summarize chapter one accounting to performance

of the text book decide on pricing against plans and

attached in detail for different flight taking corrective
providing real routes. actions. For
examples. give example, if a fast-
 Financial
examples to your food chain like
Accounting: The
answers. provide McDonald's notices
same company
detailed answers with excess waste in
prepares financial
explanations and inventory,
statements for
examples. managers
investors
investigate and
Chapter 1 of the textbook, summarizing the
adjust procurement
titled Managerial profitability of their
strategies.
Accounting and the operations over a
Business Environment, year. 4. Decision Making:
provides an essential Choosing between
Key Activities of
foundation for alternatives based
Managers
understanding managerial on relevant data.
accounting, its role in Managers use managerial Bombardier, for
organizations, and how it accounting to perform instance, might
contrasts with financial four major activities: decide whether to
accounting. Below is a outsource
detailed summary with 1. Planning: component
examples: Establishing goals production to
and determining reduce costs.
The Role of Managerial strategies to
Accounting achieve them. For Comparison of
instance, a Financial and
Managerial accounting
marketing manager Managerial Accounting
focuses on providing
at a retail chain like
information to managers  Audience:
Canadian Tire might
within an organization to Managerial
budget for a holiday
assist in decision-making, accounting serves
sales campaign.
planning, controlling internal managers,
operations, and improving 2. Directing and while financial
efficiency. It contrasts with Motivating: accounting targets
financial accounting, Mobilizing external parties.
which serves external employees to
 Focus: Managerial
stakeholders like implement the plan.
accounting
shareholders and creditors Example: A
emphasizes future-
. production manager
oriented decision-
at Tesla motivates
Examples: making, while
their team to meet
financial accounting
 Managerial vehicle production
reflects past
Accounting: A targets.
performance.
company like Air
3. Controlling:
Canada might use  Flexibility:
Monitoring actual
managerial Managerial reports
 are not bound by Example: Toyota Conclusion
GAAP (Generally uses lean
This chapter underscores
Accepted techniques to
that managerial
Accounting minimize inventory
accounting is integral to
Principles), unlike and enhance
the planning and control
financial accounting production
cycle in organizations,
reports. efficiency.
helping managers achieve
Example: 2. Enterprise strategic goals efficiently
Systems: while adapting to a rapidly
 Managerial
Integrates data changing business
accounting might
across environment. Real-world
provide real-time
departments, applications, such as Air
sales data to a
ensuring Canada’s pricing
store manager to
consistency. strategies or Tesla’s
optimize daily
Example: Walmart production planning,
operations, while
employs an showcase the practical
financial accounting
enterprise resource importance of these
prepares quarterly
planning (ERP) concepts.
profit statements
system to manage
for regulatory
its supply chain.
compliance.
DISCUSSIONCASE
Ethics, Corporate
Organizational DISCUSSION CASE 1 – 1
Governance, and Social
Structure and Companies such as
Responsibility
Decentralization CIBC have developed a
The chapter discusses the detailed code of
The text highlights the
ethical responsibilities of conduct for their
importance of
managerial accountants, employees and often
organizational design,
emphasizing integrity, make this information
including decentralized
confidentiality, and publicly available by
systems where decision-
competence. Corporate providing a copy of the
making authority is
Social Responsibility (CSR) code online. For
distributed across various
is also highlighted as example, the CIBC code
levels. For example,
critical for building trust of conduct can be
Starbucks decentralizes its
and long-term success. found at http://
operations by giving
[Link]/ca/inside
regional managers Example:
-cibc/governance/
autonomy to adapt
 Companies like governance-practices/c
offerings based on local
Patagonia embed [Link] .
tastes.
CSR by producing Required : If you are an
Modern Business environmentally employee at CIBC, what
Processes sustainable are some benefits of
products, which having such a detailed
1. Lean Production: code of conduct? Might
helps attract
Reduces waste by there be any
ethically conscious
streamlining disadvantages to CIBC
consumers.
processes. in having such a
detailed code of avoid regulatory
conduct? answer with potential penalties.
reference to the book legal and
o Example: If
attached and provide reputational
detailed explanation risks. an employee
and examples discloses
2. Enhancing confidential
Benefits of a Detailed Corporate Culture client
Code of Conduct for A well-defined code information,
Employees at CIBC fosters a culture of the code of
accountability, conduct
1. Clarity in
professionalism, provides a
Expectations
and mutual respect. basis for
A detailed code of
Employees are disciplinary
conduct clearly
likely to feel aligned action,
outlines what
with the demonstratin
behaviors are
organization's g compliance
acceptable and
values, increasing with legal
unacceptable,
morale and unity. and
reducing ambiguity
regulatory
for employees. For o Example:
standards.
example, the code The code can
may specify policies emphasize 4. Building Trust
regarding inclusivity with Stakeholders
confidentiality, and diversity, Making the code
integrity in financial fostering an publicly available
reporting, and environment signals
customer relations. where transparency and
This ensures employees commitment to
employees from varied ethical business
understand their backgrounds practices. This can
responsibilities and feel valued enhance trust
the company’s and among customers,
ethical standards. respected. shareholders, and
the public.
o Example: An 3. Legal Protection
employee in The code acts as a o Example:
the safeguard for both CIBC’s code
investment the company and may include
banking its employees by guidelines for
division providing a legal fair lending
might refer framework for practices,
to the code addressing which could
to confirm misconduct. This build
the ethical can protect the consumer
implications company from confidence in
of insider lawsuits and the bank's
trading and integrity.
 requires significant 4. Public Criticism
resources. or Legal Exposure
Disadvantages of a
Making the code
Detailed Code of o Example:
publicly available
Conduct for CIBC CIBC may can expose CIBC to
need to scrutiny if
1. Rigid Application
invest in stakeholders
A detailed code
periodic perceive gaps or
may leave little
training inconsistencies in
room for discretion
workshops to its content or
or flexibility in
ensure application. Failure
complex, real-world
employees to uphold certain
scenarios.
across all standards can
Employees might
branches result in
feel constrained by
understand reputational
the rules, which
the updated damage.
could limit their
provisions of
ability to make
the code. o Example: If
judgment-based
the code
decisions. 3. Potential Misuse
emphasizes
or Overreach
o Example: A sustainability
The code could be
manager in but CIBC is
interpreted in a way
customer found
that discourages
service might financing
whistleblowing or
hesitate to environment
penalizes
offer a ally harmful
employees for
creative projects,
unintentional, minor
solution to a stakeholders
infractions. This
client issue may accuse
might lead to fear
due to fear of the bank of
and dissatisfaction
violating a hypocrisy.
among employees.
strict rule in
the code. o Example: If
a junior Conclusion
2. Implementation
employee
and Training A detailed code of conduct
unknowingly
Costs is a powerful tool for
violates a
Developing, ensuring ethical behavior,
minor clause,
updating, and enhancing corporate
they might
training employees culture, and protecting
face
on a comprehensive legal interests. However, it
disciplinary
code can be costly must be complemented
action that
and time-intensive. with regular training,
feels
Ensuring all updates, and mechanisms
disproportion
employees are for addressing real-world
ate, affecting
familiar with and complexities to avoid
morale.
adhere to the code rigidity and
misinterpretation. CIBC, good ethical requirement to
like any organization, reputation? 1–1 3 Why adhere to GAAP.
