- This Assignment is designed to give you an opportunity to demonstrate:
∙ the application of management accounting concepts and frameworks to identify and
solve complex organisational problems creatively and practically to increase the
effectiveness of management decision making that provides solutions to real world
problems (Learning Objective 2);
∙ the application and use of management accounting concepts, with other evidence, to
provide solutions to real world problems (Learning Objective 4).
The Pioneer Company is in the construction and engineering business. The accountant
of the company has approached you to provide advice on the development of a Balanced
Scorecard that will assist in the evaluation of the company’s performance.
For the purposes of designing this Balanced Scorecard, you interviewed managers from
many of the company’s current and potential customers. You found that some customers
were highly pricesensitive and wanted to continue business as usual. These customers
developed internally all the specifications for their bids, put the detailed bidding document
out to tender, and chose, from among all qualified suppliers the one submitting the lowest
bid. As one pricesensitive customer said during an interview:
We don’t have the resources of time for doing anything fancy with our suppliers. Our
business has become ruthlessly competitive, with price and margin reductions in recent
years, and the need for us to cut costs wherever we can. We can’t afford to choose
anyone but the lowestprice supplier.
Historically, Pioneer Company competed by attempting to be the selected lowprice
bidder for pricesensitive customers.
Your interviews also revealed that several large and important customers were looking for
more than low price from their most valued supplier of construction services. They said:
We have to cut costs wherever we can. But we are looking to our suppliers to help us in
this goal. If it’s cheaper and more effective for them to take over some of our engineering
functions, we should let them do that, and reduce our internal engineering staff
accordingly. We don’t have any special capabilities in engineering. We want suppliers
that can suggest new ways of doing business, and who can develop improved
technologies for this new task. Our best suppliers of engineering and construction
services will anticipate our needs and suggest creative ways to meet these needs through
new technologies, new project management approaches, and new financing methods.
These companies acknowledged that rapidly changing technology and an increasingly
competitive marketplace for their final products had motivated them to look to their
suppliers for innovative ways to lower their costs. Although price would still be a factor, a
supplier’s ability to offer innovative and more costeffective approaches would still be a
strong influence on suppler selection. You refer to these companies as those wanting
differentiated services.
As part of your information gathering you also had the opportunity to discuss methods of
performance evaluation this with the CEO of Pioneer Company. You note the following
comment made by the CEO:
“As managers we need to be wary of the fadlike innovations proposed by accountants.
We know if our company is in control if we earn at least the required rate of return on our
assets. At the end of the day the numbers don’t lie.”
You are required to provide written a report to the accountant of Pioneer Company.
Your advice should include the following:
1. Respond to the CEO by explaining how the Balanced Scorecard can serve a useful
purpose in assisting Pioneer Company in assessing progress towards its objectives.
2. Design a Balanced Scorecard for Pioneer Company and consider the following:
(a) Using the information that you have gleaned from the interviews, suggest two
possible strategies that could be employed by Pioneer Company. For each strategy,
develop between two and four measures for each dimension of the Balanced Scorecard,
explaining how these measures support each strategy.
(b) Explain how the Customer and Internal Business Process perspectives of Pioneer
Company’s Balanced Scorecard might differ, depending on whether the company
selected the pricesensitive or differentiated services customer types as the target for its
future strategy. Be specific about how the measures would differ depending upon which
strategy Pioneer Company followed.
(c) Suggest potential new internal business processes that Pioneer Company would
have to perform very well if it wanted to meet the expectations of its customers wanting
differentiated services?
General Requirements:
1. A report style assignment is required. Choose a report structure, with the use of
appropriate headings you deem to be of a professional standard. There is no prescribed
structure.
2. Full referencing is required in accordance with the Harvard
Referencing style.
3. There is no specified word length for this assignment. However, be as concise and
efficient in your writing as possible. You should not need any more than four to five 1.5
spaced A4 pages (12 point font) to answer this question.
4. You should note that the assignment is based on Topic 4.
5. Assignment extensions will be granted if needed due to medical or personal
reasons. Generally extensions will be granted for one week. If an extension of more than
two weeks is required then a different assignment will be given. This is because marked
assignments and solutions cannot be released until all assignments have been received.
It is unfair on other students to delay the return of their marked assignments unduly.
6. The assignment is to be submitted electronically. Details on how to submit the
assignment will be provided at a later date. File types allowed include doc and docx. Only
one file will be accepted. If more than one file is uploaded, only first file listed will be
marked.
