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GM1403: Management Accounting, Strategy and Control > Part 5: Inter-organisational value creation > Flashcards

Part 5: Inter-organisational value creation Flashcards

1
Q

What is (management) control?

A

Strategies and tools to influence employees, groups, and units to work towards organisational goals

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2
Q

Who works with inter-organisational control?

A 
Marketing & Sales 
R&D & Production 
Logistics 
Quality management 
Legal, finance, and other support functions 
Controllers 
(Almost everyone)
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3
Q

Why do we need inter-organisational control?

A
  1. To manage opportunism/fairness
    • Safeguard against being exploited
    • Profit sharing and pricing issues
  2. To enable efficient exchange
    • Co-ordination of operational exchange
    • Information sharing
    • Knowledge transfer sharing
  3. To align inter- & intra-organisational goals and strategies
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4
Q

What are inter-organisational relationships

A

Interconnections between organisations that allow for economic specialisation

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5
Q

Inter-organisational dimensions of relationships

A 
Structural dimensions (hard factors) 
Affective dimensions (soft factors)
Temporal dimensions (relationships are not static)
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6
Q

What are the structural dimensions of inter-organisational relationships

A
  1. Activity system (who does what)
  2. Resource distribution (who has what)
    = Product
  3. Interaction patterns
  4. Contracts
  5. Investments
  6. Adaptations
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7
Q

What are the affective dimensions of inter-organisational relationships

A
  1. Trust
  2. Commitment
  3. Norms
  4. Satisfaction and Conflict
  5. Goals and negotiations
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8
Q

What are the temporal dimensions of inter-organisational relationships

A

Longevity
Cumulativity (the importance of history)
Institutionalisation

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9
Q

Inter-organisational types of relationships can be

A

Collaborative

Transactional

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10
Q

Can you, as a company, choose whether you have inter-organisational relationships?

A

No, it’s necessary for efficient allocation of resources and activities. It is not a question of whether you have relationships, but what kind of relationships

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11
Q

What determines what kind of relationships you have?

A
  1. Nature of product
    - commodity vs adapted
  2. Importance of the product
    - consequence of loss
  3. Supply market conditions
    - readily available or scarce
  4. Resources to spend on relationship maintenance and development
  5. The counterpart’s interest in us
  6. Our joint history
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12
Q

Van der Meer-Kooistra & Vosselman (2000)’s model of phases and transactional relationships (12 fielder)

A

Transactional relation
Contact phase
Contract phase
Execution phase

Inter-firm relationship pattern
Market-based pattern
Bureaucratic pattern
Trust-based pattern

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13
Q

Agndal & Nilsson’s extended exchange process

A
  1. Supplier selection
  2. Concept development
  3. Joint product and/or process design
  4. Deliveries (production)
  5. Price revisions & Product and process redesign
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14
Q

Relationships can be built upon

A
  1. Emergent relationship development
  2. Strategic relationship transformation
    • Commanding interventions
    • Engineering interventions
    • Teaching interventions
    • Socializing interventions
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15
Q

Open Book Accounting

A

Sharing costs and other accounting information in a supply chain (mostly common suppliers providing customers)

Buyer perspective (why?)

Supplier perspective (why not?)

Incentives (buyer to supplier)

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16
Q

Why do the buyer want to engage in Open book accounting?

A
  1. Cost control
    - Efficient processes (the suppliers)
    - Purchases (are the suppliers-suppliers’ prices fair)
    - Continuous improvements
  2. Price control
    - Avoid overcharging
    - Competitive supply chain
  3. Avoid misunderstandings
    - Concerns both parties
  4. Relieve tension and gain knowledge to
    - Learn about supply chain
    - Use against supplier
17
Q

Why would suppliers not want to engage in open book accounting?

A
  1. Distrust
  2. Pricing model
  3. Uncertain benefits
  4. Policy
  5. Buyer’s competence (not enough)
  6. Time horizon (taking a risk today, but benefits will come in the future)
  7. Investments required)
  8. Relies on new logics
18
Q

What incentives can buyers give suppliers to engage in open book accounting?

A
  1. Basic requirement (If you don’t you won’t be our supplier, Volvo says this)
  2. Efficiency gains
    - Within relationship (more likely to be selected next
    time)
    - Outside relationship (more competitive when
    competing for other contracts)
  3. Understanding
  4. Relieves tension
  5. Profit margin (if known you could’ve guaranteed the
    profit margin)
  6. Special incentives (promise to)
    • Favoured supplier
    • Longer contract
    • Greater volumes
19
Q

Relationship purchasing strategy

A

Asset specificity
Significant relationship-specific investments
High degree of commitment
Focus on joint benefits

Uncertainty 
	Few alternative suppliers 
	High switching costs 
	Product critical to buyer 
	Interdependence 
	Self-regulating behaviour through trust 
	Cumulativity
20
Q

Transactional purchasing strategy

A
  1. Asset specificity
    Limited relationship-specific investments
    Low degree of commitment
    Focus on own benefits
2. Uncertainty
Many alternative suppliers 
Low switching costs 
Product of limited importance to buyer 
Interdependence 
Opportunism checked by buyer
No Cumulativity
21
Q

Agndal & Nilsson techniques for inter-organisational value creation in the Supplier evaluation stage

A

Joint target costing

Open book accounting

22
Q

Agndal & Nilsson techniques for inter-organisational value creation in the Concept discussion stage

A

Cost platform

Often simultaneous with supplier evaluation

23
Q

Agndal & Nilsson techniques for inter-organisational value creation in the Joint production & process design stage

A
  1. Quality-function-price trade off
  2. Concurrent engineering, minimal cost investigation
  3. Cross-functional teams
  4. Knowledge exchange
24
Q

Agndal & Nilsson techniques for inter-organisational value creation in the Deliveries/production stage

A

Kaizen (value analysis), small ongoing improvements

25
Q

Agndal & Nilsson techniques for inter-organisational value creation in the Price revision stage

A
  1. Expected annual price reductions (learning, other efficiencies)
  2. Factors that might change prices (volumes, raw material prices)
  3. Product and process redesign
  4. Simple value analysis and target costing
    (Often costly to change products and processes)
26
Q

Formal joint costs management techniques

A
  1. Quality-function-price trade-off
  2. Concurrent engineering
  3. Inter-organisational cost investigations
  4. Kaizen (value analysis)
27
Q

Informal use of open books

A

Uses of open books not tied to a formal cost management technique

28
Q

How does the purchasing strategy influence usage and result of open book practises

A

Transactional purchasing strategy
- Cost data is used to reduce purchase price
Relational purchasing strategy
- Cost data supports joint cost reduction

29
Q

Agndal & Nilsson (2010) open book accounting practises expressed in terms of

A
  1. Nature of data and accounting data disclosure practises
    - Types of data
    - Main cost objects
    - Extent of disclosure
    - Forms of disclosure
    - Direction of data disclosure
  2. Uses of disclosed accounting data
    - Main purposes
    - Specific decisions and activities supported
  3. Conditions of open book accounting
    - Attitudes to cost data disclosure
    - Incentives to disclose data

GM1403: Management Accounting, Strategy and Control (5 decks)

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