needs to balance do companies prepare
Example: Financial
specificity with flexibility a code of conduct? 1–1
accounting reports
to maximize the benefits 4 What are the four key
quarterly profits, while
of such a code. aspects of the
managerial accounting
Sarbanes-Oxley Act of
analyzes product costs to
2002 ? 1–1 5 Briefly
determine pricing
1–1 What are the major describe what is meant
strategies.
differences between by enterprise risk
financial and management . 1 – 16
managerial What are some
examples of common 1–2: Four Major
accounting? 1–2
business risks faced by Activities of a Manager
Describe the four major
activities of a manager. companies? 1. Planning: Setting
1 – 3 What is a budget? QUESTIONS goals and
1– 4 Describe the three objectives (e.g.,
broad categories of developing a
customer value 1–1: Major Differences market expansion
propositions. 1–5 What Between Financial and strategy).
are the four steps in Managerial Accounting
the planning and 2. Directing and
 Financial Motivating:
control cycle? 1–6
Accounting Leading teams to
Describe the
focuses on implement plans
responsibilities of the
providing historical (e.g., managing
controller. 1–7
financial production
Distinguish between
information to schedules).
line and staff positions
external
in an organization. 1–8 3. Controlling:
stakeholders (e.g.,
What is Monitoring
shareholders,
decentralization? 1 – 9 performance and
creditors) and must
What are the six correcting
comply with
business functions that deviations (e.g.,
Generally Accepted
make up the value comparing
Accounting
chain? 1– 10 What are budgeted vs. actual
Principles (GAAP).
some examples of costs).
things socially  Managerial
responsible Accounting 4. Decision Making:
organizations should provides future- Choosing among
provide for their oriented alternatives (e.g.,
employees? 1–1 1 What information to deciding whether to
is an enterprise system internal managers outsource a product
supposed to for planning, line).
accomplish? 1 – 12 Why decision-making,
should companies be and control, with no
careful to maintain a 1–3: What is a Budget?
A budget is a detailed 1. Planning: Defining roles (e.g., HR
financial plan for acquiring objectives and manager).
and using resources over methods.
a specific period. It helps
2. Implementing
organizations allocate 1–8: What is
Plans: Executing
resources, forecast Decentralization?
strategies.
financial performance, and
control operations. Decentralization refers
3. Monitoring:
to delegating decision-
Comparing actual
Example: A company like making authority to lower
outcomes with the
Apple prepares a budget levels of management
plan.
for R&D expenditures to within an organization.
develop new products. 4. Feedback:
Example: Starbucks
Adjusting plans
allows regional managers
based on
to adapt menus to local
1–4: Three Broad performance
preferences.
Categories of Customer analysis.
Value Propositions
1. Customer 1–9: Six Business
1–6: Responsibilities of
Intimacy: Offering Functions in the Value
the Controller
customized Chain
solutions (e.g., The controller oversees
Nordstrom's 1. Research and
the preparation of
personalized Development
financial reports,
shopping (R&D).
budgeting, internal
experiences). controls, and compliance 2. Product Design.
with regulations. They
2. Operational 3. Manufacturing.
ensure accurate and
Excellence:
timely financial 4. Marketing.
Providing reliable
information for decision-
products/services at
making. 5. Distribution.
low cost (e.g.,
Walmart). 6. Customer Service.
3. Product 1–7: Line vs. Staff
Leadership: Positions
Delivering 1–10: Socially
innovative products  Line Positions: Responsible
(e.g., Tesla's electric Directly involved in Organizations for
vehicles). achieving company Employees
goals (e.g., a
 Fair wages.
production
manager).  Safe working
1–5: Four Steps in the
Planning and Control conditions.
 Staff Positions:
Cycle Provide support and  Opportunities for
expertise to line growth and
development.
  Health and wellness ethical behavior, ensuring  Regulatory
programs. employees align with the changes.
company's values and
Example: Patagonia  Supply chain
reducing misconduct risks.
provides paid volunteer disruptions.
time for employees to
Example: During COVID-
work on environmental
1–14: Four Key Aspects 19, many businesses
projects.
of the Sarbanes-Oxley faced operational risks
Act of 2002 due to supply chain
disruptions.
1–11: What is an 1. Corporate
Enterprise System? responsibility for
financial reports.
An enterprise system EXERCISE 1–1 Functions
integrates data across 2. Increased auditor Performed by
business functions to independence. Managers [LO1] Each of
enhance coordination and the following
3. Enhanced internal
decision-making. independent examples
controls.
involves one or more of
Example: SAP's ERP
4. Greater penalties the four major
system consolidates
for fraudulent activities carried out by
financial, HR, and supply
activities. managers at Sights and
chain data.
Sounds, a
manufacturer of high-
1–15: Enterprise Risk quality televisions and
1–12: Importance of audio equipment for
Management (ERM)
Ethical Reputation home use: planning,
ERM is a framework for directing and
A strong ethical reputation
identifying, assessing, and motivating, controlling,
builds trust with
mitigating risks across an and decision making. i .
customers, employees,
organization to achieve Sales managers are
and investors, reduces
strategic objectives. developing estimates
legal risks, and ensures
long-term sustainability. of next year’s demand
Example: A bank
for the company’s
implements ERM to
Example: Johnson & newest line of LCD
manage credit, market,
Johnson's swift response televisions. This
and operational risks.
to the Tylenol crisis information will be
demonstrated ethical used in preparing the
accountability, preserving annual budget. ii. In
trust. 1–16: Common reviewing the monthly
Business Risks quality control reports,
 Economic the production
1–13: Why Companies downturns. manager for home
Prepare a Code of theatre systems has
Conduct  Technological noticed that an
obsolescence. unusually high number
A code of conduct of units were
provides guidelines for
discovered to have action to address
manufacturing defects. deviations.
i. Developing estimates
She is putting together
of next year’s demand Example: The team may
a team of employees to
for LCD televisions identify defective
investigate the
components from a
problem. iii. Managers Activity: Planning
supplier or procedural
in the research and
 Explanation: This errors in the assembly
development
activity involves line.
department are
developing a forecasting future
recommendation as to demand, which is
which of two an essential part of iii. Developing
alternative design the planning recommendations for
choices the company process. Planning alternative design
should use for its line sets objectives and choices for floor
of floor speakers. iv . prepares budgets to speakers
The most recent guide resource
Activity: Decision
monthly performance allocation and
Making
report shows operational focus.
disappointing results  Explanation:
Example: Estimating
for sales of the Evaluating and
demand helps Sights and
company’s line of recommending
Sounds decide how many
plasma televisions in design alternatives
LCD televisions to produce
May. Sales are well requires analyzing
and allocate marketing
below budget, and the costs, benefits, and
efforts effectively.
product manager for potential market
plasma televisions is responses.
evaluating several Decision-making
ii. Investigating
issues, including how involves choosing
unusually high
retailers can be the best course of
manufacturing defects
motivated to improve action from
in home theatre
sales; the production available
systems
schedule for the next alternatives.
three months; and, Activity: Controlling
Example: Managers
longer term, the
 Explanation: The might compare the cost-
possibility of
production manager effectiveness and
discontinuing this
is responding to consumer appeal of two
product line. Required :
quality control designs, considering
For each example,
reports, which material costs and sound
select which of the four
involves monitoring quality.
activities managers are
carrying out and briefly and evaluating
explain the basis for performance
your choice(s). Some against standards. iv. Evaluating
examples may include Forming a team to disappointing sales
more than one type of investigate results for plasma
activity. suggests corrective televisions
Activity: Controlling, demand, or invest in more This approach highlights
Directing and profitable product lines. the interconnected nature
Motivating, and of managerial activities
Decision Making and their relevance to
Summary Table: real-world situations at
 Explanation:
Sights and Sounds. Let me
Controlling: Activit know if you'd like more
o Scenario Reason
The manager y examples or further
reviews sales clarification!
