Office hours: 4:00 5:00 p.m. TR and by appointment. If you cant make my office hours, please call or email me to make an appointment. ______________________________________________________________________________
Course objectives and overview
This course provides students with the knowledge and analytical skills necessary to use accounting information as a basis for formulating, implementing, and evaluating corporate strategy. A central theme of the course is that one of the primary functions of accounting information is to facilitate corporate strategy. A superior accounting system provides an important tool for developing a sustainable competitive advantage by enabling a deep understanding of an industrys and a specific companys cost (and revenue) structure.
The course examines various managerial accounting tools that support product/customer differentiation or cost leadership strategies. These tools include strategic profitability analysis, activity-based costing, activity-based management, life-cycle costing, economic value to customer, cost driver analysis, regression analysis, value chain analysis, throughput accounting, and lean accounting.
Many MBA and MSA students will accept job positions in which they will make decisions affecting the profitability of products, services, and customers, or provide consulting services to companies on how to improve profitability. Thus, the materials covered in this course will be highly relevant to students planning careers in marketing, operations management, corporate finance, and management consulting, as well as those students choosing accounting careers.
Articles in the course packet provide the conceptual materials for the course, while cases supply the foundation for class discussion about specific topics. These cases will:
(1) introduce and illuminate key concepts related to topics in the course, (2) illustrate how to integrate cost analysis into strategic decisions, (3) develop approaches for diagnosing the cause of low-profitability products, services, and customers, and (4) identify how corporate strategy can be transformed to generate greater profitability.
The Learning Outcomes for A576 are for the student to be able to:
2 Students will demonstrate an ability to apply managerial accounting knowledge and tools to new business contexts. o this supports MBA Program Learning Goal 3 o this supports 3/2 MBA Program Learning Goal 1 o this supports MSA Program Learning Goal 1
Students will demonstrate an ability to integrate managerial accounting data with knowledge from other functional areas of business to develop recommendations to solve business problems and to enhance firm value o this supports MBA Program Learning Goals 2 and 3 o this supports 3/2 MBA Program Learning Goal 4 o this supports MSA Program Learning Goal 2
See appendix for MBA Program Learning Goals.
Course Materials
Course Packet, Indiana University Publishing.
In the Classroom
I will conduct class using both lecture and discussion formats. The most important requirement for each class is a thorough preparation and analysis of the assigned case and reading material and active participation in the classroom discussion. I encourage you to work together on the cases that will be discussed in class. (The two written cases turned in for grading, Sloan Styles and Continental Airlines, should be discussed with your case team only.) Class sessions will be based on the assumption that you are prepared and will be conducted in a manner that requires your contribution.
My primary role in the classroom is to facilitate class discussion, manage the class process, and ensure that the class achieves an understanding of the case situation. Typically there is no single correct solution to a case. There are, however, many incorrect solutions. There are also solutions that are not appropriately supported with analysis and solutions that are ineffective because they are not conveyed in a logical and persuasive manner.
Grades
The following table summarizes grade requirements and allocations.
Requirement Percentage Final Exam 25% Team Case Reports 30% Case Calculations 20% Class Participation 25% Total 100%
3
Grades will strictly follow the KSBs targeted distribution for M.B.A. classes, shown below.
Grade Distribution A 10-15% A- 25-35% B+ / B / B- Up to 50% Below B- As needed
Final Exam: The exam will have both an out-of-class and in-class component. The in-class component of the final exam will be held on Tuesday, May 6 during regular class time.
Team Case Reports: Students will prepare a written analysis of two cases in a team. I will determine teams in conjunction with student input by the second week of the term. The written analyses should reflect ideas of team members only, i.e., you should not discuss the case with anyone other than team members or consult sources that contain solutions to the cases. The two cases are Sloan Styles on April 15 and Continental Airlines on April 29. I will distribute further information about case preparation in class.
