Question “low cost”; Walmart doesn’t need it to be

Question 1

In this question, the objective of F.T. Electronics Company is to maximize its ROI and ensure the design of company’s management control system is able to bring out the performance which can match with the company’s strategy. The performance techniques must augment the effectiveness of the company. Hence, the management must use the techniques which are suitable to develop effective performance measurement and the control system.

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The key concept of the responsibility accounting is controllability. Thus, when F.T. Electronics Company wants to reduce the labor and operational cost while maximizing ROI, the controller should contemplate offering a new control system which can show the company reduce $28,659 excess in labor budget is reduced by 60%. F.T. Electronics Company has to reduce the billed person hours but not the labor force.

The management should target on meeting the current standards of performance with a process-oriented control within the departments. The financial control based system should not be emphasized since F.T Electronics Company is not operating at optimal. If F.T. Electronics Company wants to reduce the costs, it requires cell-based control to reduce the cost. For instance, appoint a cell leader who is in charge of the budget. This is because the operational controls are more important than the financial based control measures.

In a nutshell, F.T. Electronics Company should choose a temporary financial based control leader to lead the new control system and responsible for the budget because this is a timed management control measure.

 

 

Question 2

Walmart

The unwavering drive to adhere to its cost leadership purpose “everyday low prices” is why Walmart is so successful in a failing industry. (Efron, 2017) Walmart obsesses with “saving people more money” at every level of its organization by saving costs such as office janitors, expensive wall art, and so on to sell products at a lower price. Walmart doesn’t implement product differentiation simply because it doesn’t align with its purpose of “low cost”; Walmart doesn’t need it to be successful anyways. It’s simple, but meaningful, purpose allows customers to have more funds to spend on other important things, and therefore customer loyalty is strong and personal. Other retail stores are interchangeable with customers, but customers go to Walmart because they see a specific value.

Coca-Cola

Coca-Cola focused on driving revenue and profit growth. They used segmented revenue growth strategies across their business. Coca-Cola aims to let their beverages affordable and sustains the foundation for their future success. Coca-Cola creates different customer values with different countries. Also, Coca-Cola has introduced the “One-Brand Strategy” which has continued the simplicity of Coca-Cola. This strategy clearly stated how and what Coca-Cola wants to bring their products to consumers. Coca-Cola’s brand name and the distinct taste that it offered are the core competencies of the company. The company’s brand name and popularity all over the world are what make it saleable to all types of individuals. While creating value for our customers, Coca-Cola is able to guide the world’s most complicated system of independent bottling partners.

 

 

 

 

 

Question 3

a)     Jamphones is following differentiated product strategy because the mobile phone has standard features compared to others which improves customers’ value.

b)    Prestige Computers is following differentiated product strategy because this computer software package is the only one in current market that has the unique ability to interface with a sewing machine and a vacuum cleaner. No other packages have this ability therefore it increases customers’ value.

c)     Arvadam Pharmaceuticals is following low cost strategy because the sunscreen will be sold at discount retail stores which means it’ll have a lower selling price compared to others.

d)    Tim’s Delicatessen is following differentiated product strategy because the special line of gourmet pasta sauce is “special”, it is unique, and no other company has this line, therefore, increases customers’ value.