Forecast
performance ing for
against the i.
budgeti
budget, Estimatin Plannin Each of the following is
ng and
identifying g g primarily either
resource
areas of demand financial accounting or
allocatio
underperform n. managerial accounting
ance. in nature. i . Preparing
Monitori an income statement
o Directing for use in filing the
ng and
and ii.
addressi company’s annual
Motivating: Investigat Control
ng corporate tax return
Exploring ing ling
quality with the Canada
ways to defects
deviatio Revenue Agency. ii.
motivate ns. Preparing an analysis
retailers of the profitability of
involves Choosin each of the company’s
guiding and g the three major product
inspiring iii. best lines for the past three
Decisio
stakeholders Recomme alternati months. The analysis
n
to improve nding ve for will be used to make
Making
outcomes. designs product decisions related to
develop resource allocation,
o Decision
ment. potential changes in
Making:
Considering Reviewi marketing strategy,
discontinuing ng and production
the plasma Control perform scheduling. iii.
TV line ling, ance, Preparing a detailed
involves Directi motivati schedule of accounts
strategic iv. ng and ng receivables balances
analysis and Evaluatin Motiva stakehol that are more than 120
long-term g sales ting, ders, days past due to
planning. Decisio and determine the
n strategi allowance for doubtful
Example: The manager accounts to be used in
Making c
might decide to offer the year-end financial
adjustm
promotions to retailers, statements. iv.
ents.
adjust the production Estimating customer
schedule to reflect lower
satisfaction by information. ii. Exercise 1–2: Financial
calculating the dollar Inspection of raw vs. Managerial
value of all products materials purchased Accounting
returned in the past from suppliers to
1. Preparing an
month and comparing reduce the likelihood of
income statement
it to returns in the defective or
for filing a tax
same month last year. substandard materials
return
v. Preparing a detailed being used in
schedule of accounts production. iii. A o Nature:
receivables balances licensing system for Financial
that are more than 120 the company’s Accounting
days past due for only products whereby to be
those customers who a certified distributor, a o Explanation
regularly purchase the retailer must satisfy : This is
company’s products. several requirements prepared for
The purpose of the related to location external use,
analysis is to identify (e.g., total population), specifically
potential changes to industry experience, for regulatory
the credit terms store size, number of compliance
offered to regular salespeople, etc. iv. with the
customers (e.g., Database firewalls that Canada
payment due dates, prevent hackers from Revenue
interest on overdue accessing sensitive Agency, and
balances). Required : information on new follows
For each item above, products being standardized
briefly explain whether developed. v. The use rules like
it is primarily financial of consumer focus GAAP.
accounting or primarily groups to pilot test 2. Analyzing
managerial accounting new advertising profitability of
in nature. EXERCISE 1– campaigns to assess major product
3 Risk Management their appeal, clarity of lines
and the Value Chain messaging, and impact.
[LO4] Sights and vi. Rigorous testing o Nature:
Sounds, a protocols to ensure all Managerial
manufacturer of high- new products are Accounting
quality televisions and designed to comply
o Explanation
audio equipment for with safety regulations
: This
home use, has before being put into
analysis
implemented the production. Required:
supports
following controls as For each item, identify
internal
part of managing which of the six
decision-
business risks. i . business functions that
making, such
Security features on make up the value
as resource
their online shopping chain the control
allocation,
website to prevent relates to most
marketing
unauthorized access to directly.
strategies,
customer credit card
 and aimed at Customer
production improving Service
schedules, processes
o Explanation
with no and customer
requirement satisfaction : Protecting
to adhere to metrics. customer
external information
5. Preparing an ensures trust
reporting
accounts in online
standards.
receivables transactions,
3. Preparing a schedule for directly
detailed accounts credit term enhancing
receivables changes the customer
schedule for service
o Nature:
year-end experience.
statements Managerial
Accounting 2. Inspection of raw
o Nature: materials
o Explanation
Financial
: The o Function:
Accounting
analysis is Production
o Explanation intended for
o Explanation
: This is used internal
to prepare decision- : Ensures raw
financial making about materials
statements customer meet quality
for external credit standards,
stakeholders, policies preventing
requiring rather than defects and
compliance external maintaining
with reporting. production
accounting efficiency.
standards. 3. Licensing system
Exercise 1–3: Risk for certified
4. Estimating
Management and the distributors
customer
Value Chain
satisfaction by o Function:
comparing For each control, the most Marketing
product returns relevant business function
in the value chain is o Explanation
o Nature: : Ensures
identified:
Managerial distribution
Accounting 1. Security features aligns with
on the online strategic
o Explanation
shopping website marketing
: This
information is goals, such
o Function:
internally as targeting
Marketing
focused, specific
and
 customer o Function: Value
demographic Production Contro Chain Explana
s. l Functio tion
o Explanation
n
4. Database : Ensures
firewalls to that products ng
secure sensitive meet safety distributi
system
product regulations on with
for
information before marketin
certifie g
production, g and
d
o Function: branding
protecting distribu
Research goals.
the tors
and
company's
Developme Researc Secures
reputation Databa
nt (R&D) h and sensitive
and legal se
o Explanation standing. Develop innovatio
firewall
: Protects ment n-related
s
proprietary (R&D) data.
information Summary Table for Risk Evaluate
during the Management and Value Consu s and
product Chain mer refines
development focus marketin
phase. Value Marketin
Contro Chain Explana groups g
g
5. Consumer focus l Functio tion for message
groups for n adverti s for
testing sing effective
advertising Builds ness.
Securit
campaigns custome
y Marketin Ensures
r trust
o Function: feature g and complian
and Product
Marketing s on Custom ce with
ensures testing
shoppin er regulatio
secure for Producti
o Explanation g Service ns and
transacti safety on
: Evaluates website maintain
ons. complia
the s
effectiveness nce
Ensures product
of marketing input quality.
strategies quality
before full- Inspecti Let me know if you need
for
scale on of further clarification or
Producti efficient
implementati raw additional examples!
on and
on. materia
defect- PROBLEM 1–4 Ethics in
ls
6. Rigorous product free Business [ LO5 ] John
testing for safety producti Brigley, CPA, is the
compliance on. controller of Baden
Foods, a large privately
Licensi Marketin Aligns
owned food processing
company located in Marketing, receive a high expense
southern Ontario. bonus. Last year was estimates) to
Brigley received his the first year the new make it
designation as a bonus plan was used, easier to
certified professional and bonuses were paid exceed
accountant several out in 5 of the 12 targets.
years ago and has been months of the fiscal
o Ethical
working his way up the year.
corporate ladder at Concern:
Analysis of Ethical Manipulating
Baden Foods. As
Issues in Business the budget
controller, Brigley is
Decision-Making at undermines
responsible for
Baden Foods its purpose
coordinating the
preparation of the as a realistic
The scenario raises
annual operating planning tool
several ethical
budget, which includes and misleads
considerations regarding
projections of revenues stakeholders
the budgeting process and
and expenses for the regarding
its connection to
coming year. Once the company
performance incentives.
budget is approved by performance.
