Chapter 1 Adnan Alibegovic Jenny Hon Vivian Ngo Tom Spaulding

Case 1-1 Overview Kirsten Malon owns a consulting firm:  Computer and software repair and analysis  Recently expanded to 25 technicians  Customer based grown to 1,900 Customer: Businesses without vendor support  Retainer arrangement Stabilizes CF Wants to expand to publishing newsletters and books

Case 1-1 Current Success Factors Measure of Technician Efficiency  Retainer schedule may be a problem  Keep fixed force of 5 to support current customer base  Rest of staff could be contractors Customer Satisfaction  Customer Retention  Follow up survey

Case 1-1 Current Success Factors Pursue high end customer  Profiling Pricing # calls per customer  % of customers on retainer

Case 1-1 Future Success Factors Needs different type of personnel added  Could contract out writing and publishing  Could use technicians for content Use current customer base as well as expand Measures  Volume of sales  Cost of publishing books vs. newsletters  Monitor sales of each line

Case 1-1 Information Required Products and Services costing  To determine pricing on each line  What is driving the cost  Effects decision pertaining to expand/contract Planning and Decision-making  Business is getting more complex  Needs direction and goals

Case 1-1 Information Required Management and operation control  Not as significant  If it continues growing at this pace, then more important

Case 1-3 Ethics/Pricing Overview Manufacturer of airplane parts and engines Civilian and military customers Government is only buyer of rocket engines, AeroSpace is only provider Rocket engine price is cost plus markup New cost system under development is more accurate than old one New system assigns lower cost to engines and higher costs to other products Top management wants to scrap the new system

Case 1-3 Ethics/Pricing Option 1 - Scrap new system:  More profitable in short term  Discovery by government risks all military contracts and bad PR  Can’t ignore fact that other products are more costly than previously thought  Unethical

Case 1-3 Ethics/Pricing Option 2 - Implement new system  Loss of profit in short term  Opportunity to build goodwill with government  Begin to investigate how to make other products more profitable  Only ethical solution

Case 1-3 What to do? Investigate whether new system complies with government regulations  If not, use internally and keep profit Tell management ethics requires using the new system Refusal necessitates resignation and whistle-blowing

Reading 1-7 to 1-16 AccountantBusiness Partner Roles Scorekeeper / Book Keeper Specialist Number Cruncher Problem Solver Generalist “Super Accountant” Tasks Data Manipulation Spreadsheet Expense Reports Financial Statements Strategic Planning Process Improvement Team Building Business Analyst

Reading 1-7 to 1-16 Transition  Started with modernized technology Lost of manual spreadsheets and gain of financial tools Interpretation of results and how they relate to strategy of the business Skill sets  Communication  Team-building skills  Analytical skills

Reading 1-7 to 1-16 Caterpillar Example:  Changes driven by corporate reorganization  Company-wide educational program Meaning of numbers and its impact to the business  Internal leadership willing and capable of understanding information  Direct line of reporting to operations  Accountants accept new roles to survive  Expansion of roles and sharing of information for all

Reading 1-7 to 1-16 Obstacles  Lack of time, expertise, and support  Set of measures for new organization  Cultural change and mind set Positives  Application relevant to all  Bring units together

Q&A