Mas-Cadel Specialty Bicycle

Cadel Specialty cycle counseling history plaques ACCT2195 Name Nguyen siamese connection Son ID S3296794 Lecturer Keshav Dayalani Table of Contents Executive Summary3 Introduction4 I. Cadel Specialty Bicycles (CSB)5 A. bank line mission5 B. Mean of competitive advantage6 C. Key mastery Factors (KSFs)8 II. Management news report System of CSB9 ?Personnel9 ?Sc ar resources10 ?Activities11 III. instruction execution criterion & come back System (PMRS) and its spots11 1. The factors to be measured12 2. A specific writ of execution target12 . A strengthener attached to the mathematical execution of instrument target12 IV. Limitations of real PMRS14 A. Limitation14 B. Dysfunctional demeanor15 V. Recommendation for new PMRS16 Conclusion17 References18 Appendix20 Executive Summary Cadel Specialty Bicycle (CSB) is a advantageful descent of which nature is made-to- ordinate oscillations. In dissimilar words, from each one bicycle of CSB is assembled in accordance with nodes specification. The bloodline aims to target on the niche grocery shop class in which al near populate atomic be 18 committed cycling partisan.Due the achiever of the premiere livestock placed in Doncaster, Victoria, Australia, CSB has recently expand its occupancy by opening ii new stores located in Geelong & B insufficiency Rock and each store has different authorisation in the track of formulatement . However, CSB has faced problems of military group & resources management because the tune had not applied the suitable strategies within the expansion. Although, the keep company plans to implement a new management accounting arrangement (MAS) to turn to with these problems, at that place still argon shadowynesses contained in the new MAS.Hence, the objects of this overcompensate atomic number 18 analyzing the received governance and pointing new suitable MAS for the vocation. The first demonstration of the brood is Background & Current ready of CSB, which is use as a footing for developing suitable MAS. The business mission of CSB, classified as dubiety mark, is building as rise up as increasing the market dispense. CSB creates its competitive advantage base on the specialism of product/ usefulness and the niche market. However, CSB has not reached the Cost-cum-Differentiation advantage yet.CSB whitethorn focus on the basketb all(prenominal) team key success factors (KSFs) including worthy(ip) decentralization & measurement of buss slaying, well(p) relationship with providers, Establishing appropriate apostrophizeing system & minimizing follow, Maintaining the highest level of guest satisfaction and Product & Service Quality The second part of the traverse focus on evaluating the piece as well as benefits of tools/techniques of current MAS in attendanting the business in term of of personnel, appal resources and activities.Next, the role of Performance measurement & pay system (PMRS) within the busines s is intelligibly analyzed in relation to guiding & wantal shapes on behavior. The report in any case states the limitations of the current PMRS which capabilityly leads to dysfunction behaviors. Finally, the report result suggest the suitable PMRS for the business which may effectively & efficiently support CSB in the track of its success. Introduction One of the most essential factors which guide organizations and businesses toward success is management accounting system (MAS).It is always a smart decision for business to apply integrated MAS which provides accurate analysis report by gathering financial data from movements (sales, inventory & represent). As a result of having MAS, business gains sufficient advantages in streamlining operations procedures, reducing comprise and building capital for expansion. Refer to the case of Cadel Specialty Bicycle (CSB), the business mainly focus on selling made-to-order bicycles and guaranteeing the product/ swear out quality.Aft er the expansion ( cardinal new stores), the business seems to get into trouble with management as well as operation. This report will demonstrate the business analysis, rate the current MAS as well as suggest new potential/appropriate MAS. I. Cadel Specialty Bicycles (CSB) A. Business mission Business mission, which usually reveals enjoyment of operation, appraise and priorities of company (John&Richard 2009), open fire be considered as a primordial factor in conducting appropriate MAS for the business.The following criteria will all the way exemplify the current mission of CSB (build, hold, harvest, divest) * Importance of externalities One factor that significantly contributes to the potential development of CSB is the external environment. Recently, bike paths confine begin popular slightly Melbourne as muckle tend to reduce using cars. Therefore, in that respect has been a significant growth in the market for bicycles. Utilizing the bike paths, CSB opened twain new stores (Black Rock & Geelong) which seem to have great potential for development. * grocery store sh be expectationDue to the well establishment, Doncaster store (touring bikes) is highly chartered by nodes that provide the store many opportunities to develop. Besides, Geelong store (mountain & touring bikes) alike has great potential thanks to its plus location although the demand is not yet as high as at the Doncaster store. As a result of having great potential, the marketplace share expectations of the two stores seem to be high. Although CSB does not own a outsize part of the bicycle market at the moment, the business has a square growth rate.Base on facts of the case, CSB aim to capture a significant balance wheel of this growth in the future. Boston Consulting Group Model relative Market Share (cash source) rush = Hold Mission = Harvest Mission = Build Dog Mission = Divest High High menial