Strtgi and Sustinbl unting - Literature review Example

STRАTЕGIС АND SUSTАINАBLЕ АССОUNTING Name: Professor’s name: Institution: Student’s name: Date: Question 1-Strategic Management The type of organization and industry does Ivory Delights want to compete in It is important to ensure that the company’s decision makers develop products and services that serve a wider community. As argued by Stanford (2007), the key context in which an organization operates is the industry or industries in which it competes. Rivalry among competitors is one of the most obvious forms of competition that Ivory Delights may want to compete in. Industries may produce similar products hence it calls for other differentiation strategies such as branding that will promote the survival of the competing industry. Such rivalry is most common in those firms that make similar products and services. Apart from that, the company may also want to solve the threat of new entrants. New companies normally come up with a more innovative products and services that tend to compete the already existing companies. Business strategy The business strategy most likely to be followed by the company is the competitive strategy. A company might decide to follow a given strategy depending on its size and the performance over a given a given period. According to Michael Porter, the competitive strategy can be properly implemented and is driven by some basic factors. First, the threats of new entrants have to be documented with the aim of ensuring the survival of the company. Secondly, the threats of substitute products and services need a clear interpretation in ensuring that the company can compete fairly in the market. Rivalry among existing firms has been recorded to be the greatest barrier towards the success of the small company. Operation under Pluto Pinnacle, which has been noted to produce quality products, Ivory Delights have ensured that quality remains one of its priorities. In 2001, the company was accredited with ISO 9002 which can be traced back to the improvement in its general Performance University of South Australia (2006). Ivory delights competitors and their strengths and weaknesses Some companies exist in Australia that offers competition to Ivory Delights. They tend to produce similar products but offers a variation in their branding process. Again, the company has faced much competition internationally by some other companies producing similar products. Nestle is one of the companies recognized globally for their quality production of pharmaceutical products. The company has its headquarter located in Switzerland. During the 2014 ranking, the company was ranked position 72 globally measured by the amount of revenue collected within the financial year. The company has so many strengths that have enabled it survive in most parts of the world. Most of its branches are located in Switzerland where most of the consumers of its products are. The company is characterized by the effective research and development capabilities. That enable it to compete globally in the most effective way. Some other strengths include unmatched product and brand portfolio, distribution channels and geographical presence, competency in mergers and acquisition as well as brand reputation valued as $7 billion. Despite the strengths of the company, it is still characterized by some other weaknesses. They include among others, the inability to provide consistent quality in food products and weak implementation of CSR (Weller et al., 2000). Some other companies that impose competition to Ivory Delights include the Amcor Company and Nupac Industries Pty Limited. These two companies have one of their strengths as proper time management, which quality has remained to be their weakness BPP Learning Media (Firm) (2015). The key issues that will affect future industry growth including any impacts. An increase in the interest rates was recorded to increase over a decade. That has limited the company from expanding due to its inability to get affordable loans from the banks. The high-interest rates have also deterred the company from investing in new capital and expansion. On the contrary, in case a fall in the interest rate could be realized, the company could be stimulated to grow which normally lead to innovation and higher employment levels. Apart from the interest rates, some other factors have been realized that impacts negatively on the growth of the company. Some of them include the fall in the currency strength and poor government interventions. These factors have resulted in the poor performance of the company for the last five years. Key issues affecting future industry profitability including any impacts Qualitative factors These factors consist of the net profits, sales earnings, and the merchandise costs. The company should tend to reduce the level of its expenses and promote the income. By doing so, it will be prudent to cost for most of its goods and services. The numbers of inventory matters too. Even though it is recorded as an asset on the balance sheet, it is not possible to record the sales revenue until the transaction has taken place. In some cases where the inventory has been