Strategic Cost Aarhus University Summer Programme-2015 Course Title: Strategic Cost () Faculty: Parvinder Arora, Ph. D. Professor (Finance and Accounting) and Assistant Dean (Post Graduate Programs) S P Jain Center of, Sydney (Australia) Email Address: parzira@gmail.com Course Description The course has been designed for business/accounting/finance students who have completed Accounting/Cost Accounting course. This course builds on the tools and techniques learnt in Accounting/Cost Accounting. The course shifts the perspective of cost analysis from a tactical and short-run focus to strategic and long run issues. The relationship between management accounting/cost analysis and strategy is established by using different strategic management tools. Drawing upon strategic management concepts, the course analyses business problems from a financial perspective, and attempts to establish relationship between cost analysis and strategic management concepts like; value chain analysis, strategic positioning analysis, and cost driver analysis, thereby culminating into the theme of Strategic Cost (). evolves as a supporting tool for decision makers involved in planning and implementing organizational strategies. Primarily, the course attempts to make students appreciate the strategic alignment of cost accounting information. Learning Objectives/Outcomes 1. Developing a fresh perspective to understanding and analyzing of familiar business problems and cost concepts 2. Revisiting some of the conventional cost/management accounting concepts and linking it with the strategy of the firm. 3. Understanding how cost/management accounting information that affects the strategic and operational decisions within the organization. Prescribed Reading: Blocher, E.J., et al (2012), Cost : A Strategic Emphasis, Irwin/McGraw-Hill (6 th Ed)
Supplementary Reading: Shank, J (2006) Cases in Cost A Strategic Emphasis. South-Western Detailed Session Plan Session Theme Focus Readings Cases 1) July 2 Thursday 2) July 3 Friday Cost/ Accounting: Relevance and Issues Aligning Information Strategy Cost and Current Issues in Cost Accounting Strategic Cost Analysis Vs. Conventional Analysis NO CLASS Accounting Lag: The Obsolescence of Cost Accounting Systems Note on Confrontation Strategy Chapters 1 Making Strategy Explicit in Cost Analysis: A Case Study. Chapter 11-12 SAYURDAY/SUNDAY Mueller-Lehmkuhl GmbH Baldwin Cycles Mavis Machine Shop 3) July 6 Monday 4) July 7 Tuesday Aligning Information Strategy Strategic concepts and Cost and CVP Analysis Revisited Chapter 9 Skyview Manor Value Chain Analysis and Strategic Cost : The Value Chain Perspective How Chrysler Created an American Keiretsu, Jeffrey H. Dyer Chapters 2 Dairy Pak
5) July 8 Wednesday Strategic concepts and Cost Driver Analysis and Activity Based Costing What Drives Cost? A Strategic Cost Perspective Time Driven ABC Morrissey Forgings Wilkerson Co 6) July 9 Thursday Strategic concepts and Strategic Positioning and Chapters 3,5 American Investment Services (AIMS) NO CLASS FRIDAY/SATURDAY/SUNDAY 7) July 13 Monday 8) July 14 Tuesday Control and Strategic Profitability Analysis Activity-Based Budgeting Stage IV: Using ABC for Budgeting and Transfer Pricing Profit Variance Analysis conventional Vs Strategic Context Tijuana Bronze Machining Chapters 15 Kinkead Equipment Software Associates 9) July 15 Wednesday 10) July 16 Thursday Creating Customer Value Through Cost Creating Customer Value Through Cost Target Costing Value Chain and Target Cost Life Cycle Costing and Control Tomorrow's Costs Through Today's Designs Chapters 13 Montclair Deep Colors Chapter 13 DEC and Minicomputers Dulux Lamps
11) July 17 Friday Creating Customer Value Through Cost Quality Cost Measurement and Chapters 17 Chalice Wines NO CLASS SAYURDAY/SUNDAY 12) July 20 Monday Sustaining the Cost Initiative- Aligning Performance to Strategy Balance Scorecard and EVA Using the Balanced Scorecard as a Strategic System The Balanced Scorecard: Measures That Drive Performance To be decided 13) July 21 Tuesday 14) July 22 Wednesday Group Presentations on the assigned Cases Group Presentations on the assigned Cases Chapter 2, 18 Cases/Topics will be assigned to different Groups. Each Group will make a 20 minutes presentation on case analyses followed by Q&A Cases/Topics will be assigned to different Groups. Each Group will make a 20 minutes presentation on case analyses followed by Q&A