Below is a detailed
James Davis, the evaluation: Example: If Brigley
president of Baden underestimates the
Foods, it is used in the expected revenue from a
monthly performance Ethical Concerns major product line, the
report, which compares company may consistently
actual results to the 1. Potential "exceed" budgeted
budget projections. To Manipulation of targets, leading to
provide an incentive the Budget unwarranted bonuses.
for the senior
o The bonus 2. Conflict of
management team to
plan Interest
make decisions that
incentivizes
benefit the company as o As the
achieving
a whole, last year Davis controller,
actual
established a bonus Brigley’s
operating
plan. In any month that responsibility
income
the company’s actual is to prepare
better than
operating income an accurate
the budgeted
(revenues minus budget.
amount. This
expenses) is better However, his
could lead to
than the budgeted role as a
intentional
amount, all members of bonus
under-
the senior management recipient
budgeting
team, including the creates a
(i.e., setting
CFO, the controller, the conflict of
artificially
vice-president of interest, as
low revenue
Production, and the he might
projections or
vice-president of
 prioritize boundaries by an
personal gain are blurred, impartial
over potentially third party,
professional leading to such as an
integrity. fraudulent audit
reporting or committee.
o Ethical
operational
Concern: A o Example: A
inefficiencies.
conflict of finance team
interest can Example: The VP of not eligible
erode trust in Production might delay for bonuses
the necessary repairs or could review
budgeting maintenance to reduce the budget
process and expenses artificially. for accuracy.
harm the
2. Implement
organization’
Performance
s credibility. Professional and
Metrics Beyond
Ethical Standards
Example: Brigley could the Budget
inflate expense According to the CPA Code
o Bonuses
projections for marketing of Ethics, professionals
to ensure actual costs should be
must adhere to principles
appear favorable during tied to
of integrity, objectivity,
performance evaluations. broader
and due care.
performance
Manipulating financial
3. Pressure on Team metrics, such
projections or
Members as revenue
performance reports
growth,
o Other senior violates these principles
customer
managers, and risks professional
satisfaction,
such as the sanctions or legal
or
vice- consequences.
operational
president of
efficiency, to
Production or
reduce the
Marketing, Recommendations incentive to
may face
1. Separate manipulate
pressure to
Budgeting and projections.
manipulate
reporting to Bonus Eligibility o Example: A
ensure the o The budget balanced
company should be scorecard
qualifies for prepared approach
bonuses. independentl could assess
y, without overall
o Ethical
influence contributions
Concern:
from the to company
This fosters a
bonus plan, objectives.
culture where
ethical and validated
3. Enhance ethical lapses final touches on the
Oversight in budgeting budget projections and
led to will have a draft
o Establish
reputational version for your review
regular damage or first thing Monday
internal legal morning. Robson :
audits to consequence Great, glad to hear it.
review the s. How do the operating
budget income numbers look
process and compared to last year’s
monthly actual results? Brigley :
Conclusion
performance They look great. With
reports for While the bonus plan the success of some of
inconsistenci incentivizes improved our new products last
es or red performance, it introduces year, our new
flags. significant ethical risks, marketing campaign,
including budget and the tainted food
o Example: An
manipulation and conflicts scandal that has
external
of interest. Addressing plagued one of our key
auditor could
these risks requires robust competitors, I’m
verify that
internal controls, ethical budgeting significant
financial
awareness, and diverse increases in operating
reporting
performance metrics to income each month
aligns with
ensure decision-making compared to last year.
ethical
aligns with the company’s Robson : Significant
standards
long-term interests and increases every month?
and best
professional standards. Are you sure about
practices.
this? Brigley : Well, as
4. Promote Ethical sure as one can ever be
Training and Late Friday afternoon, when projecting what
Awareness as Brigley was working revenues and expenses
on finalizing the will be in the future.
o Conduct
operating budget for But I’m confident that
workshops
the upcoming fiscal the budget is based on
for senior
year, he received a call reasonable
management
from Jan Robson, the expectations. I’ve
to emphasize
CFO at Baden Foods. talked to all the key
the
The conversation went managers in production
importance
as follows: Robson : Hi and marketing, and
of ethical
John, how goes the they agree that my
practices in
budgeting process? We estimates are very
budgeting
have the review with reasonable. Robson :
and
James Davis next week Sounds like you’ve
reporting.
so I just want to be done your homework,
o Example: sure we’re good to go. as usual. I’m thinking
Highlight Brigley : Really well, though that maybe
cases where Jan. I’m just putting the being a bit more
conservative in our beat just to get our comply with Robson’s
budget estimates bonuses seems just as request for a
might be a better way unethical as misstating “conservative budget,”
to go. Brigley : I don’t the actual results. what aspects of the
quite follow. It’s not Robson : I disagree. code of professional
that the estimates are The budgets are used ethics featured in
aggressive. As I said, only for internal Exhibit 1–7 should
all the key managers purposes. What’s the guide Brigley’s
think the budget is harm in being a little behaviour? 2. What
reasonable, and conservative? Besides, would you recommend
attainable if we work we all work hard and that Brigley do, and
hard. Robson : Right, I we deserve the why?
understand that. I’m monthly bonuses.
1. Ethical
just saying that given Davis will never know
Considerations from
the new bonus plan because he’s so busy
the Code of
that Davis introduced with his charitable
Professional Ethics
last year, maybe we foundations these days
should be developing that he really doesn’t Exhibit 1–7 in the textbook
monthly budgets that have a good idea of outlines core principles
we are sure we can what’s realistic when it that should guide Brigley's
meet or beat. Do you comes to the budget decision. These principles
follow? Brigley : Wait a each year. As you know include:
minute—are you he basically approves
suggesting that we whatever we 1. Integrity
intentionally lowball recommend without  Brigley must be
the budget numbers much discussion. honest and
just so we can get our Brigley : But won’t he straightforward in
bonuses each month? get suspicious when his professional
Robson : I prefer to actual results are responsibilities.
think of it as better than the budget Intentionally
conservative budgeting every month? Robson : preparing a budget
as opposed to Heck no, he’ll just be that misrepresents
lowballing. Plus, it’s delighted that we’re reasonable
not like I’m asking you doing better than expectations
to misstate the actual expected! It’s a win– violates integrity.
revenues and expenses win situation, John.
that get reported each We’ll get our bonuses  Violation
month. That would be and Davis will be happy Example: Creating
unethical since the the company is doing a "lowball" budget
actual numbers get so well. I’ve got to run, would knowingly
used by our creditors but I look forward to mislead
and by the tax seeing those stakeholders about
authorities. Brigley : I conservative budget expected
don’t know, Jan. projections first thing performance,
Intentionally Monday morning. undermining trust
developing budgets Required: 1. In in the budgeting
that we know we can deciding whether to process.
2. Objectivity “conservative” 2. Recommended
approach is Course of Action
 Accountants must
unprofessional.
avoid biases or Recommendation for
conflicts of interest 4. Confidentiality Brigley: Reject
that could influence Robson’s Request
 While
their decisions.
confidentiality isn’t Brigley should refuse to
Robson’s
directly at issue in prepare a deliberately
suggestion
this scenario, conservative budget and
introduces a clear
trustworthiness in instead:
conflict between
financial matters
achieving bonuses 1. Explain Ethical
aligns with
and creating an Concerns to
maintaining ethical
accurate, objective Robson
practices across all
budget.
professional o Clearly
 Violation activities. articulate
Example: A biased that
5. Professional
budget prepared to "lowballing"
Behavior
secure bonuses the budget
compromises  Brigley must adhere violates core
professional to laws, regulations, ethical
independence. and professional principles,
standards. including
3. Professional
Manipulating integrity and
Competence and Due
budgets for objectivity.