devalued, it is possible that the profit margin is most likely to be hurt. It is imperative to get rid of inventory through increased sales as that can help the profit margins Lewis & Lewis (1996). Qualitative Factors These include those elements that affect the sale of any given product in the company. Such factors include the market share, effective advertising, company leadership, employees training and the competitive strengths. For instance, it remains crucial that the company should ensure that customer awareness is improved. That can be achieved by ensuring that it does effective marketing of its products. Lack of proper advertisement can lead to a reduction in the company niche hence a reduction in the market share. Ivory Delights' key stakeholders Ivory Delight is characterized by strong family value. The company value its sustainability more that the short-term profitability. The key stakeholders in the company include Darrell Lea, who is the general manager at Pluto Pinnacle. The founder of the business was Darrell’s grandfather who started the business over 50 years ago. The key stakeholders, therefore, constitute the family members who directly take part in the daily operations of the business. Question 2- Knowledge Management In the global economy, competition has been noted in different sectors such as the manufacturing sector. Such companies are more stressed than ever due to increasing complexity and plant incidents. It has been very important at the moment to analyze the ways of how to capture the knowledge from these professionals. It should then be made readily shareable before the expertise of their experience is lost forever. The captured knowledge should be made use of in the process of decision support applications that will enhance the role of the organization’s personnel in the event of abnormal conditions. For instance, the U.S National Institute of Standards and Technology estimated that the inability of effective knowledge transfer impacts much on the economy that translated to almost a loss of at least $2o billion a year. Different studies conducted by different scholars such as (Hernon & Altman, 2010) identified that making operational intelligence available enable companies to strive to manage better those conditions that minimize plant incidents caused primarily by human interventions due to insufficient knowledge, procedure, and operation errors. Commercial companies have gone to greater heights in finding out the importance of capturing the design and manufacturing knowledge early in the product development. At that point, the costs to identify problems and make design changes to the product are relatively cheaper. The achievement of each successive knowledge point depends on the preceding one as realized in knowledge-based systems, giving decision makers the knowledge they need at the right time they need it to make decisions whether to invest significant additional funds. Problems occur in programs when knowledge builds more slowly that commitments to enter product development or productions. The effects of the delay in the process of capturing knowledge can be debilitating. If a decision is made to commit to developing in the early stages. Any problem that arises can later be solved. Such processes are considered of much importance since they can lead to increasing in cost and reduce the quality. They should, therefore, be monitored effectively. Employees’ needs training on the knowledge based systems. Once they are trained, there is a reduction in the rate of errors that could be realized in the process of using the system. Again, training the employees reduces the level of resistance that could be realized in the process of implementing the knowledge-based systems. Being part of any given part of a project improves its performance and accepted. To be motivated, the employees has to be part of the implementation process as that will ensure that they are well factored in the process. Ways of improving knowledge capture Ivory Delights can decide to organize interviews with knowledgeable employees or to invite them to join the team. That is, however, dependent on the problems identified. The justification for is to elicit tacit knowledge accumulated in the heads of the experienced workers which normally provides the key to finding better ways of process improvement, in addition to new ideas and solutions provided by the innovative improvement team. It means that business improvement or innovation should be built on ideas elicited from knowledgeable and experienced people (Schellenberg, 1996). Due to this, the improvement team should include such experienced employees from the organization that could provide such new knowledge. Knowledge capture and knowledge creation are done by searching for or inventing new approaches and for ways that enable us to identify, elicit, and articulate unused knowledge hidden in the minds of its owners. Such new knowledge is gained from professionals and highly experienced individuals and groups of the individual. Such knowledge should be stored in both the primary sources and secondary sources to act as a form of reference and for future reference. Storage can be effected in the