Actual pricing practice: various management accounting techniques within organization - Essay Example

Order 202549 Actual Pricing Practice: Various Management Accounting Techniques within Organization A Research Paper Presented to The Faculty of In Partial Fulfillment Of the requirements for By TABLE OF CONTENTS Page Chapter 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background of the Study . . . . . . . . . . . . . . . . . . . . . . . Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . Significance of the Study . . . . . . . . . . . . . . . . . . . . . . . Theoretical Framework of the Study . . . . . . . . . . . . . . . . . Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DEFINITION OF TERMS . . . . . . . . . . . . . . . . . . . . . . 2. REVIEW OF RELATED LITERATURE . . . . . . . . . . . . . . . . RELATED LITERATURE . . . . . . . . . . . . . . . . . . . . . . 3. METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Research Method . . . . . . . . . . . . . . . . . . . . . . . . . Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statistical Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 4. PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA . Data Analysis on Data Analysis on Data Analysis on 5. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS . . . . SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treatment of the Data . . . . . . . . . . . . . . . . . . . . . . . . . THE FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Testing Hypothesis No. 1 . . . . . . . . . . . . . . . . . . . . . . . Testing Hypothesis No. 2 . . . . . . . . . . . . . . . . . . . . . . . CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 1 INTRODUCTION Background of the Study Introduction Pricing, essentially a management decision is largely dependent upon accountants' estimation after cost analysis (Hornegren 1984, 82). Consumers, market players, and overheads are the threefold issues that manipulate pricing choices according to Horngren, Charles T., a Certified Public Accountant, and Doctor of Philosophy at Stanford University (Hornegren 1984, 82). Consumers have discretionary sources of goods and services all the time if sellers' prices are far above the inference of buyers (Hornegren 1984, 82). On the other hand, market players frequently respond by manipulating their own prices whose trend was set by the other participants, while costs is the ceiling price that drives purchases (Griffiths & Wall 1995, 188). Given a firm's objective to make the most of profits, prices may also be maneuvered based on the market structure where the particular firms exist. This is pointed out by recent research results showing how individual companies actually price goods and services. Griffith and Wall (1995) identified "costs, market-share strategies, phase of the product life cycle, degree of product differentiation, product line and prestige pricing strategies, and role of distribution" as regarded factors in pricing (Griffiths & Wall 1995, 188). Furthermore, costs of production as input determines primarily production and pricing decisions despite the consequences of market circumstances because maximum profit is every business object (Mankiw 1998, 264). Total revenue = Total cost + Profit (Mankiw 1998, 264). Statement of the Problem This study was concerned mainly in finding out various management accounting techniques within organization as regards actual pricing practice. Specifically, the investigator was directed to answer the following questions: 1. What are the various determinants of pricing within organizations 2. What are the influences management accounting techniques 3. Is there a various Management Accounting Techniques within organizational pricing using Plasma Television 50 in. Significance of the Study In a country like UK, the need for management accounting experts is vital; hence it becomes imperative to extend present day knowledge on techniques utilized by organizations as regards actual pricing practice. Likewise, the researcher believed that the findings of this study will help managers develop pricing accounting techniques apt for the recent market strategic developments. Furthermore, the baseline data gathered from the results of this study shall serve as guide for other researchers in their quest for additional knowledge especially those interested in the field of Management Accountancy. Theoretical Framework of the Study Pricing affects product positioning, market segmentation, demand management, and market share dynamics (Day and Montgomery 1983, 44-45; Nagle and Holden, 1995). Price must be governed inclusive of increasing cost and revenues, and with fluctuating currency values (Clark, Kotabe, and Rajaratnam 1999). Firms price categorically, making the most of the variety in taste, price sensitivity, and supply (Clark, Kotabe, and Rajaratnam 1999). However, pricing data, pricing data theories, and pricing being a