customers

suppliers

R&D

weak

good reputation

R&D

cash flows

strong

high cost structure

competition

market

economy

increase sales

increase market share

competition

political changes

economic changes

legislative/regulatory changes

international pressures

general market must be available

usually leads to optimal pricing

long-run average can be used with high variances

methods

minimum should be variable costs of production for selling unit

maximum should be market price

proration is acceptable

dual can be used when selling uses cost-based and buying uses market

ensure that price optimises organizations returns/goal congruence

managers given autonomy

aids in management training

actions

policies

decisions

respect rights

help exercise rights

openly and effectively communicate

encourage shareholders to participate in general meetings

legal

contractual

social

market-driven

include

sufficient relevant skills & understanding

review & challenge management performance

adequate size

appropriate levels of independence & commitment

fundamental requirement

code of conduct for directors and executive

promote ethical and responsible decision making

clarify and make publicly known roles & responsibilities of board & directors

implement procedures to verify & safeguard integrity of financial reporting

disclose material matters

ownership concentration

board of directors

executive compensation

add overtime or another shift

hire new workers

acquire new machinery

subcontract productoin

streamline production process

cannot be changed in short-term

usu. fixed costs

set to earn reasonable ROI

all costs are variable in long run

time horizon of one year or longer

competitive forces often set prices

accurate full cost data is a decision requirement

immediate impact

all costs of production are product costs

cost of a unit of product

allocates portion of fixed costs to each unit of product with variable costs

all costs of production = "full cost"

do not include selling & admin

only costs that vary with output are product costs

fixed costs are treated as period costs

no fixed o/h costs

aka direct costing or marginal costing

do not include selling & admin

two stage

allocates activities into pools

overhead costs assigned to products/services on basis of iterations of each activity in each pool

thorough understanding of tasks, activities processes carried out in pursuit of goals

financial

non-financial

a balance of indicators

management system

short-term management

subject to manipulation

subject to external influences

long-term growth

accountable only for areas over which managers have authority/can influence

how closely meets needs and wants of customers

performance according to design and production specs

does product meet design and production specs?

support activities

reduce # defects

identify defects before shipping

also called inspection costs

scrap

rejected products

reworking of defective units

downtime caused by quality problem

warranty

repairs

replacement

recalls

liability/litigation

reputational effects

random & non-random variation in processes

frequency of defect by type

"fishbone"

root of problems