form of databases that will promote effective dissemination of information in the future (Chapman et al., 2007). Question 3 – Economic Order Quantity and Sustainability (20 marks) a. Economic Order Quantity is calculated using the formula below Q= √2DCO/CC In this case D = $ 7000 Co = $ 175 =√2x7000x175/95x0.05 Q=718 Units b. Total cost of ordering and storing at the Economic order Quantity and how many orders will be planned per year. i. Total Cost of ordering = D∕Qxco =7000∕718x175 =$1706 ii. Holding Cost = Q∕2xcc =718∕2x5 =$1795 Total cost = 1706+1795= $3501 Re-order level = Minimum stock level + lead time consumption If 365 days = $700 What of 30 days=30*7000/365*365 =209875 units Financial, environmental, social and broader issues to be considered when purchasing Availability of funds: Availability of funds will be able to determine the EOQ. Lack of funds may lead to the reduction of EOQ while efficient funds increase the economic order of quantity in an organization. Lead time: This also determines the EOQ, for example, a longer lead time may increase the re-order level of an organization to have a continuous flow of materials up to the next lead time. Government quotas or policy: When purchasing, and organizations need to consider the rules that govern its jurisdiction for instance during scarcity the policy may require quantities to be increased so that purchases are made in large quantities to have some materials being kept for use. Demand: The demand of materials will be able to determine the quantity required. When demand is high, the economic order of quantity will be increased to satisfy consumers’ needs while low demand reduces EOQ to avoid overstocking. Nature of goods: Some goods are perishable in nature while others are non-perishable. EOQ can be suitable for none perishable goods because they are easy to manage in terms of holding and storage cost. On the other hand, perishable goods may involve a lot of spendings. Question 4-Linear programming State the optimal confectionery treat mix and the resulting profit. The optimal treat mix is in the ration of 2:3:4. That would yield a profit amounting to $23,000 million. The product mix suggested by solver should be implemented so as to realize the profit as mentioned above. Question 5 – Transfer Pricing and Performance Management (20 marks) Based on the current information, the highest price that Ivory Delights should be prepared to pay for each box is $0.03 based on the suggestion that they plan to get a concession when they buy internally. However, is not in line with Ebony Boxes as the lowest cost they can over after variable cost is $0.04 as this is the full cost of production of the boxes. Outside increase on the sales prices of the boxes to $0.047 will reduce the internal transfer price of the boxes. It is mainly because Ebony boxes would have gained profit and thus saves on production cost. It will hence affect the variable cost limiting expense on production cost. However, if market conditions cause low demand on the boxes resulting in significant decrease in demand, there will be excess idle capacity within Ebony boxes. Normally bone boxes will not like this as there will be very low flow in business and with a stagnant sale there will be low profits and they might be forced to go into liquidation. It will thus make ebony boxes decrease their internal transfer price to pull interested parties like Ivory Delights who will want a reduction of the internal transfer price. That is important to create demand in the market as they will easily get to reduce the outside sales price to create demand. Allowing division managers to negotiate on the internal transfer pricing is in the best interest of the company as a whole. It lets them come to terms by negotiating the factors as involved such as the production cost and the outside sales price of the boxes. It lets them involved in mutual understanding and bargaining for the best interest of the respective companies. Further using a non-negotiable formula might not allow for price concession (De & Kramar, 2003). Question 6-Sustainability Sustainability reporting has been identified by most companies and organizations as a vital step towards the realization of a sustainable global economy Crawford & Di (2010). Due to the benefits realized from such reporting, the number of companies disclosing the financial performance realized to be on the increase. Most of these companies see sustainability reporting as a means that could easily promote innovation hence competitive advantage (Anderson & Vincze, 2000). The government normally depend on sustainability reporting to assess the impact of a given company to the development and growth of the economy. In understanding the contributions and issues that are being tackled by different players of the economy, the government, through different agencies have encouraged the idea of sustainability reporting. The health of an economy should be the responsibility of each and every citizen. For that to be viable, the presence of widespread sustainability reporting practices, which tends to create much transparency should be encouraged as they normally help markets to function more efficiently. Benefits