Pedagogy: The most important requirements for this course are a thorough preparation and analysis of the assigned case and reading materials and active participation in the classroom. The course is built almost exclusively around the case method. Only the assigned cases will be discussed in the class (not the assigned readings) but the readings will help students in tackling the case. I expect students to have already thought through and analyzed the cases when they come to class. This way, we can devote the bulk of the class time to thinking about, and responding to, each other's analyses of the cases and only the necessary minimum to getting the facts out. Each student group will be assigned one case each for making presentations. The presentations are expected to be based on detailed analysis of each case. Each group is expected to make presentations using ExcelSheet/PowerPoint/other multi-media. All the groups are
required to hand in written case solutions before class starts. If, for some reason, you must miss class, e-mail me your case solution before the start of class. Failure to follow this particular instruction will result in a grade of zero for the presentation. Case solutions should include a cover page, a summary of case facts, and case questions with individual question solutions. If you make assumptions, state them clearly. With the possible exception of the wrap-up period at the end of each class, note taking is unnecessary. The instructor will provide notes summarizing the key issues raised in each session in the class. Guidelines for Case Presentations Witten case analysis to be submitted not exceeding 8 pages, double-spaced, exclusive of exhibits, using 12-point Times New Roman font. PowerPoint presentation not exceeding 10 slides. Wherever the material has been referred to (e.g. published papers, articles, books or website), citation to the source must be shown in the text itself. This is very important. Each Group will get maximum 20 minutes for presentation followed by Q&A. Evaluation: 1. Case Analysis and Presentation* 20 Marks (Submission/Presentation of Case Analysis) 2. Quizzes 20 Marks (To be conducted during the course) 3. End Term Test 60 Marks *(To be evaluated on the basis of quality of case analysis, reference to other materials, balancing the content, not-too-much and not-tooless,and quality of presentation) Readings: 1. Kaplan, Robert (1986) Accounting Lag: The Obsolescence of Cost Accounting Systems, California Review, Vol. XXVIII, No. 2. P 174. 2. Cooper, R. (1994) Note on Confrontation Strategy, Haravard Business Publishing, Product No. 9-195-105 3. John K. Shank and Vijay Govindarajan, (1998) Making Strategy Explicit in Cost Analysis: A Case Study, MIT Sloan Review, Vol. 29(3): 19-29 4. John K. Shank and Vijay Govindarajan (1992) Strategic Cost : The Value Chain Perspective, Journal of Accounting Research, Volume 4, Fall.
5. Jeffrey H. Dyer (1996) How Chrysler Created an American Keiretsu, Harvard Business Review, July. 6. John K Shank and Vijay Govindarajan (1993) What Drives Cost? A Strategic Cost Perspective,, Advances in Accounting, Vol 2, pp. 27-46 7. Robert Kaplan, Time Driven ABC, Harvard Business Review 8. Robert S. Kaplan and Robin Cooper (1997) Stage IV: Using ABC for Budgeting and Transfer Pricing, Harvard Business Press, (Product number: 1610BC-PDF-ENG) 9. Robin Cooper and Robert S. Kaplan (1998) The Promise-and Peril- of Integrated Cost Systems,, Harvard Business Review, July. 10. Using ABC to Manage Customer Mix and Relationship, Harvard Business Press (Product No. 9-197-094) 11. Robin Cooper and W. Bruce Chew (1996) Control Tomorrow's Costs Through Today's Designs,, Harvard Business Review, January. 12. Robert S. Kaplan and David P. Norton (2007) Using the Balanced Scorecard as a Strategic System,, Harvard Business Review, July. 13. Robert S. Kaplan and David P. Norton (2005) The Balanced Scorecard: Measures That Drive Performance, Harvard Business Review, July. Cases: 1. Mueller-Lehmkuhl GmbH, Harvard Publishing (9-187-048) 2. Baldwin Cycles, Harvard Publishing (TCG 001) 3. Mavis Machine Shop 4. Dairy Pak 5. Morrissey Forgings 6. Skyview Manor 7. American Investment Services (AIMS) 8. Wilkerson Co, Harvard Publishing (9-101-92) 9. Tijuana Bronze Machining 10. Kinkead Equipment 11. Software Associates, Harvard Publishing (9-101-38) 12. Montclair Deep Colors 13. Chalice Wines 14. DEC and Minicomputers 15. Dulux Lamps