ACC5502 Accounting and Financial Management
Due date: 29th April 2015
This Assignment is designed to give you an opportunity to demonstrate:
• the application of management accounting concepts and frameworks to identify and solve complex organisational problems creatively and
practically to increase the effectiveness of management decision making that provides solutions to real world problems (Learning Objective
2);
• the application and use of management accounting concepts, with other evidence, to provide solutions to real world problems (Learning
Objective 4).
The Pioneer Company is in the construction and engineering business. The accountant of the company has approached you to provide advice on
the development of a Balanced Scorecard that will assist in the evaluation of the company’s performance.
For the purposes of designingthis Balanced Scorecard, you interviewed managers from many of the company’s current and potential customers.
You found that some customers were highly price-sensitive and wanted to continue business as usual. These customers developed internally
all the specifications for their bids, put the detailed bidding document out to tender, and chose, from among all qualified suppliers the
one submitting the lowest bid. As one price-sensitive customer said during an interview:
We don’t have the resources of time for doing anything fancy with our suppliers. Our business has become ruthlessly competitive, with
price and margin reductions in recent years, and the need for us to cut costs wherever we can. We can’t afford to choose anyone but the
lowest-price supplier.
Historically, Pioneer Company competed by attempting to be the selected low-price bidder for price-sensitive customers.
Your interviews also revealed that several large and important customers were looking for more than low price from their most valued
supplier of construction services. They said:
We have to cut costs wherever we can. But we are looking to our suppliers to help us in this goal. If it’s cheaper and more effective for
them to take over some of our engineering functions, we should let them do that, and reduce our internal engineering staff accordingly. We
don’t have any special capabilities in engineering. We want suppliers that can suggest new ways of doing business, and who can develop
improved technologies for this new task. Our best suppliers of engineering and construction services will anticipate our needs and suggest
creative ways to meet these needs through new technologies, new project management approaches, and new financing methods.
These companies acknowledged that rapidly changing technology and an increasingly competitive marketplace for their final products had
motivated them to look to their suppliers for innovative ways to lower their costs. Although price would still be a factor, a supplier’s
ability to offer innovative and more cost-effective approaches would still be a strong influence on suppler selection. You refer to these
companies as those wanting differentiated services.
As part of your information gathering you also had the opportunity to discuss methods of performance evaluation this with the CEO of
Pioneer Company. You note the following comment made by the CEO:
“As managers we need to be wary of the fad-like innovations proposed by accountants. We know if our company is in control if we earn at
least the required rate of return on our assets. At the end of the day the numbers don’t lie.”
You are required to provide written a report to the accountant of Pioneer Company. Your advice should include the following:
1. Respond to the CEO byexplaining how the Balanced Scorecard can serve a useful purpose in assisting Pioneer Company in assessing
progress towards its objectives.
2. Design a Balanced Scorecardfor Pioneer Company and consider the following:
(a) Using the information that you have gleaned from the interviews, suggest two possible strategies that could be employed by Pioneer
Company. For each strategy, develop between two and four measures for each dimension of the Balanced Scorecard, explaining how these
measures support each strategy.
(b) Explain how the Customer and Internal Business Process perspectives of Pioneer Company’sBalanced Scorecard might differ, depending on
whether the company selected the price-sensitive or differentiated services customer types as the target for its future strategy. Be
specific about how the measures would differ depending upon which strategy Pioneer Company followed.
(c) Suggest potential new internal business processes thatPioneer Companywould have to perform very well if it wanted to meet the
expectations of its customers wanting differentiated services?
General Requirements:
1. A report style assignment is required. Choose a report structure,with the use of appropriate headings you deem to be of a professional
standard. There is no prescribed structure.
2. Full referencing is required in accordance with the USQ preferred Harvard Referencing style.
3. There is no specified word length for this assignment. However, be as concise and efficient in your writing as possible. You should not
need any more than four to five 1.5 spaced A4 pages (12 point font) to answer this question.
4. You should note that the assignment is based on Topic 4.
5. Assignment extensions will be granted if needed due to medical or personal reasons. Generally extensions will be granted for one week.
If an extension of more than two weeks is required then a different assignment will be given. This is because marked assignments and
solutions cannot be released until all assignments have been received. It is unfair on other students to delay the return of their marked
assignments unduly.
6. The assignment is to be submitted electronically. Details on how to submit the assignment will be provided at a later date. File types
allowed include doc and docx. Only one file will be accepted. If more than one file is uploaded, only first file listed will be marked.
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