1. DESCRIBE THE STRATEGIC CONTEXT IN WHICH QUINTANA SHOULD JUDGE MUSIMUNDO’S PERFORMANCE. WHAT ARE THE CHARACTERISTICS OF THE ENVIRONMENT THAT MUSIMUNDO COMPETES IN? WHAT ARE PEGASUS’ STRATEGIC OBJECTIVES FOR MUSIMUNDO? HOW DO THESE FACTORS AFFECT THE BUDGETING PROCESS? Strategic Context Quintana wants to strategically reward the managers of the Musimundo stores for meeting their budgetary goals; however, some managers were completely unable to do this and other managers were guaranteed their sales quota. Quintana can rectify this situation by modifying the Musimundo incentive system. Quintana can use multiple performance measures to reward his managers. These performance measures can be sales based on a flexible budget that looks at historical sales and measures them against current sales. The manager could be rewarded for the percentage of increase. Quintana can also use a balanced scorecard approach for each store. A store’s success can be based on a number of factors aside from sales. These factors could be customer satisfaction surveys, growth within the store, and management of employees and human resources. Additionally for the next year, Quintana should implement and/or refine an Activity Based Budgeting system. Quintana can first assign overhead costs to cost pools that represent the largest activities for Musimundo. These costs would be related to the purchase, location, and stocking of Music (Music represented 41% of the Musimundo business in 2004). After these overhead costs are assigned, the costs can be allocated to the various retail stores based on their consumption of the good (e.g. the number of musical works they stock and sell). The Musimundo Environment The Musimundo environment is jaded and disproportionately profitable in various regions of Argentina. As Argentina was exiting its economic crisis, various regions were “catching up” in the realm of consumption; however, other regions were either not “catching up” or lacked the activity to generate the proper sales. Managers in the more profitable regions were achieving/surpassing their sales goals, while managers in the less active regions were unable to achieve their sales goals. These underperforming managers were penalized by a system that they neither fostered nor developed. In all likelihood, the underperforming managers were disincentivized by unrealistic budgetary goals for their region, needing further assurances from corporate that their vision could be achieved. All retail stores suffered from a lack of product, destroying the potential sales that they could have gained. The stores in less popular/populated regions may have garnered a reputation for being unreliable and continually out of stock.
If done right, I believe that all of the costs can be allocated to each of the three products through both direct and overhead costs. The only direct costs that are being included currently are labor and manufacturing costs. I broke up overhead into overhead based off direct labor and overhead based on units sold.
The strategic recommendations provided will improve and enable the business to cope with the competitors, while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the business. In the case study, it was discovered that there were sources of opportunities in which the company would invest.
At the same time as Lamb learned about the moral system that ties families together, she also explained about the concern that people in Mangaldihi had in regards to weakening of family connections (Lamb 2000, p.70). This is explained through a series of events including family conflicts and modernity. Many conflicts can be seen after marriage. As new member of another family usually the bride moves into the husbands household. The new status of married couples can cause tension between mother and son, mother in law and daughter in law (bou), father and son, but also between mother and daughter (Lamb 2000, p.71). The relationship between mother and daughter in law seems to generates the most problems. It is said that the bond between a mother
Employees protested, “that supervisors should have received a reduced bonus because they were not working as hard as they are and the company might be playing with the numbers” (Beer & Collins, 2008 p.6). A beneficial system for the new Scanlon Plan is to rearranged payout count. This will help to regain trust amongst employees and management. Equity Theory stresses integrity to all compensation arrangement and if this is effectively executed, then this will resolve the mistrust issue that employees have with their management team. The rewards should not be paid on a consistent month-to-month basis, instead, on a settled proportion plan, which gives rewards "each nth time the right behavior is demonstrated" (Bauer and Erdogan, 2013, p. 112). Traditionally, this would imply that workers are paid reward each time a specific measure of cash in permitted payroll is met. “The current permitted payroll is at 38% of sales value” (Engstrom, 2008). This requires no change. Instead, when Engstrom comes to a permitted payroll of one million dollars, then 10% of that sum should naturally disbursed to workers as rewards. This tackles numerous past issues with the Scanlon
Mujtaba, B. G., & Shuaib, S. (2010). An Equitable Total Rewards Approach to Pay for Performance Management. Journal of Management Policy and Practice vol. II (4), 111-121.
