Exercises
1-1) USAA is a financial services corporation that deals not only in multiple lines of business,
but also operates with the mindset of becoming better in the future. For the purpose of specified
performance measures we will look at the frontline manager performance. Frontline managers
oversee in most cases Member-Contact MSR’s and report to leadership their performance for
Member Satisfaction, Sales by Product, and Member Experience.
Member satisfaction(MSAT) is important to the organization as it provides direct
feedback from members that choose to participate. A performance measure for MSAT is
favorable as it speaks highly to the culture of the team that the manager presides over as well as
ensuring the MSR’s are happy completing their work and serving the membership. This
performance measure can be unfavorable as well, noting that based upon the member’s call, they
are not always willing to provide any additional feedback, or feel that their request does not
require a reflection on their experience with a particular MSR.
Managers of frontline employees at USAA are also measured by the level of productivity
in terms of products sold. Although this is a business and consumers have their rights, managers
should be able to motivate their team members to sell as much as possible. A performance
measure based upon products sold is favorable as this can further incentivize the manage with a
better bonus and significant impact to the bottom line, which could also lead to promotion. An
unfavorable trait is a performance measure for sales in times such as the pandemic we currently
find ourselves in. Although a product may be necessary, consumers are not always willing to pay
the extra fee to acquire a new or different service due to their own financial pressures.
Lastly is Member Experience, as this may seem closely related to Member satisfaction it
is highly unique. USAA has an internal methodology, SERVE. This method helps MSR’s to
better understand Situation, helps to Explore member needs, Respond to discovered needs,
provide the Value of the product or service, and lastly Engage and try to close the sale. This is a
favorable performance measure as it demonstrates a managers ability to coach and lead others. A
similar trend could be found in these responses, but it comes back to consumer choice. We can
build a relationship and act in the favor of the consumer, if they choose to allow us to do so.
1-2) Rachel who owns Campus Copies is falling victim to the Sunk Cost Fallacy. The sunk
cost fallacy occurs when a business owner or manager looks upon a decision and attempts to
factor in a cost that has already been spent, thus making it irrelevant. The previous color copier is
a sunk cost as it is an investment that the business has already made and will not have an impact
on future purchasing decisions. There is an opportunity cost to choosing a new printer, yet the
issue with today’s decision is the cost of previous investments cannot be considered unless they
were being paid for over time.
1-3) Guthrie must first and foremost adhere to the standards of Integrity and Credibility, such
as; “abstaining from engaging in or supporting activity that might discredit the profession” and
“disclose delays or deficiencies in information, timelines, processing, or internal controls in
conformance with organization policy and/or applicable law” (p.24, Jiambalvo, 2015). When it
comes to achieving a resolution, Guthrie may need to consult higher leaders than his own or
other audit teams to review the accuracy of the decision and possibly choose a better solution to
the problem at hand. Concurrently it may also prove beneficial to holding “confidential
discussion with an IMA Ethics Counselor—to obtain a better understanding of possible courses
of action” (p.25, Jiambalvo, 2015). Adhering to these guidelines for resolution, Guthrie will be
able to retain his own Integrity and Credibility alongside choosing the best way to absolve the
billing dispute.
1-4) Considering the use of a CRM by the Wellington Hotel there are a number of benefits for
the hotel to enhance their profit. Looking into details, providing that one of the tracked metrics
tells the hotel what type of room each customer chooses on a normal basis they can begin to offer
specialized savings. An additional benefit for the hotel is the ability to pre-fill online bookings to
speed up the future booking process. Another item that may be tracked for the hotel is when
customers generally book their reservations to coordinate alignment with a particular season.
Knowing this information would help to hotel to send targeted direct mail to these customers to
advise of any specials during that time, or to offer better packages for longer stays during the
normal times that customers choose to stay at the hotel. There are likely many other pieces of
information collected that will build to enhance the customer experience. Each of these items can
be focused upon as the hotel requests specific assistance to enhance other areas that experience a
business need.
1-5)
Dear Megan,
Regarding your inquiry for how to best use your budgets, please review the following
suggestions.
It is understood that planning your future profits is important to the organization. By
producing a profit budget, cash flow budget, and production budget; you will be able to combine
these three reports to better understand where you can find ways to increase your profits. The
profit budget will focus mainly on planned income for the organization to receive, armed with
this information you will then be able to compare alongside any potential losses so that as much
profit as possible may be retained. The cash flow budget will be able to clearly denote where
your resources are consistently coming in and out. Reviewing this statement would likely display
areas of profit loss as miscellaneous funds could be leaking. Finally a production budget will
provide a focused image of your production costs. This report should be compared monthly and
quarterly for the purpose of better understanding peak periods of production. Following this the
production budget would also display times throughout the year when you can expect profit to be
higher, which will allow you to construct a better profit plan year over year.
Concerning specifics to controlling operations, these budgets can also be used to more
effectively display profits and losses. With the knowledge of the profits and losses, management
alongside yourself will have a stronger confidence when making decisions to bring new items to
production and to phase out older or less profitable items. Other beneficial information can
provide suggestions on where to cut costs in certain departments, or if hiring more employees
will be feasible.
Should there be any additional questions or concerns, feel free to respond to this email, or
to contact us directly.