non-academic sphere of influence fostered much difficulty in creating a reliable pattern (Lessard and Zaheer 1996, 513-33). The writer holds similar idea as those of the advocates and hopes to draw upon archival data online to show pricing strategies among some firms. Hypotheses 1. There is no various Management Accounting Techniques within organizational pricing using Plasma Television 50 in.. Scope and Delimitation of the Study This study focused on the actual pricing of the Plasma Television 50 in. in the selected electronic companies such as: Panasonic, Samsung, Hitachi, and Toshiba. The number of merchants was also studied in this research. This is done to identify the various management accounting techniques within the organization pricing. DEFINITION OF TERMS ""Sellers" are not restricted to persons who are exclusively in the retail or distribution business. A manufacturer is also a seller when he is distributing his products. This study is concerned with the pricing of products; hence the general term "seller" is used to designate anyone who has to price his products at any level of distribution. " (Thin 1960, 6) Chapter 2 REVIEW OF RELATED LITERATURE The researcher went over a number of literature and studies relevant to the present study in different public and private libraries. The literature studies which have bearing to the present day study are herein cited. RELATED LITERATURE Price should not be the foundation for competing in the market, instead, leave market share for revenue to increase profitability (Lewis 1995, 162). Rather than lowering prices to meet competition, raising prices with a tolerable drop in the market share would be an acceptable trade-off (Lewis 1995, 162). In the market, there are four cases of competition that are only differentiated by characteristic changes on two fundamental conditions: the homogeneity of the product and the number of firms (Thin 1960, 8). Reginald Lewis (1995) said:" The name of the game was to hold market share, not increase it at any expense. It was equally important to hold an increased price and moderate the level of increases, and to hold the line on expenses (Lewis 1995, 162). Chapter 3 METHODOLOGY This study presents the research method, study area, experimental materials, data collection, and statistical treatment used to test the null hypothesis. The Research Method This study made use of the archival method of research as it was aimed at ascertaining various management accounting techniques within organization as regards actual pricing practice. Research Instrument There was no primary research instrument used in this study. Documentary method instead was followed in discovering the various management accounting techniques within organization as regards actual pricing practice. Research procedures The researcher collected and gathered the data from different books, journals, magazines, corrected thesis, corrected dissertations and online data. The informational data required were limited to Plasma television 50 inches only, which is primarily available in the online market. The data were tabulated and computed using Microsoft Excel. Statistical Treatment In treating the data statistically the researcher utilized the following: 1. Average Mean = This is used to measure the average of the actual pricing of the plasma television 50 in. of the four selected electronic companies. Formula Average = frequency/ number of observation 2. Probability = This is used to determine the probability of the number of merchants and number of notes/coupons compared to the selected companies such as Panasonic, Samsung, Hitachi and Toshiba. Formula : P(x) = f/n where : f = frequency and n = total number of population Chapter 4 PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA This chapter puts forward the presentation, analysis and interpretation of the data collected. The questions identified in the problem are used as the bases for the presentation. The sequence of the structure includes table, analysis and interpretation of the data of the current study. PRESENTATION OF THE STUDY Actual Pricing of Plasma Television of the selected electronic company. Panasonic TH-50PZ750U Television Panasonic 50 in. 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Plasma TV HDMI Widescreen TV HDTV - On/Off Timer Video Noise Reduction, Simplayhd On-screen Menu Sort by: Merchant Total Price Notes/Coupons $1,498.00** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 accessorize with affordable starter kits $1,399.99** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 1 Coupon & DealHide Coupons & Deals 36 months no interest on all tvs $999 & up $1,497.10** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 affordable accessory kits to get started Amazon.com $1,448.06** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 get free shipping on orders over $25! 