Week 10 | Market Variance Analysis Flashcards

1
Q

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

A
  • 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
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2
Q

What could cause a positive or negative market share variance?

A

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

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3
Q

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

A

Actual sales volume higher than expected (depends on question)

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4
Q

Under what condition does product mix variance operate under?

A

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

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5
Q

What are the causes of product mix variance?

A

Caused by selling a different product mix than planned

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6
Q

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

A

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

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7
Q

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

A

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)

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8
Q

What is the flexed budget?

A

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

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