Care
bonuses may not
 Brigley is breach legal o Emphasize
responsible for standards directly, the long-term
ensuring that the but it undermines consequence
budget is based on the spirit of fair and s of
sound, well- ethical corporate undermining
researched data governance. trust in
and reasonable internal
 Violation processes
assumptions.
Example: and the
Deliberately
Misleading internal potential
conservative
reports could harm harm to the
estimates disregard
organizational organization’
the due diligence
decision-making s culture and
already performed.
and, eventually, reputation.
 Violation external
Example: stakeholders if Example Response:
Disregarding input uncovered. o "I cannot
from production justify
and marketing preparing a
managers in favor budget that
of an arbitrary
 intentionally 3. Propose an o Brigley
misrepresent Alternative should keep
s our Solution a written
reasonable record of the
o Advocate for
expectations. conversation
It would modifying the
and his
compromise bonus plan to
objections.
my tie incentives
This
professional to broader,
documentatio
integrity and objective
n is vital if
the trust our metrics, such
the issue
company as year-over-
escalates or
places in us." year growth,
external
customer
auditors later
2. Report the satisfaction,
investigate
Concern to a or market
the
Higher Authority share, rather
budgeting
than
o If Robson practices.
consistently
persists,
outperformin
Brigley
ga
should Why This Course of
potentially
escalate the Action is Critical
manipulated
matter to the
budget. 1. Maintaining
CEO (James
Professional
Davis) or the o Suggest
Integrity
board of regular
directors. The external o Brigley must
CFO’s reviews of uphold his
suggestion budgeting CPA ethical
directly and standards
impacts performance and serve as
corporate to ensure a role model
governance alignment for ethical
and with ethical behavior
transparency, standards. within the
making it organization.
essential to Example: "To align
address at bonuses with ethical 2. Preventing Long-
the highest practices, I recommend Term Harm
level. linking them to realistic
growth goals rather than o While Robson
Example: Inform Davis of surpassing conservative views the
the potential conflict budgets." situation as a
between the bonus plan "win-win,"
and ethical budgeting 4. Document the manipulating
practices. Interaction budgets
undermines
 the
company’s
PROBLEM 1–5 Planning 1. Planning
internal
and Control Activities
processes Planning involves setting
[LO1] The Sports
and could objectives and
Network (TSN), a
lead to determining the strategies
Canadian television
greater and resources needed to
network, broadcasts a
scrutiny or achieve them.
variety of content,
scandal if
including sporting 1. Programming
discovered.
events (e.g., baseball, Schedule
3. Preserving Trust basketball, football, Development
golf, hockey), feature
o Both internal o Planning the
programs (e.g., “That’s
and external Hockey”), and news broadcasting
stakeholders broadcasts (e.g., schedule for
rely on the “Sports Desk”). upcoming
accuracy of Managing a major sporting
financial television network such events,
information. as TSN very frequently feature
By refusing involves planning, programs,
to comply, directing and and news
Brigley motivating, controlling, segments.
safeguards and decision making. Example:
the credibility Indeed, networks such Scheduling
of Baden as TSN deliver new hockey
Foods' program content to playoffs
financial viewers on a daily during
practices. basis, with some primetime to
content, such as sports maximize
news broadcasts, viewership
Conclusion changing as the day and
unfolds. Managing this advertising
Brigley should uphold
type of organization is revenue.
ethical standards, reject
Robson’s suggestion, and highly challenging and 2. Budget Allocation
advocate for alternative [Link]: For
each of the four o Preparing a
solutions that align with
professional integrity and functions performed by budget for
long-term corporate managers (planning, production
success. Addressing the directing and costs, staff
issue transparently and motivating, controlling, salaries,
constructively can help and decision making), marketing
Baden Foods maintain identify three examples campaigns,
ethical practices while of activities managers and
fostering a culture of at a television network technology
accountability. such as TSN would upgrades.
likely engage in. Example:
 Allocating o Ensuring halftime
funds to production discussions.
cover live teams are
3. Inspiring
event ready for live
Innovation
broadcasting broadcasts
rights for by providing o Encouraging
major clear creativity in
tournaments instructions creating new
like the and segments or
Stanley Cup resources. improving
Finals. Example: existing
Motivating programs.
3. Marketing
the crew to Example:
Campaigns
adapt to last- Motivating
o Strategizing minute the team to
and planning changes, introduce
promotional such as interactive
activities to rescheduling features,
attract new due to such as real-
viewers and weather time polls
retain delays in during live
existing outdoor games.
ones. sports.
Example:
2. Collaborating
Launching a 3. Controlling
with Talent
campaign to
promote o Working Controlling involves
exclusive closely with monitoring performance
coverage of a on-air talent and making adjustments
major (e.g., sports to stay on track with
international analysts, goals.
event like the commentator 1. Performance
Olympics. s) to Monitoring
maintain
energy and o Comparing
2. Directing and engagement viewership
Motivating during ratings for
broadcasts. different
This function focuses on Example: programs to
leading teams to Encouraging identify
implement plans and a charismatic successes
achieve goals. sports and areas for
1. Guiding analyst to improvement
Production Teams build .
excitement Example:
during Reviewing
 audience Decision making involves g augmented
data after a selecting the best course reality (AR)
weekend’s of action from multiple graphics
broadcasts to alternatives. during
assess the broadcasts.
1. Choosing
popularity of
Programming 3. Negotiating
new content.
Content Advertising Deals
2. Quality
o Deciding o Making
Assurance
which sports decisions
o Ensuring events or about
broadcasts shows to partnerships
meet broadcast with
technical and based on advertisers
content audience and
quality preferences sponsors.
standards. and potential Example:
Example: advertising Choosing
Monitoring revenue. between
sound and Example: competing
video quality Opting to air brands to
during live a high-stakes sponsor a
events and basketball major event
addressing game over a based on
issues less popular financial
immediately. golf benefits and
tournament. brand
3. Expense Tracking
alignment.
2. Investing in
o Evaluating
Technology
whether
actual o Deciding Summary Table
expenses whether to
align with the upgrade to Function Examples
budget. 4K Programming
Example: broadcasting schedule
Monitoring to enhance development,
travel and viewer Planning budget
lodging costs experience allocation,
for reporting and stay marketing
teams competitive. campaigns.
covering Example:
international Evaluating Directing Guiding
tournaments. costs and & production
potential ROI Motivatin teams,
for g collaborating
4. Decision Making implementin with talent,
Function Examples strengthened Exhibit 1–7 to support
Williams’s your answer. 2. For
inspiring determination to probe each of the two
innovation. this area further to be alternative courses of
sure that the company action that Williams
Performance
was not vulnerable to has outlined, explain
monitoring,
litigation. On further whether or not the
Controllin quality
investigation, Williams action is appropriate
g assurance,
discovered evidence according to the
expense
that GroChem was guidelines presented in
tracking.
using a nearby Exhibit 1–7. 3. Assume
PROBLEM 1–6 Ethics in residential landfill to that Williams sought
Business [LO 5 ] Anna dump toxic wastes—an the advice of her
Williams, CPA, was illegal activity. It superior, the controller,
recently hired as appeared that some and discovered that
assistant controller of members of GroChem’s the controller was
GroChem Inc., which management team involved in the
processes chemicals were aware of this dumping of toxic
for use in fertilizers. situation and may have wastes. Describe the
Williams was selected been involved in steps that Williams
for this position arranging for this should take to resolve
because of her past dumping; however, this situation.
