Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Prologue Managerial Accounting and the Business Environment PowerPoint Authors: Jon A. Booker, Ph.D., CPA, CIA Charles W. Caldwell, D.B.A., CMA Susan Coomer Galbreath, Ph.D., CPA

P-2 Strategy A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors. Customer Intimacy Operational Excellence Product Leadership

P-3 Organizational Structure An organization is a group of people united for a common purpose. Decentralization decision–making

P-4 Value Chain Research and Production Product Design ManufacturingManufacturingMarketingMarketingDistributionDistribution Customer Service Business Functions Making Up the Value Chain A value chain consists of the major business functions that add value to a company’s products and services.

P-5 Lean Production Traditional Thinking Minimize unit costs by maximizing output. Keep everyone busy. Idleness wastes money. Push products through the system even if unsold inventory piles up in warehouses.

P-6 Lean Production Step 1 Identify value in specific products and services Step 2 Identify the business process that delivers value Step 3 Organize work arrangements around the flow of the business process Step 4 Create a pull system that responds to customer orders Step 5 Continuously pursue perfection in the business process

P-7 Supply Chain Management The term supply chain management is commonly used to refer to the coordination of business processes across companies to better serve end consumers.

P-8 Theory of Constraints (TOC) A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective

P-9 Theory of Constraints (TOC) Step 1 Identify the weakest link in the chain, which is the constraint Step 2 Do not place a greater strain on the system than the weakest link can handle Step 3 Concentrate improvement efforts on strengthening the weakest link Step 4 If improvement efforts are successful, the weakest link will improve

P-10 Six Sigma Six Sigma is sometimes associated with the slogan zero defects. A process improvement method that relies on customer feedback and fact-based data gathering and analysis techniques to drive process improvements.

P-11 Code of Conduct for Management Accountants – IMA’s Statement of Ethical Professional Practice Part One Competence Confidentiality Integrity Credibility Part Two Resolution of Ethical Conflict

P-12 The Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 is intended to protect the interests of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures.

P-13 Identifying and Controlling Business Risks

P-14 Corporate Social Responsibility CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations. Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions. Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions. CustomersEmployeesCommunitiesSuppliersStockholders Environmental & Human Rights Advocates

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P-16 End of Prologue