Low Star Question mark Cash cow Market growth rate (cash user) Overall, CS B has high Market growth rate epoch owning low market share. Hence, the business can be classified in to Question mark and the business mission of CSB is building as well as increasing the market share. B. Mean of competitive advantage agonistical advantage is a special characteristic that a business has over its competitors, enabling the business to gain greater sales or profit within the competition. The two common competitive advantage options, which have been applied by CSB, are Differentiation & quoin market. * Differentiation CSB differentiates its products & aids ground on real criteria which are Function & Customer service. * Function Unlike normal bicycle business, CSB primarily applies the made-to-order function for all three stores which assemble customized bicycles based on customer specifications.In order to picture the timing & success of this approach, a large inventory of different bicycle parts is held by each CSB stores. * Customer service CSB puts much effo rt on the operating customer service as well as interacting with customers. Cadel- CSB owner spends significant judgment of conviction in taking care of stores day-to-day operations and often engages at once with customers to make sure that customers can purchase sought afterwards bikes. CSB likewise sets a limit for the waiting conviction ( cartridge clip for customized bicycles to be procurable) which are less than two days of the initial consultation.The applied post-sale service is transaction the customer after a week of taking possession of CSBs products to ensure the customers satisfaction, and offering free-of-charge changes if necessary. Additionally, free lifetime after-sales service is also offered in which customers only have to pay for parts required. * Niche Market CSB targets on specific segment of market which is cycling enthusiast through the offer of customized bicycles. This customer group willing to spend more for qualified & desirable product Business c ompetitive advantage coition Cost Position Cost-cum-Differentiation Advantage Stuck-in-the -middle Differentiation Advantage Low-cost-Advantage Superior deficient Inferior Superior Relative Differentiation Position Although CSB gains moderate differentiation advantage, the business did not consider much about the costing system (estimating price without real cost data). Therefore, CSB has not reached the Cost-cum-Differentiation advantage yet. C. Key Success Factors (KSFs) In order to construct appropriate & efficient MAS, business may consider the essence of critical KSFs which determine its success (cost and efficiency, quality, time, innovation).Gaining sufficient familiarity of KSFs will support the business to define the necessity of promoting strengths and competencies that match those factors in order to gain competitive advantage and achieve the business success (Jorge&Donald 1989). Refer to CSB- a growing business with great potential, certain KSFs would be as the follow ing * Product & Service Quality Cadel spends considerable time in training the store coach and often personally assembles & checks the customized bicycles to ensure the Service & Product quality.As a result, CSB is currently well known as a business providing high quality, customized bicycle. * Maintaining the highest level of customer satisfaction large-minded customers more than they expect is the basic concept of this issue. As Cadel believe that narrow customer service is a KSF of CSB, he put many efforts in maintaining the customer satisfaction such as calling the customer after a week of possession, offering free lifetime after-sales service & restrain the waiting time (2days). Establishing appropriate costing system & minimizing cost A weakness of CSB is that the business operates without real cost data. Hence, establishing suitable costing system has become a fundamental mission in the track of arriver success. Besides, CSB has to consider cost minimization to achieve C ost-cum-Differentiation advantage. * Good relationship with suppliers Since the expansion, the demand for supplies of CSB has increased due to the requirement of more inventories for the two new stores. Therefore, finding and maintaining in force(p) relationship with suppliers is also essential. Proper decentralization & measurement of managers performance It is essential that Cadel distributes the authority to store managers properly because the business structure has become more complicated since the expansion and Cadel cannot play all roles of the business. II. Management Accounting System of CSB In order to solve the problems arisen from the expansion, Cadels brother has suggested Cadel to develop a MAS which significantly supports the business management in term of personnel, scare resources and activities. The following analysis will demonstrate the roles & benefits of each tool include in the MAS Personnel * Supplier performance measures (SPM) SPM is a critical chess openin g for business dealing with multiple suppliers. The main role of SPM is integrating supplier quality which dish ups the business have accurate visibility toward supplier talking to and avoid hidden cost drivers from poor quality. As a result, SPM directly decreases business risks and revenue losses Besides, SPM is a vital tool for cause improvement and ensuring that products meet the required standards. SPM also supports in determining good suppliers so that CSB can maintain relationship with those suppliers.Related KSFs Product quality Good relation with supplier * Responsibility accounting system (RAS) RAS is used as an internal system which improves cost control and businesss performance. Its main role is ensuring the responsibility of individual managers toward chemical elements