experience in chemical Williams was unable to
1. Ethical
processing. During her determine whether her
Responsibility to Act
first month on the job, superior, the controller,
Williams made a point was involved. Anna Williams has an
of getting to know the Uncertain how she ethical responsibility to
people responsible for should proceed, take action based on her
the plant operations Williams began to professional obligations
and learning how consider her options by and adherence to the
things are done at outlining the following Code of Professional
GroChem. During a two alternative courses Ethics outlined in Exhibit
conversation with the of action: • Seek the 1–7. Key principles
plant supervisor, advice of her superior, include:
Williams asked about the controller. •
the company Anonymously release  Integrity: Williams
procedures for the information to the must act honestly
handling toxic waste local newspaper. and uphold her
materials. The plant Required: 1. Discuss professional
supervisor replied that why Williams has an responsibility to the
he was not involved ethical responsibility to public, even if it
with the disposal of take some action in the conflicts with
wastes and suggested matter of GroChem Inc. company interests.
that Williams might be and the dumping of Dumping toxic
wise to ignore this toxic wastes. Refer to waste into a
issue. This response the code of residential landfill is
professional ethics in illegal, unethical,
 and harmful to the By taking action, Williams prioritize integrity
environment and not only fulfills her and objectivity.
community health. professional duty but also Consulting the
Ignoring it would protects GroChem from controller may
compromise her potential lawsuits, fines, conflict with these
integrity. and reputational damage. principles if the
controller’s
 Objectivity:
involvement is
Williams must
2. Evaluation of the suspected.
remain unbiased in
Two Proposed Actions
addressing this b. Anonymously
issue, ensuring her a. Seeking Advice from Releasing Information
decisions are based the Controller to the Newspaper
on facts and ethical
 Appropriateness:  Appropriateness:
considerations
Seeking advice Anonymously
rather than
from the controller reporting to the
personal gain or
may initially seem press is not an
fear of retribution.
reasonable as part appropriate course
 Professional of escalating of action according
Competence and concerns through to the Code of
Due Care: As a proper channels. Professional Ethics.
CPA, Williams is However, this This breaches
expected to approach is only confidentiality and
exercise due appropriate if bypasses internal
diligence to identify Williams is mechanisms for
and address confident the addressing ethical
unethical practices controller is not violations.
within her complicit in the
 Risks: Publicly
organization. illegal activity.
disclosing the issue
 Public Interest:  Risks: If the could expose
Protecting the controller is GroChem to
public from harm involved, this immediate legal
caused by illegal course of action action and
toxic waste could lead to reputational harm
dumping is a critical suppression of the without giving the
aspect of Williams’s issue, retaliation organization an
ethical against Williams, or opportunity to
responsibility. The escalation of resolve the matter
illegal dumping unethical practices. internally.
could have serious
 Code of Ethics  Code of Ethics
consequences for
Consideration: Consideration:
the environment,
While adhering to While releasing the
community health,
the principle of information aligns
and GroChem’s
confidentiality, with public interest,
stakeholders.
Williams must it violates the
 principles of complicit, escalate according to some
confidentiality and the matter to estimates involve 14
due care. GroChem’s million vehicles
compliance officer worldwide. Also,
or legal reports suggest that
3. Steps if the department. Toyota did not tell
Controller is Involved federal regulators in
Step 3: Consult
Canada about a
If Williams discovers the Professional Bodies
possible problem with
controller is complicit, she the accelerator pedal
 Seek guidance from
must take the following when the company first
the professional
steps to resolve the learned of the issue.
accounting
situation: Instead Toyota waited
organization (e.g.,
Step 1: Document CPA Canada) to until after the recall
Evidence ensure her actions notice had been issued
align with ethical to inform regulators
 Maintain detailed standards and about the problem.
and accurate receive support for Some have suggested
records of all navigating the that Toyota’s rapid
evidence related to situation. growth in worldwide
the toxic waste production and sales
dumping and any  **Purpose compromised its focus
involvement of the on maintaining high
controller or other standards of quality. In
management PROBLEM 1–7 response to the crisis,
members. Corporate Governance Toyota temporarily
and Corporate Social closed some plants in
 Purpose: Protect
Responsibility [LO 5 ] Britain and France as a
herself from
Problems experienced result of lower demand
retaliation and
by Toyota Motor because of the recalls.
provide a basis for
Corporation beginning The company also
further action.
in 2010 with offered significant
Step 2: Escalate to accelerator pedals discounts to win back
Higher Authorities sticking and brakes lost customers in North
malfunctioning in some America. In December
 Report the issue to of its vehicle models 2012, Toyota
higher illustrate how announced that it will
management, such important it is to pay over $1 billion to
as the CEO or board identify and control settle hundreds of
of directors, in business risks, even for lawsuits related to the
accordance with the highly reputable accelerator problems.
organization’s companies. Among Required: 1. Identify
whistleblower other things, Toyota stakeholders that were
policies. was criticized for not probably negatively
 Example: If the acting quickly enough affected by the
controller is in implementing problems experienced
recalls, which by Toyota. 2. What role
does effective  Example: The $1 regulators in
corporate governance billion settlement Canada and
play in reducing the and subsequent elsewhere.
likelihood that loss of market share
 Example:
companies will negatively affected
Regulators faced
experience the types of shareholder returns.
criticism for not
problems faced by
c. Employees identifying the issue
Toyota?
earlier and ensuring
 Impact: Employees
1. Stakeholders public safety.
in plants that were
Negatively Affected by
temporarily closed f. Communities
Toyota’s Problems
faced job
 Impact:
The issues Toyota faced uncertainty and
Communities reliant
with accelerator pedals potential income
on Toyota plants for
and brakes likely had loss.
economic stability
widespread negative
 Example: Workers were affected by
impacts on various
in Britain and reduced production
stakeholders:
France suffered due and uncertainty.
a. Customers to the suspension of
 Example: Towns
production caused
 Impact: Customers hosting Toyota
by reduced
who purchased plants in Britain and
demand.
Toyota vehicles France faced
experienced safety d. Dealers and economic ripple
risks, Distributors effects from
inconvenience, and temporary closures.
 Impact: Toyota
financial loss.
dealers experienced g. Suppliers
 Example: reduced sales and
 Impact: Suppliers
Individuals involved reputational
of components and
in accidents due to damage.
raw materials
malfunctioning
 Example: North experienced
pedals suffered
American disruptions in
physical, emotional,
dealerships had to demand due to
and financial harm.
offer significant reduced production.
b. Shareholders discounts to regain
 Example:
customer trust,
 Impact: Component
affecting
Shareholders saw a suppliers in Toyota’s
profitability.
decline in stock global supply chain
value and financial e. Regulators faced reduced
performance as orders and potential
 Impact: Toyota’s
Toyota faced financial losses.
delayed reporting of
lawsuits, recalls,
issues undermined
and loss of
the trust and
consumer trust.
authority of federal
2. Role of Effective regulators and on sustainable
Corporate Governance stakeholders. practices.
in Reducing Such
 Example: Toyota  Example: If
Problems
could have avoided governance
Corporate governance criticism by structures had
involves systems, promptly informing prioritized customer
processes, and controls Canadian regulators safety, Toyota might
that ensure accountability, of the issue instead have implemented
fairness, and transparency of delaying recalls more swiftly
in a company’s disclosure. and transparently.
operations. Effective
c. Enhancing Decision- e. Safeguarding
governance plays a crucial
Making Reputation
role in mitigating risks like
those faced by Toyota.  Explanation: A  Explanation:
well-structured Effective
a. Identifying and
board of directors governance
Managing Risks
provides oversight minimizes
 Explanation: and ensures reputational risks
Governance management by ensuring
structures, such as decisions align with compliance with
risk management long-term laws, ethical
committees, can organizational practices, and
proactively identify goals. stakeholder
potential risks and expectations.
