Order ID | 9626849819 |
Subject | Accounting |
Topic | Budgeting, Variance Analysis, and Performance Evaluations SLP 4 |
Type | PowerPoint Presentation |
Level | College |
Style | APA |
Sources | 1 |
Language | English(U.S.) |
Description |
Fourth and final part of the presentation. See background information for the module one SLP. Required: – Enterprise and corporate performance management. SLP Assignment Expectations: Submit a PowerPoint presentation or a Word Document. A PowerPoint presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources. Combine the submissions from prior module(s) into one file before uploading to the dropbox. Module 1 – SLP BACKGROUND d Cost Behavior You are applying for a managerial position at an innovative and rapidly growing company. This is a dynamic company that wants an individual who adds value to the organization. Managers at this company wear many hats, so the position requires managing products, people, and financial aspects of running the company. As part of the interview process, you are required to make a presentation covering four different topics, one per module for this course. You choose the company and the new product that you want to showcase in your presentation. It can be real or fictitious (based on an industry). This is for background purposes only. The presentation is to showcase your abilities and what you can contribute to the organization. IBIS World (access on the Trident Portal through the Online Library > Additional Library Resources > IBISWorld link) and BizStats have estimates of cost of goods sold and some other categories of operating expenses. Information about contribution margins is not available, but adding new products typically mean incurring both fixed and variable costs. Consequently, cost of goods sold is a reasonable estimate. Net operating income as a percentage of sales or some variation thereof may also be relevant if the new product is expected to contribute significantly to the bottom line. As a candidate for a position you would not have internal information available, but being resourceful and being a skilled researcher are desired traits for the position. IBIS World also has a wealth of other market statistics that may be helpful. Use listed background material and other resources as needed. Required: Include the following items in your presentation.
SLP Assignment Expectations Submit a PowerPoint presentation or a Word Document. A PowerPoint presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources. Accounting Cost Systems and Cost Behavior The automotive spare parts industry has been on the rise and has been evolving in tandem with the motor vehicle manufacturing industry. However, as consumers increase uptake of motor vehicles and manufacturers production, growing concerns about carbon emissions keep rising. So serious is the issue of carbon emissions globally that manufacturers have in the recent past worked tirelessly to devise a way of reducing emissions in their products as well as developing zero-emission vehicles. An infamous economic belief is that each crisis presents an opportunity. It is in line with this that I felt the spare parts industry should also join the course for an emission-free environment while increasing revenues and profits. This gave rise to my idea of a carbon emission filter. Carbon Emission Filter A carbon emission filter is a device that will capture CO2 at the tailpipe thus resulting in carbon-friendly emissions from motor vehicles. This device will be a hit as it will be a cheaper alternative to electric car engines and the adoption of other fuels for manufacturers and consumers alike. This will not only increase sales of parts by Autoparts limited but will also enable the company to diversify its line of production by opening an avenue for different lines of business for the company. Cost Estimates and Pricing Approach As the company is already equipped to produce car spare parts, little costs are expected to get the product under production. Current machinery and technology will only need little adjustments to get production underway. This means the expected initial costs will be very minimal. High production rates will also mean the company can maintain fixed costs on the low and hence focus on meeting demands of variable costs. Since this product will be in the market to compete with far costlier alternatives, these costs may be minute in comparison with costs incurred by competitors hence enabling the company to hold relatively lower pricing levels. On average the low entry conventional cars cost about $4,000 less than their electric counterparts. This gap may rise to about $7,000 on the high-end models as seen in a 2018 study by EnergySage. Figure 1: Price of electric vehicles vs conventional vehicles. (Source: EnergySage, 2018). As illustrated above, consumers are expected to own more conventional vehicles than electric vehicles due to the low costs of purchasing conventional vehicles. This creates a large client base for the product. The tax mechanism will also play a major role in costs and pricing. Subsidies for low-emitting energy sources arean approach to increase welfare (Galinato, 2010). Therefore, the company can employ such available mechanisms to reduce costs. These factors all play to influence the ability of the company to price the product relatively low. This is generally the target pricing approach as I estimate the product pricing relative to the competitive market prices of other alternatives. The rationale for this approach is the fact that it is easier to establish the company’s desired profits and costs and these help in arriving at the right price point. Expectations for Growth and Future Profit Consumption of motor vehicles is only expected to keep growing. With the prohibitive costs of electric vehicles as an environmentally friendly means of transport, carbon emission filters will be a hit and as such demand will increase with an increase in demand for motor vehicles. In the long term, the company may be able to vary the fixed cost and increase specialization in labor as such significantly cut down on costs and hence increase profits. Special Pricing The pricing of products or services offered by an entity is one of the crucial decisions made by managers that determine the success of the organization. Pricing decisions are made on the various customer segments to attain an optimal price mix that maximizes the gains from operations. Revenues soar as more promotional activities are directed to the most profitable groups of customers. Maximizing financial returns or value for the organization is the ultimate objective of every business manager. This goal is achieved through several strategies, including determining the selling price. However, pricing must be done with caution in order to strike a balance between customer perception and organizational objectives. The prices of carbon emission filters should be as differentiated as the prices of motor vehicles themselves. Price differentiation will offer the company maximum financial returns by optimizing the customers’ ability to buy the product. Customer Profitability The filters will be structurally differentiated to target the different customers. Differentiation may be in terms of the quality of materials used and the engineering process involved. For instance, the luxury cars segment ought to attract more sophisticated carbon emission filters with a higher price tag than the lower end brands. Income distribution among customers can also be considered in pricing, especially where geographic segmentation is used. For instance, the target market in USA and Canada has a higher purchasing power than that in African countries, so the premium emission filters can be targeted