Question

1-30 Strategic decisions and management accounting. Consider the following series of independe situations in which a firm is about to make a strategic decision, Managi Negotia Assess Evalus 2. e Decisions A running shoe manufacturer is weighing whether to purchase leather from a cheaper supplier in Orde. to compete with lower priced competitors. An office supply store is considering adding a delivery service that its competitors do not have. c. A regional retailer is deciding whether to install self-check-out counters. This technology will reduce the number of check-out clerks required in the store. d. A local florist is considering hiring a horticulture specialist to help customers with gardening questions, 1. For each decision, state whether the company is following a cost leadership or a product differentia- tion strategy 1-3 Res pre: get dit 2 For each decision, discuss what information the managerial accountant can provide about the source of competitive advantage for these firms. US

Answer 1

Ans1. a) Cost Leadership

b) Product differentiation

c) Cost Leadership

d) Product differentiation

Ans2.
Examples of information the managerial accountant can provide for each strategic decision follow:
a. _Cost to manufacture and sell the shoes with different leather.
_Productivity, efficiency, and cost advantages relative to competition.
_Prices of competitive shoes.
_Sensitivity of target customers to price and quality.
b. _Cost to sell a delivery service.
_Prices of the delivery fee.
_Efficiency of the shipping.
c. _Cost of developing and producing self-check-out customers.
_Efficiency of the self-check-out and waiting time.
d. _Cost to hire a horticulture specialist.
_Cash available to hire a horticulture specialist.
_Efficiency of the horticulture specialist.