1. Use only with permission of Susan Crosson Chapter 1 : A Manager’s Perspective Chapter 1 The Changing Business Environment: A Manager’s Perspective Fall 2007 Crosson

2. Use only with permission of Susan Crosson Learning Objectives  Management v. Financial Accounting  Management Cycle  Value Chain and Supply Chain Analyses  Performance Measures and the Balanced Scorecard  Management Tools: JIT, TQM, ABM, TOC  Code of Ethics

3. Use only with permission of Susan Crosson Management Accounting v. Financial Accounting Table 1  Users  Nature of Info  Report Purposes  Report Frequency  Report Format  Measures —you get what you measure!  Users  Nature of Info  Report Purposes  Report Frequency  Report Format  Measures —you get what you measure! Good follow up exercise is SE 1.

4. Use only with permission of Susan Crosson Management Process Figure 1  Plan  Perform  Evaluate  Communicate The Ongoing Management Process— WHAT MANAGERS DO Good follow up exercise is SE3 or E2.

5. Use only with permission of Susan Crosson Planning Framework Figure 2  Goal/Vision -value adding  Mission -why exists  Strategic Objectives -long-term performance  Tactical Objectives -mid-term performance  Operating Objectives -short-term performance  Business Plan -how will achieve performance objectives and how will measure success  Budgets -$$$ expression of business plan Good follow up exercise is E4.

6. Use only with permission of Susan Crosson More on Terms  Mission -specifies organization’s identity. Its reason for existence and longer term overall purpose. It embodies the unique character of the organization.  Vision Statement -specifies what the organization aims to become in the longer term. It specifies an end point and portrays the organization’s long term ideal state… “To be #1”  Statement of Core Values- specifies the key beliefs and philosophies of the organization that drives what it does and how it does it.

7. Use only with permission of Susan Crosson Introducing Strategy Supply Chain/Network Value Chain

8. Use only with permission of Susan Crosson Strategic Positioning Michael Porter… Cost Leadership Differentiation (Focus) Good follow up exercise is SE2.

9. Use only with permission of Susan Crosson  Upstream (supply chain)  Your Operation (value chain comprised of primary processes and support services) Good follow up is SE5, SE6, or E6.  Downstream (supply chain) Supply Chain and Value Chain Analysis A Detailed Look at Strategy…

10. Use only with permission of Susan Crosson Balanced Scorecard feeds back to Strategy Value Chain Balanced Scorecard

11. Use only with permission of Susan Crosson Performance Measures  Financial and Nonfinancial Measures  Balanced Scorecard  Financial  Learning and Growth  Internal Business Processes  Customers  Lead and Lag Indicators Good follow up exercise is E9 Or look and listen to SE8.

12. Use only with permission of Susan Crosson The Balanced Scorecard: The Strategy Map-a causal value chain InternalExternal 2. Operations/Internal Business Processes 1.Learning and Growth/ Employees/People 3. Customer Relationships 4. Environmental/ Community Impact 5.Financial Results – Short-term – Long-term

13. Cause-and-Effect Chain Illustration for a Bank Learning and Growth Perspective Internal-Business Perspective Customer Perspective Financial Perspective Number of Training Hours Employees Receive Employee Scores on in-house tests about sales, service, and product knowledge Number of Successful Referrals and/or Cross-sales Customer Satisfaction Ratings on Quarterly Surveys Customer Retention Rate: percent of last year’s customers still with bank Improved Loan, Deposits, and Non-Interest Income If employees receive training in sales effectiveness, customer service, product profitability, and local bank knowledge, then better customer service and higher quality interactions with existing clients can take place. Bank employees will be better able to ascertain the needs of customers, thereby making higher quality referrals and cross-sell proposals to customers, and customers will be more satisfied and choose to continue banking with bank. Increased referrals or cross-sales increases non-interest income and provides the basis for growth in deposit and loan balances. Causal Chain Explanation:

14. Use only with permission of Susan Crosson Management Tools & Continuous Improvement Figure 5 Just-In-Time JIT Types of Time Total Quality Management TQM Costs of Quality Activity-Based Management ABM ABC Value-adding v. Nonvalue-adding Theory of Constraints TOC Bottlenecks

15. Use only with permission of Susan Crosson Just-In-Time JIT  Philosophy  Types of Time  Process  Inspect  Move  Queue  Store

16. Use only with permission of Susan Crosson Total Quality Management TQM  Evolving Concept  Product  Service  Experience  Costs of Quality  Conformance  Prevention  Appraisal  Nonconformance  Internal Failure  External Failure

17. Use only with permission of Susan Crosson Activity-Based Management ABM  ABC v. Traditional Product/Department Costing  Value-adding  Nonvalue-adding

18. Use only with permission of Susan Crosson What Do You Know? Exercise 8 1.2.3.4.5.

19. Use only with permission of Susan Crosson What Do You Know? Exercise 8 1. V 2. NV 3. V 4. V 5. NV

20. Use only with permission of Susan Crosson Theory of Constraints TOC The Goal by Goldratt and Cox  What is the goal of any business?  Constraints of Time and Cost

21. Use only with permission of Susan Crosson What Do You Know? Exercise 7 CFO 1: CFO 2: CFO 3: CFO 4:

22. Use only with permission of Susan Crosson What Do You Know? Exercise 7 CFO 1: JIT CFO 2: TQM CFO 3: ABM CFO 4: TOC

23. Use only with permission of Susan Crosson Code of Ethics Exhibit 4  Ethics Quiz Ethics Quiz  Competence  Confidentiality  Integrity  Credibility  Resolution of Ethical Conflict

24. Use only with permission of Susan Crosson What Do You Know? Exercise 14 and 15  Rank in order of importance: Competence, Confidentiality, Integrity, Credibility  Explain your ranking  How do actual company ethics statements (Exercise 15) compare with your ranking?

25. Use only with permission of Susan Crosson Homework P 2