Week 10 | Market Variance Analysis Flashcards
What measures does SPA use to shed light on strategy implementation areas
- Product efficiency and cost variances
-Sales price variances - Market size and market share variances [and product mix variance where applicable]
- Variances for non-variable costs
What could cause a positive or negative market share variance?
Negative market share variance could be caused by:
- capturing less of the market than expected
- actual market share lower than expected
Positive market variance:
- capturing more of the market than expected
- actual market share being higher than expected
What are some real-life factors of volume variance being positive
Actual sales volume higher than expected (depends on question)
Under what condition does product mix variance operate under?
It is only a suitable calculation when products are deemed to be operating in the same
market (substitutes)
What are the causes of product mix variance?
Caused by selling a different product mix than planned
What are some real-life factors that could result in positive market size variance?
Capturing more of the market than expected
Market growth higher than expected
How can being overly conclusive with the market variance analysis be misleading?
The performance of the management can be the problem as well (diagnostic).
Or there are other problems than performance such as competitive advantage, strategy, guide profit planning & budgeting. e.g. we could be better at technology than making solar panels (interactive)
What is the flexed budget?
It is a budget based on actual volume but estimated price.
If a variance arises then the flexed budget shows the difference in sales