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Question operation cost with maximizing the profit,

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Question 1

As the controller,
I would make modification to shift the responsibility of setting budget from
service department to top management in F.T. Electronics’ responsibility accounting
system.

Service department is cost center and top management
is investment center. The declining of the demand for production resulted that
actual labor cost in the service department is about 90% higher than the
budget. Service department will just only focus on the method to decrease its
cost but ignored revenue and profit earned which brings negative impact for the
company. Hence, it warned the top
management to take immediate action to correct the issue by shifting the
responsibility in preparing budget to top management, instead of just service
department.

 

Due
to the significant over-budget, the staff who prepared the budget previously
should be held accountable and answerable to the result. However, hard approach
of punishment such as wages deduction might not be appropriate as the staff’s
morale will affected. Therefore, proper communication and training should be in
place to educate the staffs. 

 

To reduce the labour and operation cost with
maximizing the profit, controller should introduce a new control system to let
the organization reduce its $28,659 excess in service department. This meaning
to reduce the billed person-hours. The top management should be focus on
meeting current situation of performance, with the aims of shift to a process-oriented
control within the department. The organization should not emphasize
on financial based control system because the company is not operating at
optimal.

 

Question
2

McDonald’s and Disney are the successful companies in
the global world.

In fact, restaurant industry is low margins industry
which it’s hard to be a cost leadership strategy. McDonald’s is very successful
with this strategy by offer a basic fast food at low price. McDonald’s able to
keep low cost through a division of labour that allows organization to train
and hire non-experienced employees rather than trained cooks. McDonald’s also
relies on a few managers with higher wages. This staff cost saving allows
organization to sell its foods for low price. The organization core
competencies let the business to bring value to customers which is high quality
products with taste and price. It also develops localized products for the
customers for each country. They not only making burgers but the provide
convenience to customers.

Disney is the leader in the global entertainment
industry with a well-known brand name by using differentiate strategy. It has
successfully achieved its mission, which is to evolve the most innovative,
creative and profitable entertainment experiences and related products in the
world by differentiating contents, services, and consumer products. For
example, it promotes “Safety, Courtesy, Show and Efficiency” to give
shareworthy services to customers. Due to Disney possess high standard
qualities, its reputation was honored with countless awards from Forbes,
Academy Awards, and the others. Its good management and creative innovation of
employees provide outstanding services qualities and stories guidelines which
has successfully delivered benefits and values and convinced the emotional
storylines to the customers.

 
 

 

Question
3

a) Low-cost
strategy. It sells the low cost than another competitor. The standard
features mobile phone lead company cost advantage relative to the competition. The
sensitivity of targeted customers to quality and price is provided in order to
enjoy in mobile phone more market share.

b) Differentiated
product strategy. There are no such software currently at the market. This
is a non-price competition strategy. However, due to the additional function,
the company will charge premium price as compared to the existing products.
Premium price that customers will be willing to pay due to product uniqueness.

c) Low-cost
strategy. The discounted price making the price of this products is low
meaning that those customers will be attracted by the low process but not the
quality of the ‘store brand’ roll on sunscreen. This strategy focus on price
competition but not differentiated products competition.

d) Differentiated
product strategy. Tim’s Delicatessen developing a special gourmet pasta
sauce which is different with other pasta sauce at the market. It is made with
sundried tomatoes, mushrooms and truffle oil. Unlike the other pasta sauces,
this pasta sauce has additional condiments that differentiate it from the rest.
It is important to note the basis of competition- products features.