Chapter 4 - Developing A Competitive Strategy; Comtemporary Cost Management Techniques

Question 1

Is a set of policies, procedures and approaches to business that procedure long-term success

Answer 1

Strategy

Question 2

Financial performance measures include among others

Answer 2

1. Growth in sales and earnings
2. Cash Flows
3. Stock Price

Question 3

Non-financial measures of operation include among others

Answer 3

1. Market Share
2. Product Quality
3. Customer Satisfaction
4. Growth Opportunities

Question 4

Strategic Financial and Nonfinancial measures of success are also commonly called:

Answer 4

Critical Success Factors (CSFs)

Question 5

This is a competitive strategy in which a firm succeeds in producing products or services at the lowest cost in the industry.

Answer 5

Cost Leadership

Question 6

Is implemented by creating a perception among consumers that the product or service is unique in some important way, usually by higher quality, features or innovation.

Answer 6

Product Differentation

Question 7

Is a technique in which managements develop policies snd practices to ensure that the firm’s products and services exceed customer’s expectations

Answer 7

Total Quality Management (TQM)

Question 8

The two major characteristics of TQM are

Answer 8

1. Focus on serving customers, and;
2. Systematic problem-solving using teams made up of front-line workers

Question 9

Is the philosophy that activities are undertaken only as needed or demanded.

Answer 9

Just in Time (JIT)

Question 10

JIT is a production system also known as

Answer 10

Pull-it-through approach

Question 11

Is a system in which each component on a production line is produced immediately as needed by the next step in the production line

Answer 11

Just-In-Time (JIT) production

Question 12

Is a process for creating competitive advantage in which the firm reorganizes its operating and management functions, often that result that jobs are modified, combined, or eliminated.

Answer 12

Reengineering

Question 13

A more radical approach to improvement than TQM, is an approach where a business process is diagrammed in detail, questioned and then completely redesigned in order to eliminate unnecessary steps

Answer 13

Process Reengineering

Question 14

Is a process by which a firm:
1. Determines its critical success factor
2. Studies the best practices of other firms for achieving these critical success factors, and;
3. Then implements improvements in the firm’s processes to match or beat the performance of those competitors

Answer 14

Benchmarking

Question 15

Is a management technique in which marketing and production processes are designed to handle the increased variety that results from delivering customized products and services to customers

Answer 15

Mass Customization

Question 16

Is an accounting report that includes the firm’s critical success factors in four areas

Answer 16

Balanced Scorecard

Question 17

Four Areas of CSF under balanced scorecard

Answer 17

1. Financial Performance
2. Customer Satisfaction
3. Internal Business Process
4. Innovation and Learning

Question 18

Is used to develop a detailed description of the specific activities performed in the operation of the firm

Answer 18

Activity Analysis

Question 19

Is used to develop a detailed description of the specific activities performed in the operation of the firm

Answer 19

Activity Analysis

Question 20

Is used to improve the accuracy of cost analysis by improving the tracing of costs to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customers.

Answer 20

Activity-based costing (ABC)

Question 21

Uses activity analysis to improve operational control and management control

Answer 21

Activity-based Management (ABM)

Question 22

Emphasizes the importance of managing the organizations constraints or barriers that hinder, impede progress towards an objective

Answer 22

Theory of Constraints (TOC)

Question 23

Is a management technique to identify and monitor the costs of a product throughout its lifecycle

Answer 23

Life-Cycle Costing

Question 24

Involves the determination of the desired cost for a product or the basis of a given competitive price so that the product will earn a desired profit

Answer 24

Target Costing

Question 25

Is the use of computers in product development, analysis and design modification to improve the quality and performance of the product

Answer 25

Computer-aided design (CAD)

Question 26

Is the use of computers to plan, implement, and control production

Answer 26

Computer-aided manufacturing (CAM)

Question 27

Is a computerized network of automated equipment that produces one or more groups or parts or variations of product in a flexible manner

Answer 27

Flexible manufacturing system (FMS)

Question 28

Is a manufacturing system that totally integrates all office and factory functions within a company via computer-based information network to allow hour-by-hour manufacturing management

Answer 28

Computer-integrated manufacturing (CIM)

Question 29

Refers to the sequence of business functions in which the usefulness is added to the products or services of the company. Is an analysis tool that firms use to identify the specific steps required to provide a product or service to a customer.

Answer 29

Value Chain