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C HAPTER 13 S TRATEGIC P LANNING AND C ONTROL SOLUTIONS 13.17 America Online, Inc. (AOL) offers a broad range of features including real-time talk, electronic mail, electronic magazines and newspapers, online classes and shopping, and Internet access. It generates revenues principally from consumers through membership fees, advertising, commissions on merchandise sales and other transactions, and from other businesses through the sale of network and production services. Google’s core competencies are in coming up with fast and efficient search engines, and its revenues are mostly from online advertisements, commissions from online intermediation. An important element of strategy is to induce people to use its search engines. It has been successful so much so that “Google” has come to be accepted as a verb in the English language as a synonym for “search” in the online world. 13.19 Obviously, the issue is one of ethics. Absent legal liability, a company might choose to dispose dangerous material in a careless manner to avoid costs of disposal. In this case, cost is not a consideration (The unfortunate Union Carbide episode in Bhopal, India comes to mind). However, firms have a social responsibility to dispose hazardous material in an environmentally safe manner. Good economic analysis would dictate that such costs be taken into account in decision making. 13.21 In general, target costing is effective for products with well-defined and discrete features because it helps make proper trade-offs among price, quality, and functionality with respect to each product feature. Target costing is less effective in firms that deal with commodity-type products because there is little scope for differentiating products by their features. Poultry and other animal products are commodity products with stable demand and little scope for differentiation. Cost control should in fact be the key focus for Tyson foods because of the low margins and high levels of competition. Factors such as cost efficient distribution channels, timely delivery of supplies are key to its success. 13.27 Conceptually, there is no barrier to using a balanced scorecard for non-profit organizations such as a municipality or a not-for-profit hospital. However, the components will change to reflect the units’ missions. For example, a municipality might track measures in categories such as financial, community, infra-structure and learning. These categories broadly correspond to the financial, customer, processes and learning categories. However, the measures will be quite different. For example, the financial measure might just be breaking even rather than making a profit, and might include targeted amounts of grants from the Federal government. 13.29
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This note was uploaded on 02/08/2012 for the course ACG 2023 taught by Professor Goslinga during the Fall '10 term at University of Florida.

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