C. Implications of the rapid growth and strategy on the firm’s Management Control System (MCS) and Management Accounting System (MAS)
Hoque (2006) has described MCS as “an analytical and calculative process to make decisions to accomplish the organization’s objectives”. A MCS is formulated by some interdependent components: strategy, accountability structure, responsibility accounting, performance measurement, direction, motivation and incentives. Thus, it can be seen that MAS is one of the components that comprising MCS. Any changes in the environment must be responded by change in MCS. After investigating and evaluating HD thoroughly, it can be determined that HD does not have an effective MCS and MAS.
The main issues that occur in the current …show more content…
In applying JIT system, these following goals need to be considered: “elimination of non-value added activities”, “zero inventory”, “zero defects”, “batch sizes of one” with “zero breakdowns” and “a 100% on-time delivery system”. The reason to choose this technique was that HD’s smoothies have really short shelf life and prone to spoilage. It also makes it almost impossible for HD to have lots of products in stock for too long. Thus, the smoothies need to make as many as required, at the required quality and at the precise time. Using JIT, HD does not need any set-up time and hence, no set-up cost incurred. In addition, HD should aim for no inventory and apply quality management in order to have no defected products and control a good quality environment. In term of fruit suppliers, the fewer the better. Besides, HD should establish a good long-term relationship with them. This will also consistent with the initial strategy of having 100% pure ingredients. Moreover, Hoque (2006) also proposed a greater emphasis on cost management and non-financial indicators. Additionally, HD need assure that after finished produced and quality check, the smoothies can be handed over to the distributor (CS) immediately in order for them to be delivered to the stores as soon as possible. HD is also required to confirm with CS about the delivery dates and aim for “a 100% on-time delivery system”. Furthermore, JIT improve the traceability of costs. Most manufacturing costs of HD will be able to be traced directly as opposed to be traced indirectly by the traditional approach: materials handling, supervision… JIT can also provide HD with these following benefits: accuracy product-costing enhancement, behavioural changes… In the investigation of some New Zealand firms, Hoque (2000) has also proved that firms applying JIT will give lesser
Hoque (2006) has described MCS as “an analytical and calculative process to make decisions to accomplish the organization’s objectives”. A MCS is formulated by some interdependent components: strategy, accountability structure, responsibility accounting, performance measurement, direction, motivation and incentives. Thus, it can be seen that MAS is one of the components that comprising MCS. Any changes in the environment must be responded by change in MCS. After investigating and evaluating HD thoroughly, it can be determined that HD does not have an effective MCS and MAS.
The main issues that occur in the current …show more content…
In applying JIT system, these following goals need to be considered: “elimination of non-value added activities”, “zero inventory”, “zero defects”, “batch sizes of one” with “zero breakdowns” and “a 100% on-time delivery system”. The reason to choose this technique was that HD’s smoothies have really short shelf life and prone to spoilage. It also makes it almost impossible for HD to have lots of products in stock for too long. Thus, the smoothies need to make as many as required, at the required quality and at the precise time. Using JIT, HD does not need any set-up time and hence, no set-up cost incurred. In addition, HD should aim for no inventory and apply quality management in order to have no defected products and control a good quality environment. In term of fruit suppliers, the fewer the better. Besides, HD should establish a good long-term relationship with them. This will also consistent with the initial strategy of having 100% pure ingredients. Moreover, Hoque (2006) also proposed a greater emphasis on cost management and non-financial indicators. Additionally, HD need assure that after finished produced and quality check, the smoothies can be handed over to the distributor (CS) immediately in order for them to be delivered to the stores as soon as possible. HD is also required to confirm with CS about the delivery dates and aim for “a 100% on-time delivery system”. Furthermore, JIT improve the traceability of costs. Most manufacturing costs of HD will be able to be traced directly as opposed to be traced indirectly by the traditional approach: materials handling, supervision… JIT can also provide HD with these following benefits: accuracy product-costing enhancement, behavioural changes… In the investigation of some New Zealand firms, Hoque (2000) has also proved that firms applying JIT will give lesser