realized from sustainability reporting Building trust Various scholars such as (Freedman, 2013), had argued that a loyal customer would come even if the competitor is providing better goods and services. That is normally attributed to the fact that trust can help in taking the company to a greater margin. In most instance, creating transparency about non-financial performance can help in reducing the reputational risk. It can also help to open up a dialogue with stakeholders such as customers, communities, and investors. The concept can also be of much importance in demonstrating good leadership skills. Creating openness and improving the level of accountability (Ireland et al., 2007). Improved processes and systems Processes that occur in the management could be easily examined and improved once there are accountability and openness. For instance, the level of communication is most likely to improve once there exist a clear definition of objectives and results. That will take the company to higher levels by reducing cost by putting measures and monitoring critical issues such as energy consumption, material use, and waste. Progressing vision and strategy Sustainability reporting can ensure that a comprehensive analysis implemented on the strengths and weaknesses of a given company. Once there exist an engagement with the stakeholders in the process of sustainability reporting, there exist a more robust and wide-ranging organization strategies and visions. Importantly, most companies have realized that they can incorporate sustainability as one of the integral parts of their strategies. Competitive advantage Due to sustainability reporting, companies are most likely to seen as leaders and innovators. They are always seen to be in a stronger bargaining position when it comes to attracting investment as well as negotiating contracts. Reducing compliance costs Regulatory obligations have become a threat to most companies and organization. Once the sustainability performance has been measures, companies can effectively meet the regulatory requirements that make them avoid costly breaches. They can gather necessary data in a more efficient and cost-effective way. Key measures Ivory Delights could include in its balanced sustainability scorecard Partner with NGOs and agencies to win stakeholders trust By including this component into the score card, the company is better placed in winning their customer loyalty. Once trust has been built between the company and its consumers, it becomes easier to its products and services to reach the market (Kachru, 2005). Combine the strategies to achieve maximum benefits Strategies such as cost leadership strategy can best operate once they are combined. A reduction in cost is most likely to realize once all the components that make up the company are properly managed and documented. Proactively engage in shaping the rules that benefit the society The society is the immediate agent that surrounds any organization. It becomes prudent for the organization or company to ensure that rules exist in a place that will ensure that the society get maximum satisfaction from the existence of the company. Differentiate based on first mover advantage In differentiating the various components of the products and services, it should be done by the demand of the first consumers of the various product and services (Doyle, 1997). References Anderson, C. H., & Vincze, J. W. (2000). Strategic marketing management: Meeting the global marketing challenge. Boston (Mass.: Houghton Mifflin. BPP Learning Media (Firm),. (2015). CPA Australia revision kit: Professional level. Chapman, C., King, R., & Corwin Press. (2007). Differentiated reading and writing strategies for elementary classrooms: A multimedia kit for professional development. Thousand Oaks, Calif: Corwin Press. Crawford, C. M., & Di, B. C. A. (2010). New products management. New York: McGraw-Hill Irwin. De, C. H., & Kramar, R. (2003). Human resource management in Australia: Strategy, people, performance. Boston: McGraw-Hill. Doyle, P. (1997). Marketing management and strategy. New York: Prentice Hall. Freedman, L. (2013). Strategy: A history. Hernon, P., & Altman, E. (2010). Assessing service quality: Satisfying the expectations of library customers. Hitt, M. A., Ireland, R. D., &Hoskisson, R. E. (2007). Strategic management: Competitiveness and globalization; [concepts and classes]. Mason, Ohio [u.a.: Thomson South-Western. Kachru, U. (2005). Strategic Management: Concepts and Cases. New Delhi: Excel Books. Lewis, G., & Lewis, G. (1996). Cases in strategic management: Australia and New Zealand. Sydney: Prentice Hall. O'Faircheallaigh, C., Wanna, J., & Weller, P. (2000). Public sector management in Australia: New challenges, new directions. South Yarra: Macmillan Education Australia. Schellenberg, J. A. (1996). Conflict resolution: Theory, research, and practice. Albany, NY: State University of New York Press. Stanford, N. (2007). Guide to organisation design: Creating high-performing and adaptable enterprises. London: The Economist. University of South Australia. (2006). BUSS 3023: Strategic management. Adelaide: University of South Australia, Document Services. Read More