of business performance in which they gain control. In RA, each store/department will be assigned certain stated goals and relevant managers will be resolved on how well they meet the goals. As a res ult, CSB is able to detect the weak areas within the business and make correction properly Related KSF Proper decentralization & measurement of managers performance Scare resources * Net Present look on (NPV) analyses NPV is an efficient order used in determining capital enthronization decisions. A potential project should be proceeded if its NPV value is positive unless there is a superior enthronisation option offered. NPV allows CSB to make proper investment decision and invest in worthwhile projects because NPV does not only wager the net cash flow from the project but also considers miscellaneous associated factors like time value of money, opportunity cost & risk of likely cash. Related KSFs Minimizing cost cost system The main role Costing system within MAs is collecting, analyzing & reporting the cost data that enables the owner and managers to reminder cost for reducing wastage and misuse of resources. Within the operation of business, it is easy to see direct cost s which associate with particular activities. However, indirect costs are those incurred in common or joint objectives so it cannot be clearly identified with particular activities. In order to assign indirect cost to projects accurately, Activity base costing system (ABCS) should be applied.ABCS is an efficient method which calculates and reduces operating the cost by finding key activities and its cost drivers. Consequently, the cost can be assigned accurately and the costing system can operate smoothly. Overall, costing system enables CSB to view all expenditures and manage its cost effectively Related KSFs Establishing appropriate costing system & minimizing cost * cipher preparation The core role of Budget within CSB is tracking all of the money coming into the business along with all of the money loss out.The budget can be designed to be detailed replete to cover numerous streams of income & expense. Establishing proper budget can significantly support the business in plann ing the use of resources, need individuals to achieve performance & supporting forecast. * Activities * Inventory management system Economic Order bar (EOQ) The main role EOQ ride is providing the most economical quantity of items which CSB should order to maximize value & minimize costs when re-stocking inventory.Applying EOQ does not only religious service the business to reduce Storage & Holding cost but also support in maintaining sufficient inventory levels to meet customer demand. It seems that customer service can be improved as inventory is available when undeniable. Related KSFs Establishing appropriate costing system & minimizing cost Maintaining the highest level of customer satisfaction * Profit and loss statements (P&L) P&L is one of the major(ip) financial statements which clearly demonstrate the profitability (revenue, expenses and profit) of the CSB during a specified time interval.Hence, the basic role of P&L is indicating whether the business is profitable or not. Conducting a proper P&L can enable CSB to tick the areas needing improvement and provide an overall idea of how much the business owes compared to how much it owns. Besides, a truthful P&L report can also support CSB in planning ahead to the next financial period. III. Performance measurement & Reward System (PMRS) and its roles Performance measurement is a crop of gathering & reporting nformation regarding the performance of the business & individuals. To be effective, Performance measurement must be flowd with Reward system and the rewards provided are based on performance. The overall role of PMRS is to periodically monitor performance to judge how well the business is running and motivate the personnels performance by Reward system. Both performance measure and rewards provide directional and motivational influence on behavior. However, each element of PMRS has its own roles which balance the system.PMRS contains three elements 1. The factors to be measured The first e lement clearly demonstrates the factors which will be measured in order to communicate important aspects of the business toward employees. Thanks to that, employees are able to concentrate their manoeuvre into informed aspects/areas * directive influence on behaviour is mainly fulfilled by the roles of the first 2 elements (Measured factors & Performance target). Within this method, employees are directed to achieve the desire behaviours. 2.A specific performance target The main mission of the second element is narrowing the targeted aspects into specific tasks/activities so that employees can focus, put effort and run these tasks. Besides, the provided criteria in the system is also a base for owner/manager to provide feedback to improve future performances 3. A reward attached to the performance target The Reward system is based on the concept of attracting, retaining and motivating people. As employees can be motivated by intrinsic (e. g. imp esteem) and extrinsic rewards (e. g. bonus), monetary reward is not the only important atom of the Reward system. There are other factors which also efficiently advertize employees in improving performance. Based on Theoretical Framework (Khan KU, Farooq SU & Ullah MI, 2010), there are generally four main unconditional variables of reward which are payment, promotion, recognition and benefits. Promotion seems to be the most efficient motivation as almost people tend to have ambitiousness of getting punter positions in the business/company.Moreover, different reward strategies would have a different motivational impact on diverse people. By providing attractive incentives, Reward system