 Example: The
implement controls
board could have  Example: By
to mitigate them.
intervened to addressing the
 Example: A robust balance rapid issue promptly and
quality assurance growth with openly, Toyota
process might have maintaining quality could have
identified the standards, maintained trust
accelerator pedal preventing the with customers and
issues earlier, compromise of regulators,
preventing safety measures. mitigating long-
widespread recalls. term damage.
d. Ensuring
b. Promoting Ethical Accountability
Behavior
 Explanation: Conclusion
 Explanation: Governance
Toyota’s crisis underscores
Strong governance mechanisms hold
the critical role of
promotes a culture management
corporate governance in
of ethical behavior accountable for
ensuring quality,
and responsibility, their actions and
accountability, and
ensuring decisions,
transparency. Strong
transparency with encouraging a focus
governance practices
could have prevented or board of directors, who Accounting Director of
minimized the negative are members elected to Seminars and
impacts on stakeholders these positions by the Conferences Editor of
by proactively managing membership. The Special Publications
risks and prioritizing chairperson of the Jesse Paige Director of
ethical behavior. board is the highest- Chapter Services
Organizations can learn ranking volunteer Director of Data
from Toyota’s experience member and presides Processing Director of
to implement robust over the board; the Self-Study Programs
governance frameworks board establishes Lana Dickson Manager
that safeguard policy for the of Personnel George
stakeholder interests and organization. The Ackers President Four
sustain long-term success. policies are of the positions
administered and appearing in the
The Association of
carried out by AMP’s organization chart are
Medical Personnel
paid professional staff. described below. Jere
(AMP) is a
The president’s chief Feldon , Staff Liaison to
membership-education
responsibility is to the Chairperson Feldon
organization that
manage the operations is assigned to work
serves a wide range of
of the professional with the chairperson of
individuals who work
staff. Like any AMP by serving as an
for medical
organization, the intermediary between
institutions, including
professional staff of the chairperson and
hospitals, clinics, and
AMP is composed of the professional staff.
medical practices. The
line and staff positions. All correspondence to
membership is
A partial organization the chairperson is
composed of doctors,
chart of the AMP funnelled through
nurses, medical
professional staff is Feldon. Feldon also
assistants, and
shown in Exhibit 1–A. works very closely with
professional
Vice-President, the president of AMP,
administrators. The
Administration Vice- especially on any
purpose of the
President, Educational matters that have to be
organization is to
Programs Vice- brought to the
provide individuals in
President, Membership attention of the
the medical field with a
Vice-President, chairperson and the
professional
Research Vice- board. Lana Dickson,
organization that offers
President, Publications Director of Self-Study
educational and
Editor, AMP Review Programs Dickson is
training opportunities
Board of Directors Staff responsible for
through local chapters,
Liaison to the developing and
a monthly magazine
Chairperson Jere marketing the self-
( AMP Review ),
Feldon Meetings study programs offered
continuing-education
Coordinator Director of by AMP. Self-study
programs, seminars,
Continuing Education courses consist of
self-study courses, and
Programs Director of DVDs and a workbook.
research publications.
Membership Marketing Most of the courses are
AMP is governed by a
Director of General developed by outside
contractors who work departments for Line Positions
under her direction. interviews. In addition,
 Definition:
Dickson relies on the Ackers coordinates the
Positions directly
director of membership employee performance
involved in
marketing to help her evaluation program
achieving the
market these courses. and administers AMP’s
primary objectives
Jesse Paige, Editor of salary schedule and
of the organization,
Special Publications fringe benefit program.
such as production,
Paige is primarily Required: 1.
sales, or services.
responsible for the Distinguish between
publication and sale of line positions and staff  Role and
any research positions in an Purpose: Line
monographs generated organization by managers have
by the research defining each. Include authority over
department. In in your discussion the subordinate
addition, he role, purpose, and employees and are
coordinates the importance of each. 2. responsible for
publication of any Conflicts will often making decisions to
special projects arise between line and accomplish
prepared by any other staff managers in organizational
AMP committees or organizations. Discuss goals.
departments. Paige the characteristics of
also works with AMP’s line and staff managers  Importance:
Publication Committee, that may cause Essential for
which sets policy on conflicts between the executing core
the types of two. 3. For each of the business operations
publications that AMP four individuals and delivering the
should publish. George identified by name in organization’s
Ackers, Manager of the text, a. Identify products or
Personnel Ackers works whether the services.
with all of the individual’s position is  Example: A
departments of AMP in a line or staff position hospital's Chief
hiring professional and and explain why. b. Surgeon directly
clerical staff. The Identify potential oversees patient
individual departments problems that could care, contributing to
screen and interview arise in each the hospital’s
prospective employees individual’s position, primary mission.
for professional either due to the type
positions, but Ackers is of position (i.e., line or Staff Positions
responsible for staff) or to the location
 Definition:
advertising open of the individual’s
Positions that
positions. Ackers plays position within the
provide support,
a more active role in organization.
advice, and
the hiring of clerical
1. Distinction Between expertise to line
personnel by screening
Line and Staff Positions positions without
individuals before they
direct involvement
are sent to the
 in core operational o Staff staff
activities. managers manager
emphasize from the
 Role and
long-term finance
Purpose: Staff
strategies, department
managers help line
policies, or may attempt
managers by
administrativ to impose
offering specialized
e efficiency. budget
services, research,
restrictions,
or administrative o Conflict conflicting
support. Example: A with the line
line manager manager’s
 Importance:
may prioritize operational
Facilitate efficiency
hiring needs.
and effectiveness of
additional
line operations by
workers 3. Perception of
ensuring resources,
quickly, while Value
guidance, and
a staff
organizational o Line
manager in
support are managers
HR
available. may perceive
emphasizes
staff
 Example: A adhering to
positions as
hospital’s HR rigorous
non-essential
Manager assists in recruitment
or
recruiting and policies.
bureaucratic,
training doctors and
2. Authority Issues while staff
nurses.
managers
o Line might see
managers line
2. Characteristics have managers as
Causing Conflicts decision- resistant to
Between Line and Staff making procedural
Managers authority, improvement
while staff s.
