ways. Benefit – increased probability that the increased organization’s objectives will be achieved. achieved.
Bus 424 lecture #1 26 Key questions Are our employees likely to behave Are appropriately? appropriately?
– Do they understand what we expect of them? – Will they work consistently hard and try to do Will what is expected of them? what – Are they capable of doing what is expected of Are them? them?
Bus 424 lecture #1 27 The basic control problem Management control is about encouraging PEOPLE to take desirable actions,
» i.e., it guards against the possibilities that employees will do something the organization does not want them to do, or, fail to do something they should do. Hence, management control has Hence, BEHAVIORAL IMPLICATIONs ! BEHAVIORAL If all personnel could always be relied on to do what If is best for the organization, there would be no need Bus 424 28 for a management control lecture #1 system. for Basic control issues Three issues:
» Do they understand what we expect of them Lack of direction Lack » Will they work consistently hard and try to do what is expected of them Lack of motivation Lack
Bus 424 lecture #1 29 » Are they capable of doing what is expected of them Personal limitations Personal Management Control Systems Control Device Standard Detector Entity Being Controlled Feedback Bus 424 lecture #1 30 Strategy Implementation
MCS Strategy Org. Structure Org. Culture HRM Performance Bus 424 lecture #1 31 ...
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This note was uploaded on 05/23/2010 for the course BUS 424 taught by Professor Joe during the Spring '10 term at Skidmore.
- Spring '10
- Managerial Accounting