encourages individuals to actually undertake the tasks with intensive willing. According to Khan KU, Farooq SU & Ullah MI, 2010, there is a statistical significant relationship between all of the independent variables of reward with dependent variable employee work motivation, all the independent variables of reward have a posi tive influence on employee work motivation.Overall, Reward system plays role as a way of having people work harder. * motivational influence on behaviour, meaning individuals are motivated to intentionally acquire the desired behaviours, is mainly achieved by the role of the third element which is Reward system. In this case, CSB applies reward strategy in term of bonus providing to each store manager up to 20% of their tracely income * get together sales budget * Bonus of 2% of managers quarterly income if they meet the sales budget for each quarter. * Meeting profit budget Bonus of 10% of managers quarterly income if they meet the profit budget, prepared at the start of each quarter * Achieving booming cost variances * Bonus of 4% of managers quarterly income if all favourable variances are less than 10% of the initial budgeted cost * Bonus of 8% of managers quarterly income if all favourable variances are 10% or more of the initial budgeted cost. * Directional influence su pports individuals in focusing on the targeted areas and tasks. Besides, Motivational influence helps employees to do the work voluntarily and put much effort to successfully accomplish it.Moreover, Motivational influence is almost always less intrusive than Directional influence. As a result, the businesss personnel cannot be well managed without the combine of Directional influence & Motivational influence. IV. Limitations of current PMRS A. Limitation B. Dysfunctional behavior * Dysfunctional behavior means that individuals within the organization/business do not function properly in accordance with the organizations direction. Dysfunctional employee behaviors often occur due to the rapaciousness of individuals or remainder between employees interest and the organizations interest.The general purpose of Dysfunctional employee behaviors is gaining benefits (either for personal or department) from organizations gaps. * In this case, as a result of lack of measurement in input and process stage, managers have opportunities to engage in Dysfunctional behavior. It can be explained by the following situation * If there is no mechanism for monitoring the body between input and output, managers may provide unreliable report which shows that they have reached the performance target and deserve rewards. Lack of input measurement also leads to the problem that managers purchase low quality material to reduce operations costs in order to reach the defined cost target. Consequently, its very difficult to discover such Dysfunctional behaviors without proper measurement. V. Recommendation for new PMRS Besides the Performance measure, several common Reward strategies are also suggested below Conclusion As MAS is essential for businesss operation, CSB cannot successfully expand its business without proper MAS. However, the new MAS, which CSB has aforethought(ip) to implement, still has several weaknesses.Therefore, the main purposes of this report are evaluating the curr ent position (Business mission, Competitive advantage & KSFs) and current MAS (including PMRS). The report also suggests the potential PMRS for the business. References Competitive Advantage, 2012, Investopedia US, viewed 28 July 2012, . Daniel, H, 2011, Benefits of NPV, BenefitOf, 27 July, viewed 28 July 2012, .John, AP II & Richard, BR 2009, strategic management Formulation, Implementation, and Control, 11thedn. , McGraw Hill, Singapore. Jorge, AS & Donald, CH 1989, Key success factors Test of a general theory in the mature industrial product sector, Strategic Management ledger, vol. 10, no. 4, pp. 367-382. Khan, KU, Farooq, SU & Ullah, MI, 2010, The Relationship between Rewards and Employee, Research Journal of Internat? onal Stud? es, May, Issue 14, pp. 37-42. 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Appendix * Porters Five Forces model for supporting an analysis of external environment Threats of New Entrants Bargaining Power of Suppliers Bargaining Power of Customers Rivalry among Industry Competitors * Porters value chain analysis for supporting an analysis of internal environment jut Production Marketing Distribution Support Activities Finance, HR, Legal, IT Motivational influences A number of important motivational influences playing a strong role in enc ouraging employee include * Job scope.Improving or enriching the nature of a conjecture substantially reduces absenteeism. * Stress and conflict. Levels of absenteeism are higher in situations of job stress, anxiety, tension, and lack of role clarity. * Leadership style. Your leadership style affects attitudes that affect absenteeism. * Co-worker relations. interchangeable tolerance and the absence of tensions among co-workers have a positive effect on attendance. * Pressures to attend. The economy and job shortages will influence a person to be more conscientious about job attendance. * Work group norms.When members of a highly cohesive group view coming to work to help co-workers as a desirable work ethic, job attendance is attractive. * ain work ethic. A high regard for work as a personal value positively affects job attendance. * Organizational commitment. Compatibility with the mission, goals, and values of the organization has a positive impact on attendance. You can affect most of these motivational factors significantly by the way you manage your department and contend your employees. By encouraging open communications, by making employees feel needed and appreciated, by making their jobs as