1. An overwiew of the MA-area, Costing & International Business
Continues
An overwiew of the MA-area,
Costing & International Business
Implementing and using MCS
Management style and 7S
Responsibility Centres
Costing-Transfer Prices – outsourcing
International Business

2. Implementation MechanismsB C
Stucture
HRM
Performance
Strategy
Culture

3. The 7S framework Strategy Staff Structure Shared Values Skills Style
Systems
McKinsey & co

4. Strategy & product/market matrix
Polo Golf Passat … New?
Market
Young people
Small family
Large family
Companies …
New?

5. Management in transition
How to balance between Control and Empowerment
Decentralize, tear down the pyramids
Measure performance
Communicate

6. Hierarcy and bureaucracy in the industrial era
CEO
Directors
Managers
Middle managers
Lower managers
Workforce (Hands)

7. Responsibilityareas and types
Process
Inputs
Outputs
Cost Center
Revenue Center
Profit Center
Investment Center

8. Generic responsibility centra
Administration/cost
R&D/cost
HRM/cost
Sourcing/cost
Inb.
logi
stics/
cost
Prod
uct/
cost
Outb.
logi
stics/
cost
Mark
eting/
cost
Service/
cost
Profit Centre?

9. Cost centers, activity areas
Inb.
logi
stics/
cost
Sourcing/cost
HRM/cost
R&D/cost
Administration/cost
Prod
uct/
Outb.
Mark
eting/
Service/

10. A decentralised ”balance sheet”
(investment center)
Acc Payable?
Bank?
Equity?
Cash
Acc Reciev?
Inventory?
Machines?
Buildings?

11. EVA versus ROI
EVA=
Net profit –
Capital charge
ROI=
Net profit
Investment

12. Degrees of freedom in responsibility?
Mgmt & adm.
R&D
Customer
base
Sourcing
HRM
Marke
ting .
inlog
istics
Service
outlog
istics
Produ
ction

13. Value chain analysis Administration. R&D HRM. Sourcing Inb. Logi stics
Prod
uction
Outb.
logi
stics
Mark
eting
Service

14. Levi Strauss’ Value-Delivery Network
Du Pont
(Fibers)
Order
Delivery
Order
Milliken
(Fabric)
Levi’s
(Apparel)
Order
Order
Sears
(Retail)
Customer
Delivery
Delivery
Delivery
Competition is between networks, not companies.
The winner is the company with the better network.

15. Transfer Prices A A B C - Cost (std C, dir C, tot C...)
- Cost plus profit margin (pre calc, real)
- Negotiation price (internal market price)
- Market Price (cathaloque, bid)
- Combinations of above

16. Transfer Price example
Selling dpt
tot C=10
Buying dpt
tot C = 15
Principle: Cost – Sale = Profit, Buying dpt Sales Price
Cost C 10 S 10 P 0 C S 25
Margin 10% C 10 S 11 P 1 C S 26
Negotiation C 10 S 14 P 4 C S 29
Market price C 10 S 20 P 10 C S 35
Combination C 10 S 20 P 10 C S 25

17. Costing for different purposes
Short term decisionmaking (tactical/operational)
Product costing/cost accounting)
Principles/methods for costing
Full costing (absorption costing, process costing..)
Marginal costing
Modern costing…ABC, TC, SCM f ex Attribute Costing

18. ABC and customer values
Administration/cost
R&D/cost
HRM/cost
Sourcing/cost
Inb.
logi
stics/
cost
Prod
uct/
cost
Outb.
logi
stics/
cost
Mark
eting/
cost
Service/
cost
Customer values?
Profitable customer?
Profitable product?

19. Aktivities and ABC Administration/cost R&D/cost HRM/cost Sourcing/cost
Inb.
logi
stics/
cost
Prod
uct/
cost
Outb.
logi
stics/
cost
Mark
eting/
cost
Service/
cost
activity
cost
based

20. Attribute costing, an illustration…

21. Costing for different purposes
Long term decision making (strategic/tactical)
Investment methods
NPV
IRR
Pay-Back
SCM/BsC?
Investment & business plan activities
Investment process in an organizational context

22. A Value system based on a vision
Goals
Company
Suppliers
Customers
Goods
Services
Finance
Partners
Employees
Management
Owners
Customer value
Market

23. The company in the Value system
Customers
customers
Suppliers
suppliers
Company
partners

24. Value Proposition, how to deliver value
Customer
Value
Proposition
Product
leadership
*state of the art
*speed to market
Operational
excellence
*low cost
*high quality
*exc. service
Customer
intimacy
*customazation
*long-term rel.
Microsoft 3M
Marks & Spencer
Sony
Intel
Nike
Toyota
Wal-Mart
Dell
Ikea
Chrysler
Southwest Air
Levi´s
Kraft
Honda
British Airways
Hope & Hope HBS (1997)

25. The Value-Delivery Process
(a) Traditional physical process sequence
Make the product
Sell the product
Procure
Design
product
Make
Price
Sell
Advertise/
promote
Distribute
Service
(b) Value creation & delivery sequence
Choose the Value
Provide the Value
Communicate the Value
Strategic marketing
Tactical marketing