BA 510: Management Control Systems

1. BA 510: Management Control Systems EMBA: Singapore March/April, 2008

2. BA 510: Day 2 Agenda 9:00-10:00 Chapter 2 Discussion 10:15-11:30 Cisco Systems Case 11:45-12:30 Chapter 3 Discussion 12:30-1:30 Lunch 1:30-2:45 Southwest Airlines 3:00-3:45 Chapter 4 Discussion 4:00-5:15 Whiz Calculator Company 5:30-6:00 Chapter 5 Discussion

3. Chapter 2: Understanding Strategy Do you understand your corporation�s strategy? What is it? What can go wrong if managers do not understand corporate strategy? Critique� The Jack Welch strategy at GE. The Henry Ford strategy at Ford. The Stan Shih strategy at Acer. What is the �balanced scorecard�?

4. Chapter 2: Understanding Strategy Exhibit 2-1: How can managerial accountants help here? Compare single industry, related diversification, and unrelated diversification strategies. What significance does this have for management control systems? Give examples of firms in Exhibit 2-5 (BCG). What significance does this have for management control systems? How is this analysis different from the GE model?

5. Chapter 2: Understanding Strategy Exhibit 2-7: Do you agree with the 3 �Porter� observations on p.66 regarding Industry Structure Analysis? What is Value Chain Analysis (p.67)? Back to Agenda

6. Chapter 3: Organizational Behavior What is goal congruence? Does employee maximization = organization maximization? Vice-versa? How do EXTERNAL and INTERNAL factors affect goal congruence? In the US, how has Sarbanes-Oxley affected goal congruence?

7. Chapter 3: Organizational Behavior Exhibit 3.1: How does the formal control process work? Exhibit 3.2: What are benefits & limitations of these organizational structures? Exhibit 3.3 (�dotted line� VS �solid line� relationships): What are the benefits and problems of each? Back to Agenda

8. Chapter 3: Organizational Behavior

9. Southwest Airlines Background? Review the financial data on p.110. What can be learned from this? What is the Southwest strategy? Risks of the strategy? How did Southwest�s control systems execute the firm strategy? Organization? Resource allocation? Budgeting? Performance evaluation? Compensation? Others? Suggestions for the future? Back to Agenda

10. BA 510: Responsibility Centers What is a responsibility center? (Slides 1-8) What are the various types of responsibility centers? How do the concepts of effectiveness and efficiency relate to responsibility centers? What is a support center? What are some examples of support centers? What are some inherent problems of evaluating support centers? Let�s review Cost Behavior. (Slides 1-35) Back to Agenda

11. Whiz Calculator Company Describe the Whiz process of budgeting prior to the proposed change. How does each item in Exhibits 1,3 vary? Fixed Discretionary? Fixed Committed? Vary with sales? Vary with another driver? Mixed? Step-variable? Given your answers to question 1, what type of budget would be most appropriate? Should the proposed system be adopted? Any other suggestions for the sales expense reporting of Whiz? Back to Agenda

12. BA 510: Profit Centers What is a profit center? Are all business units profit centers? What are the requirements to qualify as a profit center? What are the BENEFITS of the profit center as a measurement tool? What are the LIMITATIONS of the profit center as a measurement tool?

13. BA 510: Profit Centers What are some measures of profits? Net Income Pretax Income Controllable Profit Direct (traceable) Profit Contribution Margin Segment Reporting (slides 9-39) Back to Agenda