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Abes of Maine $1,445.55** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 PreferredPhoto.com $1,145.00** does not include tax/shipping * Unknown Tax * Add $199.99 Shipping to 00610 Sears $1,299.99** does not include tax/shipping * Unknown Tax * Add $54.95 Shipping to 00610 Camera Addict $1,145.00** does not include tax/shipping * Unknown Tax * Add $199.99 Shipping to 00610 CompUSA.com $1,399.99** does not include tax/shipping * Unknown Tax * Free Shipping to 00610 order now-ships today Toshiba 50HP66 Television 50 in. Plasma TV 720p - HDTV, HDMI - Widescreen HDTV HDMI Type A Composite video/audio output, Audio line-in, Composite video/audio... Sort by: Merchant Total Price Notes/Coupons Amazon.com $1,949.46** does not include tax/shipping * Unknown Tax * Add $190.22 Shipping to 00610 get free shipping on orders over $25! 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Sort by: Merchant Panasonic Samsung Hitachi Toshiba 1oneCALL $2,299.99 $2,099.99 $0.00 $0.00 Circuit City $2,499.99 $2,299.99 $1,399.99 $0.00 Beach Camera $2,214.00 $0.00 $0.00 $0.00 TigerDirect $2,487.49 $0.00 $0.00 $0.00 BESTBUY $2,699.99 $2,399.99 $0.00 $0.00 buydig.com $2,214.00 $0.00 $0.00 $0.00 Crutchfield $2,299.99 $2,499.99 $0.00 $0.00 Amazon.com $2,449.98 $2,299.98 $1,448.06 $2,139.68 Newegg $2,299.99 $2,899.98 $0.00 $0.00 Monitor Outlet, Inc. $2,440.99 $2,217.99 $1,731.99 $0.00 Vanns.com $2,299.88 $0.00 $1,479.88 $0.00 AboutGizmos.com $2,714.00 $0.00 $0.00 $0.00 Appliance Best Buys $2,349.99 $2,103.95 $0.00 $1,849.98 OurStore.com $2,359.00 $0.00 $0.00 $0.00 Advanced Home Solutions $2,499.00 $2,099.00 $0.00 $0.00 Usappliance $2,829.00 $2,429.00 $1,799.00 $0.00 PriceMad $2,099.01 $1,902.01 $1,418.01 $0.00 Amazon.com Marketplace $2,248.99 $2,848.99 $1,608.05 $3,139.48 6th Avenue Electronics $2,497.97 $0.00 $0.00 $0.00 Plasma Bay $2,190.00 $1,947.00 $0.00 $0.00 shopdigitalonline $2,100.00 $0.00 $0.00 $1,098 Electroline Electronics $2,349.00 $0.00 $0.00 $0.00 Abes of Maine $2,389.55 $1,959.55 $1,445.55 $0.00 PreferredPhoto.com $1,904.00 $0.00 $1,344.99 $0.00 Bright and Sleek $2,419.00 $0.00 0 $0.00 Camera Addict $1,909.00 $1,815.00 $1,344.99 $0.00 CompUSA.com $2,299.99 $0.00 $1,399.99 $0.00 OpenlyGeek.com $2,449.00 $0.00 $0.00 $0.00 Sale Stores $2,542.80 $2,427.70 $0.00 $1,476.30 butterfly photo $0.00 $1,949.00 $1,497.10 $0.00 PCVideoOnline $0.00 $2,188.01 $0.00 $0.00 Digitaletailer $0.00 $1,965.00 $0.00 $0.00 POWERSELLERNYC.COM $0.00 $1,949.00 $0.00 $0.00 Target $0.00 $2,999.99 $0.00 $1,649.99 The Refurb Depot $0.00 $1,879.95 $0.00 $1,249.95 Buy.com $0.00 $2,999.00 $0.00 $1,719.98 Etronics $0.00 $2,506.99 $0.00 $0.00 HP Small & Medium Business $0.00 $2,567.39 $0.00 $0.00 PreferredPhoto.com $ 0.00 $2,049 $0.00 $0.00 Sears $0.00 $0.00 $1,354.94 $0.00 LCD TV $0.00 $0.00 $1,498.00 $0.00 Home Price Club $0.00 $0.00 $0.00 $1,999.99 Top-100-electronics $0.00 $0.00 $0.00 $2,966.20 1bestbuyelectronics $0.00 $0.00 $0.00 $2,397.95 Universal LCD $0.00 $0.00 $0.00 $25.90 Average pricing of each Merchant $2,426.57 $2,196.42 $1,483.61 $1,809.45 This table shows the average plasma television pricing of the four selected companies namely Panasonic, Samsung, Hitachi, and Toshiba. The Panasonic electronic company has the highest average price which yields an average plasma television pricing of $ 2,426.57. This is followed by the Samsung with an average plasma television pricing of $ 2,196.42. This means that the Panasonic company produces more Plasma Televisions than other companies. Table 2. The number of Merchants of the selected four electronic companies Company Number of Merchants P(x) Panasonic 29 0.35 Samsung 27 0.33 Hitachi 14 0.17 Toshiba 12 0.15 It can be gleaned from the table that the Panasonic Company has the highest number of merchants which has a value 29 and yields a percentage of 0.35. This was followed by the Samsung with a value of 27 and yields a percentage of 0.33. Also, the probability of the Panasonic and Samsung was 0.02. This means that there is a close competition between the two companies. And in addition Hitachi and Toshiba companies were also within 0.02 proximity. This means that there is no pure monopoly in selling a Plasma TV 50' but instead there is perfect competition. Chart 1. The chart shows that the Panasonic Company has the highest number of merchants, followed by the Samsung Company, then by the Hitachi and lastly the Toshiba. This means that the Panasonic Company is the leading company in terms of Plasma Television 50 in. This also implies that they produce more television than other companies. Table 3. Probability of number of merchants with notes/coupons Electronic Company Number of Merchants with Notes/Coupons P (x) Panasonic 13 0.45 SAMSUNG 10 0.37 HITACHI 7 0.50 Toshiba 6 0.50 This table shows that the probability of notes/coupons of every company is in proximity. This means that there is perfect competition taking place in selling a plasma television 50 