An organization costing system is a system that helps the management with the strategy planning while the system plays an important role in providing accurate cost information about the products and customers (Curtin, 2006). UPS utilizes the Activity-Based Costing (ABC) system. ABC assumes that activities cause costs and that cost objects create the demand for activities (Marx, 2009). The key to cost allocation under ABC is to identify the activities that are performed to provide a particular service and then aggregate the costs of the activities (Gapenski, 2012). This is a marked departure from the practice of sharing overheads costs equally or overheads becoming part of the overall profit-loss estimate instead of component product pricing (Nayab, 2011).
A strategic analysis provides an examination of both the internal and external factors impacting on the organisation (Papulova & Gazova, 2016). City
Transactional leader accomplishes goals by bounties workers UN agency convene potential (Bass, 1990). These rewards are available the form of recognition pay will increase and advancement. Such transactions the promise of reward permanently performance and restraint for poor performance.
One tool that can be used to measure business success is the balanced scorecard. The balanced scoreboard is a tool that is used to manage and evaluate strategies from four perspectives: financial performance, customer knowledge, internal business processes, and learning and growth (David & David, 2015, pg. 291). The balanced scorecard could help Rite Aid with identifying what areas of the organization that needs to be monitored more closely as well as what areas needs some improvement. For example, the customer perspective can be used to gain knowledge on what the customers’ needs and wants are. Another tool that Rite Aid could use is a SWOT analysis. A SWOT analysis is a tool that is used to match organization’s internal strengths and weaknesses with external opportunities and threats (David & David, 2015, pg.169). With a SWOT analysis, Rite Aid could pinpoint exactly what their strengths and weaknesses are. Rite Aid could then take advantage of their strengths that could lead to possible opportunities and work to improve their weaknesses so that the threats could be
Using the balanced scorecard method you are able to get a balanced view on how your company is performing. Using this method you get a full view on if your company is meeting its objectives. Even though your company may be performing well financially other areas of your company could be failing. When using this approach your company will look at objectives short and long term and determine the health of your company. Lastly when using this approach any strategic actions that are implemented will match your desired outcome. (Bowen,
This is a crucial part of a strategic analysis because ‘…organisations do not exist in a vacuum, they are part of a complex world’ (Bowman 1987:61) and many factors can influence operations, beneficially and unfavourably. However, these can be difficult to comprehend due to their complexity, diversity and fast changing nature. Necessarily a number of techniques have been developed to facilitate the process and to ‘…contribute to answering the key managerial question…’of what ‘…opportunities and threats might arise in the future’ (Johnson & Scholes 2002:99).
A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate to Scents & Things vision, mission, values, and SWOTT analysis.
First we will talk about activity based costing and we will start by giving the definition of it ; Activity based costing means refining the costing system by concentrating on individual activities as essential or primary cost object or tool . ABC system has a lot of benefits and we will discuss them now, ABC helps in understanding overhead much better and the percentage of prim cost and overhead is the same in both ABC and traditional system; but what gives advantage of ABC over traditional is by using ABC system it helps to know the detail of overhead so that it can identifies how is the activity to avoid.
Russel Y., Topper S., Akerman L., Oliveira J., Strydom Z.; 2013; Studying Business NSC Business Studies Grade 12; 2013 Edition; Paardekraal; Excom Publishers; 26/05/2014
Incentive reward engagement offers a win-win situation for the employees and the company. Kelleher believes that incentive is a form of recognition and builds engagement through company’s and employee’s obligations towards a common goal (2014). The company has a “Growth Incentive Scheme” for the production workers. Special monetary incentives are provided should the workers achieve the monthly output target. Through the rewards, employees feel motivated towards their work and thus, contribute towards the company’s