Case Calculations: Cases typically require some quantitative or detailed qualitative analysis in order to have a productive class discussion about the case. Each student will be required to turn in case calculations for four of the following five cases: Cafes Monte Bianco (March 27), Southwest Airlines (April 1), The Denim Finishing Company (April 3), Dulux Lamp (April 17) and Wilson Electronics (B) (April 24). Case calculations are due at the beginning of class; late assignments will not be accepted. If you turn in solutions for all five case answers, I will drop your lowest grade. The specific questions required will be distributed in class as part of the assignment for the case. You may work with other members of the class; however, each student must turn in his/her own copy of the calculations. All individuals working in teams are expected to contribute to the answers. Copying another students solution is a violation of the Kelley School of Business Honor code.
Class Participation: The vast majority of managers and consultants interactions with others are oral. For this reason, the development of oral skills is given a high priority in this course. The classroom should be considered a laboratory in which you can test your ability to convince your peers of the correctness of your approach. Clearly, you must participate if you are going to share your ideas with others. I will calibrate your class contributions according to the following descriptions.
Outstanding Contributor: Contributions in class reflect exceptional preparation. Ideas offered are always substantive, provide major insights and direction for the class. Arguments are well substantiated and persuasively presented. If this person were not a member of the class, the quality of the discussions would be diminished significantly. Good Contributor: Contributions in class reflect thorough preparation. Ideas offered are usually substantive, provide good insights and sometimes direction for the class. Arguments are generally well-substantiated and are often persuasive. If this person were
4 not a member of the class, the quality of the discussions would be diminished considerably. Satisfactory Contributor: Contributions in class reflect satisfactory preparation. Ideas offered are sometimes substantive, provide generally useful insights, but seldom offer a major new direction for the discussion. Arguments are sometimes presented and are fairly well substantiated and sometimes persuasive. If this person were a member of the class, the quality of the discussions would be diminished somewhat. Non-Participant: This person has said little in this class to date. Hence, there is not adequate basis for evaluation. If this person were not a member of the class, the quality of the discussions would be unchanged. Unsatisfactory contributor: Contribution in class reflects inadequate preparation. Ideas offered are seldom substantive, provide few, if any, insights, and do not provide a constructive direction for the class. Integrative comments and effective arguments are absent. Class contributions make isolated, obvious, or confusing points. If this person were not a member of the class, valuable airtime would be saved.
Other Factors I nfluencing Class Participation Grades
Class attendance obviously is important. In general, being absent from more than one class session will negatively affect your class participation grade. If you cannot attend class, please let me know beforehand if at all possible. Please attend the section in which you are registered unless you make other arrangements with me prior to a class session. Classes will begin on time. I appreciate it if you are in the classroom before class starts. Since I may call on students who do not have their hands raised, please notify me before class if you are not prepared for class. Obviously, you should make very limited use of this option. I do not ban the use of computers in the classroom; however, computer use in class should be related solely to the current days A576 content, i.e., taking notes, pulling up spreadsheets containing case calculations. I reserve the right to reduce your overall class participation grade for the course by a third for each use of a computer for activities unrelated to the current class material. If you are not using your computer for A576 activities, I ask that you keep it closed so your screensaver does not distract your fellow students.
Honor Code
One key element of managerial accounting is a control system that governs the behavior of individuals in the organization. The Kelley School of Business Student Code of Conduct is an example of such a control system. Intellectual honesty, integrity, and respect for the thoughts of others are critical to the mission of the Kelley School. Your acceptance of admission to KSB indicates that you embrace and will adhere to the principles in the Student Code of Conduct. Any violation of Code of Conduct diminishes the mission of the Kelley School of Business. I will take all alleged violations of the Code of Conduct very seriously and will pursue all violations according to the procedures outlined in the Code of Conduct.
The acceptable behavior for elements of your performance evaluation are described in the syllabus above, and re-iterated below.
5 Final Exam All work on the final exam is to be that of the individual student. You may not consult any person or materials not provided or prepared by you in A576 to complete the final exam. You may use computers on the exam but should access only materials provided to you or prepared by you in A576 (e.g., notes taken in class). Case Calculations Students may work on case answers with any other student currently enrolled in A576. When working with other students, each student is expected to make a significant contribution to each set of case answers. Copying another students solution is a violation of the Code of Conduct. Students should turn in individual answers, i.e., one answer per team is not acceptable. Written Case Reports Students should work only with their assigned team on the two written case reports. Each student is expected to make a significant contribution to each case report. You should not discuss the case with any person other than your team members and Professor Maines. You may not consult case solutions from any source. One copy of the case solution per team should be turned in for grading.