in. in the market place. Cahrt 2. The four selected electronic companies with their selling price Chart 2 reveals that the Panasonic has the lowest pricing in every competing price. This means that they were properly monitoring the value of the plasma television. This may be because they more often produce new innovations in their products and new additional accessories within the devices that they are selling. Chapter 5 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS This chapter presents a brief summary of the study, the salient findings based on the data gathered, the corresponding conclusions drawn, and the recommendations offered. This study sought to determine if there is a various management accounting techniques within organization as regards actual pricing practice. Specifically, the investigator was directed to answer the following questions: 1. What are the various determinants of pricing within organizations 2. What are the influences management accounting techniques 3. Is there a various Management Accounting Techniques within organizational pricing using Plasma Television 50 in. The hypothesis of the study: 1. Is there a various Management Accounting Techniques within organizational pricing using Plasma Television 50 in. SUMMARY OF FINDINGS The present inquiry revealed the following findings: 1. The Panasonic electronic company has the highest average price which yielded an average plasma television pricing of $ 2,426.57. This is followed by the Samsung Company which has an average plasma television pricing of $ 2,196.42. This means that the Panasonic company produces more Plasma Televisions than other companies. 2. Panasonic Company has the highest number of merchants which has a value 29 and yielded a percentage of 0.35. This was followed by the Samsung Company which has a value of 27 and yielded a percentage of 0.33. 3. The probability of values of the Panasonic and Samsung at proximity. This means that there is active competition between the two companies. In addition the Hitachi and Toshiba companies were also at proximity, so there is no pure monopoly in selling a Plasma Television 50 in. but instead there is perfect competition. 4. The Panasonic Company is the leading company in terms of Plasma Television 50 in. This also implies that they produce more television than other companies. It reveals that the Panasonic has the lowest pricing in every competing price. This means that they were properly monitoring the pricing of the plasma television. This may be because they more often produce new innovations in their products and new additional accessories within the devices that they are selling. CONCLUSIONS Based on the findings of the study, the researcher came up with the following conclusions: 1. Panasonic Company is the leading electronic company in terms of producing Plasma Television specifically a fifty inches television. 2. Panasonic Company monitors the actual pricing of plasma television in the market place. 3. Panasonic Company has lots of improvisation and innovation as regards customer satisfaction . 4. The more merchants a company has, the higher is the possible sales. 5. The number of merchants also help the company widen the network competition and keep optimum levels of monitoring value of the actual pricing. RECOMMENDATIONS In consonance with the findings of the study, the following are recommended: 1. A study must be conducted to determine the truth that the move to match sale prices is a disaster to a firm. 2. Data gathered through research along actual cost and prices in the different markets must be kept open to enthusiast for further investigations. Reference Clark, Terry, Masaaki Kotabe, and Dan Rajaratnam. 1999. Exchange Rate Pass-Through and International Pricing Strategy: A Conceptual Framework and Research Propositions. Journal of International Business Studies 30, no. 2: 249+. Day, George S. & David B. Montgomery. 1983. Diagnosing the experience curve. Journal of Marketing, 47(2): 44-58. Griffiths, Alan and Wall, Stuart. 1995. Applied Economics: An Introductory Course London: Longman Group, 188. Hornegren, Charles T. 1984. Introduction to Management Accounting. London: Prentice-Hall, 82. Lessard, Donald & Srilata Zaheer. 1996. Breaking silos: Distributed knowledge and strategic responses to volatile exchange rates. Strategic Management Journal, 17: 513-33. Lewis, Reginald F. and Wlaker, Blair S. "Why Should White Guys Have All the Fun". How Reginald Lewis Created a Billion-Dollar Business Empire, John Wiley & Sons, Inc., co. 1995 Mankiw, N. Gregory. 1998. Principles of Economics. London: The Dryden Press, 264. Nagle, Thomas T. & Reed K. Holden. 1995. The strategy and tactics of pricing. Englewood Cliffs, NJ: Prentice-Hall. Parsons, A. J. 1988. Hillslope Form. London: Routledge. Thin, Tun. 1960. Theory of Markets. Cambridge, MA: Harvard University Press. 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