1. Differing managers
Perspectives typically play o Conflict
o Line an advisory Example: A
managers role. Staff staff
focus on managers manager in
achieving might IT suggesting
operational overstep an expensive
goals, often boundaries, software
prioritizing causing upgrade
immediate friction. might face
results. resistance
o Conflict from a line
Example: A manager
 focused on coordinating o Reason:
cutting costs. between the Dickson
chairperson directly
4. Communication
and the oversees the
Breakdowns
professional development
o Misunderstan staff without and
dings or direct marketing of
misaligned involvement AMP’s self-
priorities can in AMP’s core study
exacerbate operations. courses,
tensions which align
 Potential
between the with AMP’s
Problems:
two roles. core mission
1. Ambiguity of providing
o Conflict in Role: As educational
Example: an opportunities
Poor intermediary, .
communicati Feldon might
on between  Potential
encounter
marketing Problems:
challenges in
staff and balancing 1. Resource
sales line loyalty to the Dependenci
managers chairperson es: Relying
could result and the on the
in professional Director of
mismatched staff. Membership
customer Marketing for
outreach 2. Limited
course
strategies. Authority:
marketing
Feldon may
might lead to
struggle to
delays or
3. Analysis of Named enforce
misalignment
Individuals decisions or
if priorities
ensure
a. Jere Feldon, Staff differ.
follow-
Liaison to the through on 2. Coordinatio
Chairperson chairperson n
 Position Type: directives. Challenges:
Staff Position Managing
external
o Reason: b. Lana Dickson, contractors
Feldon Director of Self-Study for course
supports the Programs development
chairperson may
by facilitating  Position Type: complicate
communicati Line Position timelines and
on and
 quality those of 2. Centralized
control. other Authority:
departments, Ackers’
creating control over
c. Jesse Paige, Editor of potential for clerical hiring
Special Publications friction. might lead to
dissatisfactio
 Position Type: n if
Staff Position departments
d. George Ackers,
o Reason: Manager of Personnel feel their
Paige preferences
 Position Type: are not
provides Staff Position
support by considered.
overseeing o Reason:
publications, Ackers
an auxiliary provides Conclusion
function that support by Understanding the
complements handling distinctions between line
AMP’s recruitment, and staff positions and the
primary evaluations, potential conflicts they
educational and might create is critical for
mission. employee effective management at
benefits, AMP. Properly delineating
 Potential
functions not roles, fostering
Problems:
directly tied communication, and
1. Policy to AMP’s core aligning priorities can help
Conflicts: mission. mitigate these challenges
Paige’s role and promote
 Potential
in organizational harmony.
Problems:
coordinating Let me know if you’d like
with the 1. Conflict further elaboration on any
Publication with point!
Committee Department
might lead to s: Line
disagreement managers PROBLEM 1 – 9 Value
s over might feel Chain Analysis [LO 4]
publication Ackers’ Some companies that
priorities or involvement manufacture multiple
strategies. in hiring products perform a
slows down comprehensive
2. Role
the process assessment of
Overlap:
or fails to individual product
Paige’s
meet specific profitability by
responsibiliti
needs. collecting the costs
es might
overlap with incurred for each of the
major business
functions in the value 1. Benefits and on specific
chain and comparing Challenges of Value cost drivers
them to the revenues Chain Analysis for and revenue
generated by each of Multiple Product Lines trends.
their major product
Benefits o Example: A
offerings. For example,
a manufacturer of company
1. Improved
home electronics might invest
Profitability
equipment employing more in
Insights
this type of analysis marketing
would separately track o Tracking home theatre
the research and costs and systems if
development, product revenues for they show
design, manufacturing, each product high growth
marketing, line provides potential.
distribution, and a detailed
3. Identification of
customer service costs understandin
Inefficiencies
for each of its major g of product-
product lines, such as level o The analysis
televisions, home profitability. highlights
theatre systems, and inefficiencies
o Example: A
speakers. Revenues for in the value
home
each of these product chain, such
electronics
lines would also be as excessive
manufacturer
separately identified, manufacturin
can identify
allowing managers to g costs or
that
calculate profitability suboptimal
televisions
on a product-by- distribution
generate
product basis. methods.
higher
Required: 1. Identify margins than o Example:
some benefits and speakers, Identifying
challenges of guiding high
performing the type of resource warranty
value chain analysis allocation. costs for a
described above in a
product can
company that has 2. Better Decision-
prompt
multiple product lines. Making
changes in
2. What might cause
o Managers design or
some of the costs for
can make quality
the specific functions
informed control.
making up the value
decisions
chain to increase or 4. Enhanced
about
decrease over the life Strategic
pricing,
of a product (i.e., from Planning
marketing,
the early to mature
and product o By
stages of a product’s
design based understandin
life)?
 g the cost between o Example:
and revenue products with Fluctuating
dynamics of overlapping component
each product design costs for
line, the features may televisions
company can be due to supply
plan for challenging. chain
product disruptions
2. Accuracy of Cost
lifecycle could skew
Allocation
transitions, results.
such as o Indirect costs
phasing out 4. Potential
(e.g., shared
underperform Conflicts
marketing
ing products. expenses) o Departments
o Example: are difficult might
to allocate compete for
Discontinuing
accurately, resources or
older speaker
potentially dispute cost
models to
distorting allocations,
focus on
profitability causing
newer, high-
analysis. internal
tech variants.
conflicts.
o Example:
Marketing o Example:
Challenges campaigns The
often marketing
1. Complexity and
promote team for
Resource
multiple speakers
Intensity
products, may argue
o Collecting, making it they receive
analyzing, hard to insufficient
and determine budget
allocating each compared to
costs across product’s the television
multiple share. team.
value chain
3. Dynamic Market
functions for
Conditions
each product 2. Factors Influencing
line can be o Rapid Costs Over a Product’s
time- changes in Life
consuming market
and Early Stages of Product
demand or
expensive. Life
input costs
can render 1. High Research
o Example:
the analysis and Development
Allocating
outdated (R&D) Costs
R&D costs
quickly.
 o New products build decrease due
incur awareness to higher
significant and attract volumes and
R&D costs to customers. process
innovate and optimizations
o Example:
meet market .
Offering
needs.
discounts o Example:
o Example: and Mass-
Developing advertising producing
cutting-edge heavily mature
features for during the speaker
smart launch of a models
televisions new speaker results in
requires system. lower per-
substantial unit costs.
investment.
3. Lower Marketing
Mature Stages of
2. High Product Costs
Product Life
Design Costs
o Marketing
1. Reduced R&D and
o Extensive expenditures
Design Costs
prototyping, may decline
testing, and o Costs decline as brand
redesign as the recognition
efforts are product and word-of-
common stabilizes and mouth
during the no longer reduce the
introduction requires need for
phase. extensive aggressive
redesigns or promotions.
o Example:
innovations.
Ensuring o Example:
compatibility o Example: Long-
of new home Established established
theatre models of home theatre
systems with televisions systems may
various audio require rely more on
formats. minimal existing
updates customer
3. Marketing and loyalty than
compared to
Promotion new
new designs.
Expenses advertising
2. Economies of campaigns.
o Launch
Scale in
campaigns
Manufacturing
and
promotions o Production Late Stages of Product
are costly to costs Life
1. Increased 3. Declining better manage
Customer Service Manufacturing profitability and adapt
Costs Efficiency their strategies.
o Aging o Outdated
products may technology or
require machinery
higher might
warranty and increase
repair production
expenses. costs.
o Example: o Example:
Older Maintaining
television production
models might lines for older
experience televisions
frequent could
breakdowns, become less
increasing cost-effective
service costs. compared to
newer
2. Higher
models.
Distribution Costs
o As products
phase out, Conclusion
smaller
Value chain analysis
production
provides detailed insights
runs or
into product-level
clearance
profitability, enabling
sales may
better decision-making
lead to
and resource allocation.
inefficiencies
However, the process is
in
complex and resource-
distribution.
intensive, requiring
o Example: accurate cost allocation
Shipping and frequent updates.
discontinued Costs across the value
speaker chain vary significantly
models to throughout a product’s
fewer retail lifecycle, driven by factors
outlets might such as R&D investments,
increase per- economies of scale, and
unit customer service
distribution requirements. By
costs. anticipating these
changes, companies can