6 DETAILED COURSE OUTLINE SUBJECT TO CHANGE CHECK ONCOURSE FOR CHANGES
INTRODUCTION TO STRATEGIC COST MANAGEMENT
Session 1: Tuesday, March 25
Topic: Class Introduction and Overview of Strategic Cost Management
Tool: DuPont Analysis
Assignment: Balakrishnan, Sivaramakrishnan, and Sprinkle, Managerial Accounting, Chapter 13 - Strategic Planning and Control, pp. 546-556. Burns, Sale, and Stephan, A Better Way to Gauge Profitability
THE ROLE OF MANAGERIAL ACCOUNTING IN CHOOSING AND EVALUATING STRATEGY
Session 2: Thursday, March 27
Topic: Choosing Differentiation versus Cost Leadership Strategies
Tool: Strategic Budgeting and Profitability Analysis
Assignment: Cafes Monte Bianco (case)
Deliverable: Case Calculations for Cafes Monte Bianco
Session 3: Tuesday, April 1
Topic: Evaluating the Success of a Firms Strategy
Tool: Strategic Profitability Analysis
Assignment: Horngren, Datar, Foster, Cost Accounting: A Managerial Emphasis, Twelfth Edition, pp. 465-472. An Analysis of Southwest Airlines (case)
Deliverable: Case Calculations for Southwest Airlines
7 STRATEGIC COST MANAGEMENT FOR DIFFERENTIATION STRATEGIES
Session 4: Thursday, April 3
Topic: Implications of Differentiation (adding products) for Costs: Activity-Based Costing versus Marginal Analysis
Tool: Activity-based costing
Assignment: The Denim Finishing Company (case)
Deliverable: Case Calculations for The Denim Finishing Company
Session 5: Tuesday, April 8
Topic: Implications of Differentiation versus Cost Leadership Strategies for Costs
Tool: Activity-based Costing and Cost Structure
Assignment: Hammond Cards, Inc.: The Creative Acquisition (case)
Session 6: Thursday, April 10
Topic: Implications of Differentiation for Costs and Revenues
Tool: Life-Cycle Costing and Economic Value to Customer
Assignment: Shank A Note on Life Cycle Costing (LCC) and the Concept of Economic Value to Customer (ECC) In-class exercise on Life-Cycle Costing and Economic Value to Customer
Session 7: Tuesday, April 15
Topic: Activity-Based Costing and Customer Differentiation
Assignment: Kaplan, Using ABC to Manage Customer Mix and Relationships Sloan Styles (case)
Deliverable: Written team report for Sloan Styles
8 Session 8: Thursday, April 17
Topic: Value to Customer and Pricing
Tool: Life Cycle Costing and Economic Value to Customer
Assignment: The Dulux Lamp (case)
Deliverable: Case Calculations for The Dulux Lamp
STRATEGIC COST MANAGEMENT FOR COST LEADERSHIP STRATEGIES
Session 9: Tuesday, April 22
Topic: Evaluating the Cost Reduction Impact of Process Re-engineering
Tool: Value Chain, Activity-Based Costing, Activity-Based Management
Assignment: Wilson Electronics (A) (case)
Session 10: Thursday, April 24
Topic: Management of Capacity Costs
Tool: Theory of Constraints / Throughput Accounting
Assignment: Corbett, Making Better Decisions Wilson Electronics (B) (case)
Deliverable: Case Calculations for Wilson Electronics (B)
Session 11: Tuesday, April 29
Topic: Using Data Analytics in Cost Reduction
Tool: Regression Analysis / Cost-driver Analysis
Assignment: Cost Estimation and Profitability Analysis at Continental Airlines (case)
Deliverable: Written team report for Continental Airlines
9 Session 12: Thursday, May 1
Topic: Use of Accounting to Support a Lean Enterprise
Tool: Lean Accounting
Assignment: Kennedy and Brewer, Lean Accounting Whats it All About? Creating a Lean Enterprise: The Case of the Lebanon Gasket Company (case)
Session 13: Tuesday, May 6
Topic: Final Exam (In class portion)
10 APPENDIX Program Learning Goals
MBA Program Learning Goals
Goal 1: I nternal Structures and Operations Students who earn the MBA degree will be able to demonstrate a thorough understanding of the internal structures and operations of businesses ranging in size from small to multi-national.