towards North America. The car manufacturers could also be targeted as customers so that the filters are made part of their car components instead of selling them as separate parts. Revenue and ProfitabilityEffect Profit from the sale of a product is the difference between the selling price and the cost of production. A sound evaluation of customer profitability can be achieved through a careful customer segmentation (Kumar, 2018). Customer segmentation of carbon emission filters can be demographic, geographic, and psychographic. The profits generated from each customer group should be determined separately to ascertain the most profitable segments based on the volumes of sales from each of them. Therefore, the entity can focus its efforts on the most profitable segment to maximize revenues and overall financial performance. Market segmentation, coupled with sales promotion activities like advertising, will significantly increase company revenues as more potential customers familiarize themselves with the products, thus increase profitability. Owing to the current pressure to minimize carbon footprint, the carbon emissions filters are very likely to gain prominence across all vehicle manufacturers as it will be a better option to integrate them in their production systems than producing electric cars, which are way costlycompared to petroleum cars. Advantages and Disadvantages Differential pricing occasioned by market segmentation is likely to yield a lot of benefits to the organization. Customer loyalty will ensue as more people and organizations get to know about the filters that minimize carbon emission, which is a global concern. The business idea can be copyrighted, creating a sustained revenue stream for the company in the form of royalties from entities that adopt the business idea. Higher revenues and net profits are likely to follow, thus giving a fair rate of return to the investors of the organization (Putra, 2018). On the negative side, some of the customers may perceive it unfair to pay higher prices for the same product that others buy at a relatively low price, which may make them opt for electric cars. Responsibility Centers It is now apparent that the automotive spare parts industry is yet to be fully explored. In the quest of venturing into the industry, one essential aspect of the trade needs tobe given extra attention, and that is the facet of the responsibility centers. Responsibility centers refer to the entities within a business that have their goals, staff, procedures, policies and financial reports. For the automotive spare parts industry, they will serve to indicate to the manger to the precise responsibility for the expenses incurred and revenue generated. They enable the top-level managers to keep track of all the financial results and activities within the business back to the particular employees. Through such, the company can be able to preserve accountability, and enable the calculating the bonus payments for an employee. The company is set to have four responsibility centers that will have different functions; the first will be a Revenue Center. This will be an entity that has the responsibility of generating sales (Atkinson, 2001). The Revenue Center would be the sales department. The second responsibility center is the Cost Center. This a group that has the responsibility of taking on certain costs. A cost center would be the janitorial department. The third responsibility center would be the Profit Center. This would be a group that is responsible for expenses and revenues (Atkinson, 2001), which will give rise to losses as well as profits. The Profit Center would be the Product Line, where the manager would be responsible. The final of the responsibility centers would be the Investment Center. It would have the responsibility of not just the profits, but also the regeneration of the funds invested within the operations of the group. The investment center would be the subsidiary entity (Atkinson, 2001). There would be a number of Responsibility Centers within a business, the operation of several Responsibility Centers would need an additional level of co-operating infrastructure, for the development of each of the centers. Cost Centers There are a number of ideas that would be effective in the reduction of cost centers in addition to cutting back on the drain of the company profits. The following are some of the ways that cost centers can be cut back: steer clear of several cost centers, and have one cost center manager. Such will guarantee that the managers are assigned to one cost center. If the mangers are not sufficient then the number of cost centers ought to be reduced to fit the available managers, nonetheless the eliminated cost centers ought to be those which can be combined with others since each cost center is essential for profit in the organization. Another idea would be the elimination of overheads. Such may include the renegotiation of conditions with suppliers, opting for more efficient modes of operation, and working smarter, which will allow each dollar to be saved. Each saved dollar will enhance the department. Another idea would be the development of a support strategy. An active role in the support of the company strategy will contribute towards the sale of more products in addition to services. For instance, the managers and employees can do their jobs in a manner that the company becomes more appealing to the customers. These are some of the ideas that can be implemented to cut back on cost centers. Conclusion Pricing decisions should be the result of a careful market segmentation. Differential pricing will increase customer profitability as that the organization maximizes its sales revenues. As an innovative product that helps lower the carbon footprint through reduced emissions, the carbon emission filter is likely to gain prominence and win customer loyalty, thus contributing immensely towards the profitability of the organization. My vast experience in managing both financial and human resources as well as my resourcefulness and innovative ability will enable me to make this product a success. I believe I can manage the company’s resources efficiently and determine the right optimal mix to achieve a quality competitive product that will sell in volumes at low costs thus improve the profitability of the company.On the other hand, business analytics has an essential role in the growth of a decentralized organization. To begin with, it would be instrumental to monitor the performance of each of the responsibility center and department. In addition, analytics would be instrumental in the identification of any problems or limitations within the organization. Analytics will also be in planning for the business such that patterns can be anticipated in advance. Business analytics is an essential tool for any business that wishes to step into the future, and ought to be regarded with such importance.
ReferencesAtkinson, A. (2001). Management accounting. Upper Saddle River, N.J.: Prentice Hall. EnergySage. (2018).How much do electric cars cost? Retrieved from https://www.energysage.com/electric-vehicles/costs-and-benefits-evs/electric-car-cost/ Galinato, G. I., & Yoder, J. K. (2010). An integrated tax-subsidy policy for carbon emission reduction. Resource and Energy Economics, 32(3), 310-326. Retrieved from https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=carbon+emision+automobile+tax+subsidy&btnG= Kumar, V. (2018). A theory of customer valuation: Concepts, metrics, strategy, and implementation. Journal of Marketing, 82(1), 1-19. doi:10.1509/jm.17.0208. Putra, Y. S. (2018). Analysis of differentiation strategies to create competitive advantages in facing global markets. KnE Social Science |
Spacing | Double |