Management Accounting
QUESTION ONE
The big challenge facing Siemens is how to adapt to their new proposed strategy and practices to respond to various challenges while ensuring financial success as well as increasing the value of their shareholders. The roles played by a management accountant are critical as they can assist in developing Siemens. Their role development aids in bringing change. The traditional role of an accountant is to organize, summarize, and present financial information to the management for decision making. However, being a management account, the interpreted information is supposed to be used in the development of strategies and plans that will minimize costs, increase efficiency, increase the quality of goods produced by Siemens and increase earnings. Thus, a management accountant is not supposed to miss out on valuable accounting data insights as well as analysis through failing to take advantage of his or her traditional skills of management accounting.
Changes in the business environment have an effect on Siemens company. Competitors to the company such as General Electric Company and ABB have introduced new and top quality products that pose stiff competition to gadgets produced by Siemens. The companies have also come up with ways to increase their operating efficiency to cut down on costs incurred during production and delivery of products. Application of budgeting tools by management accountants will make the company realize the changes within no time. One of the tools is variance analysis. The analysis will assist in comparing the prepared standard budgets against expected actual outputs (Hansen and Mowen). The results got will assist managers to ascertain the level of deviation from the made plans. If there is unfavorable variance, then the management must go back to the drawing take and reformulate the plan. Cost volume profit analysis is also important. The management will be able to ascertain the breakeven point and what they can do to increase profits from there. Management accounts are essential to a company and given the case of Siemens; they will play a super role towards bringing the required transformations.
QUESTION TWO
QUESTION THREE
The view that long-term market leadership is a fundamental measure of success should be substituted with a fundamental measure of Siemens success is the stakeholder value it has managed to produce over the long-term. As a result of the value created, the company will be able to portray its ability to solidify and extend its current leadership position in the market. The stronger the market leadership of Siemens, the more powerful its economic models becomes. The market leadership of the company will be translating direct greater velocity in capital, higher levels of profitability, higher revenue generation, as well as a corresponding return on shareholders’ capital invested. The new decision for change has reflected the company’s focus. Thus, the company has first to measure itself taking into consideration the metrics that indicate its market leadership. These metrics are revenue and client growth, the extent to which clients buy Siemens products repetitively, together with the brand’s strength in the market. Siemens needs to invest and carry on investing aggressively to enlarge and leverage its client base, its brand, and its infrastructure (Thorpe and Holloway). The following performance management framework can be applied to ensure that needs of different stakeholders are taken into account.
performance management framework
QUESTION FOUR
Customer profitability analyzes are used to measure the profit level that a single customer generates. The analysis works through looking at the revenue that a single customer will generate and then subtract all the costs that are associated with customer relationship servicing. The costs calculated are inclusive of the marketing costs, logistics, packaging, products costs and all other related costs (Harrington). It is important to measure customer profitability to ascertain the percentage of profitable customers that will bring a given percentage of the total profits. It is advantageous to carry out Customer Profitability Analysis. Firstly, the analysis helps in eliminating customers who cost the company money. Customers with low gross margins are supposed to be replaced with those that have higher gross margin. Secondly, the company can focus on those customers that are more profitable and eliminate those who have high maintenance costs. Lastly, the analysis can be used to increase productivity in Siemens. The benefits of eliminating low-profit customers and high maintenance will be felt across the company (Wilkinson). The sales department will start focusing on the right customers who highly value and pay for services and products of Siemens. Therefore, operations and finance will improve. Evidence in this is the use of Net Promotor Score by the company. Customer Profitability Analysis should be carried out often to pinpoint profitable and non-profitable Siemens customers.
Work cited
Hansen, Don R, and Maryanne M Mowen. Management Accounting. Cincinnati: South-Western College Pub., 2000. Print.
Harrington, Roseann. Customer Profitability Analysis. [Norwood, Mass.]: Books24x7.com, 2006. Print.
"Our Strategy | Siemens Annual Report 2014". Siemens.com. N.p., 2016. Web. 8 Apr. 2016.
Thorpe, Richard, and Jacky Holloway. Performance Management. Hound mills, Basinstoke, Hampshire: Palgrave Macmillan, 2008. Print.
Wilkinson, Jim. "3 Benefits of an Analysis of Customer Profitability". Strategiccfo.com. N.p., 2014. Web. 8 Apr. 2016.
