Week 10 | Market Variance Analysis

Question 1

What measures does SPA use to shed light on strategy implementation areas

Answer 1

• 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

Question 2

What could cause a positive or negative market share variance?

Answer 2

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

Question 3

What are some real-life factors of volume variance being positive

Answer 3

Actual sales volume higher than expected (depends on question)

Question 4

Under what condition does product mix variance operate under?

Answer 4

It is only a suitable calculation when products are deemed to be operating in the same
market (substitutes)

Question 5

What are the causes of product mix variance?

Answer 5

Caused by selling a different product mix than planned

Question 6

What are some real-life factors that could result in positive market size variance?

Answer 6

Capturing more of the market than expected
Market growth higher than expected

Question 7

How can being overly conclusive with the market variance analysis be misleading?

Answer 7

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)

Question 8

What is the flexed budget?

Answer 8

It is a budget based on actual volume but estimated price.
If a variance arises then the flexed budget shows the difference in sales