Goal 2: External Environments Students who earn the MBA degree will be able to demonstrate a thorough understanding of the relationship between business and relevant external environments (e.g., governmental, legal, competitive, environmental and other environments), i.e., how management decisions will affect each relevant stakeholder and how various external environments will shape business practices.
Goal 3: I ntegration of Tools and Techniques of Business Students who earn the MBA degree will be able to integrate and apply the tools and techniques of business, drawing on a broad-based knowledge of the major functions (accounting, economics, finance, information systems, marketing, operations management, and strategy) to solve complex business problems and make sound business decisions.
Goal 4: Professional Skills Students who earn the MBA degree will be able to demonstrate a command of human relation or people skills necessary for lifelong career success. Examples of these skills include but are not limited to 1) understanding how an organizations structure affects performance for companies and for individuals; 2) oral and written communication; 3) leadership; 4) teamwork and collaboration; 5) reflective self-assessment; and 6) appreciation of diversity.
Goal 5: Legal and Ethical Considerations Students who earn the MBA degree will be able to articulate explicitly how ethical and legal considerations affect business decisions, strategies and outcomes.
3/2 MBA in Accounting Program Learning Goals
Goal 1: Basic Principles of Accounting
Students who earn the 3/2 MBA degree will be able to demonstrate a thorough command of the basic principles and operations of accounting.
Goal 2: Internal Structures and Operations
Students who earn the 3/2 MBA degree will be able to demonstrate a thorough understanding of the internal structures and operations of businesses ranging in size from small businesses to multi-national corporations.
Goal 3: External Environments
Students who earn the 3/2 MBA degree will be able to demonstrate a thorough understanding of the relationship between a business and relevant external environments (e.g., governmental, legal, competitive and other environments.)
11 Goal 4: Integration of Tools and Techniques of Business
Students who earn the 3/2 MBA degree will be able to integrate and apply the tools and techniques of business drawing on a broad-based knowledge of the major functional areas, as well as specific technical knowledge of accounting, to analyze and recommend solutions to complex business problems.
Goal 5: Legal and Ethical Considerations
Students who earn the 3/2 MBA degree will be able to identify, interpret and apply legal and ethical principles as they affect business decisions, strategies and outcomes in general and specifically as they relate to accounting.
Goal 6: Professional Skills
Students who earn the 3/2 MBA degree will be able to use appropriate processes to identify, select, and demonstrate effective management skills and attributes including but not limited to 1) oral and written communication; 2) leadership skills; 3) emotional intelligence; 4) teamwork and collaboration; 5) reflective self-assessment; and 6) inclusivity.
Masters in Accounting Program Learning Goals
Goal 1: Basic Principles of Accounting
Students who earn the MS in Accounting degree will be able to demonstrate a thorough command of the basic principles and operations of accounting.
Goal 2: Integration
Students who earn the MS in Accounting degree will be able to integrate technical accounting knowledge with other functional areas of business to analyze and recommend solutions to business problems.
Goal 3: Legal and Ethical Considerations
Students who earn the MS in Accounting degree will be able to identify, interpret and apply legal and ethical principles as they relate to accounting.
Goal 4: Communication
Students who earn the MS in Accounting degree will be able to communicate effectively.
Goal 5: Team work
Students who earn the MS in Accounting degree will be able to work effectively in teams and organizations.
Goal 6: Professional Skills
Students who earn the MS in Accounting degree will be able to identify and exemplify attributes of career success.