Tex M
Consultants Unlimited
1-6) The false statement is “If actual costs exceed planned costs in a performance report, this
clearly indicates managerial incompetence” (p.29, Jiambalvo, 2015). This statement is false as
there are many other metrics that a manager could/would be reviewed on, as well there may be
external factors that directly affected performance for one if not many or all departments.
1-7) Deidre should not be concerned with an increase in cost of sales. The basis for this
reasoning is directly related to overall profit. As an additional cost of $25,000 was incurred there
was also a comparative increase of $75,000 in additional profit. Despite the extra cost in this
scenario, there is a larger generated profit.
Problems
1-6) For Linda, the details provided in the company’s income statement, balance sheet, and
statement of cash flows will not be sufficient as this type of organization will find better
information in sales and inventory reports. The detailed numbers may share information leading
to profit and loss, however they fail to indicate which products sell better and which products are
only presenting a cost to the business.
As mentioned above, looking specifically at a sales report will provide details as to the
products that sell the best on the website. A cookies tracker to be used internally would also be
helpful to see the details in terms of which products obtain the most views. Lastly a product
review would be deemed to be important in combination with the others mentioned. A product
review will help to show how some of the many products may be similar and help to lower the
number of brands offered. Offering only a limited selection will demonstrate care for the
consumer as well as likely providing ways to increase profit.
1-7) When determining the validity of of a particular performance measure there may always
be negative consequences. Specifically, looking at sales to new customers over the previous
years total sales completely eliminates the consideration of increased sales to devoted customers
already on the books. If the focus is set to new customers, previous customers may begin to feel
neglected and this could cause a much larger profit loss as opposed to any increase in sales from
new customers.
Noting that sales are generally expected to increase year over year, factoring a decreased
ratio for cost of goods sold could present a significant deficit to the overall balance sheet. The tru
negative consequence comes from the fact that increased sales will likely mean that there are
additional incurred costs for production, there will likely be a profit ratio except for being
compared to the difference in sales relative between the current and the prior year.
Reaching out with the last possible scenario comparing sales and administrative costs,
once again over net sales between the current and previous year has the bigger opportunity to
create a deficit. Noting once again that sales are likely to increase year over year, sales and
administrative expenses would be a variable cost to this extent. There could be different tiered
bonuses for sales staff and there may be additional employees needed to process any increase in
sales.
Overall there will be positive and negative outcomes based upon calculations. Seeing that
there are definitive negative consequences for each of these calculations, it could be suggested
that a focus towards one management effort at a time, will not be a viable option to allow the
firm to be most productive, and most profitable.
1-8) The Riverview hotel currently stands to lose a significant sum ($5,200) by not having all
of their rooms filled. By taking on guests from The Pines, The Riverview Hotel would gain $640
in incremental revenue—4 rooms at $160.
By acquiring the additional guests, these rooms will need to be cleaned and if a free
breakfast is included this would also present an additional cost. Any other included services such
as dry cleaning and extended concierge could provide additional cost as well.
Noting that these services will be functioning for the other already booked guests for the
hotel, any amount of incremental value can help the bottom line. It is reasonable to assume that
The Riverview Hotel is operating with a room revenue well above the cost of maintaining the
rooms and the guest. I would suggest to take on these customers to fill as many rooms as
possible, being the scenario takes place late in the evening, the chances of the hotel obtaining the
required guests to fill up is continually decreasing.
1-9) A. Pricing information such as a bid for supplying products would be considered
confidential information. In this instance the release of this information for any reason to a
competitor would not be allowed or condoned by the code of conduct. Ref: Communications
with Vendors: “Information regarding a competitive bidding process which is not formally
communicated to all vendors involved in the bidding (such as where a vendor’s proposal stands
relative to other bidders or what changes would have to be made to the vendor’s proposal for the
vendor to be awarded the business) should never be disclosed to a vendor” (Sears, 2020).
B. Any level of political affiliation that stems from a person purpose, such as individual
campaign support, is acceptable and encouraged, however attempting to garner support using any
employee resource or attempts to coerce other employees support is not allowed and considered
a violation as well. Ref: Charitable Contributions and Political Activities; “associates may notes
Company time or resources to support personal political activities or use their position to coerce
or pressure associates to make contributions or support a candidate or political cause” (Sears,
2020).
C. Regarding vendor samples, an employee may accept samples for business purposes
only, any personal gain of a vendor sample whether by gift or purchase falls in violation of the
cod of conduct. Ref: Vendor Samples
D. Sears Holdings Corporation Code of Conduct, as stated previously allows employees
to form their own opinion and express it, however sharing any sensitive or proprietary
information is considered a violation. Ref: Confidential Information and Privacy: “You must not
disclose SHC proprietary or confidential information to anyone not authorized to receive it or
with no need to know the information” (Sears, 2020)
All individuals are different with a respect to ethics, some or most may share similar
views, yet for each person the gray areas may vary and thus further create a different image. All
of the scenarios above are examples of what not to do if you are an employee of Sears Holdings
Corporation—the only expiation noted is that employees may accept vendor samples for
business purposes. The prompt for this issue fails to clarify, therefore it is important to look from
as many angles as possible. Related to ethics once again, if an employee were to attempt to keep
a sample provided by a vendor, this would be viewed as either a bribe or theft against the
company.
References
Jiambalvo, J. Managerial Accounting. [VitalSource Bookshelf]. Retrieved from
https://bookshelf.vitalsource.com/#/books/9781119158073/
Sears Holding Corporation Code of Conduct. (n.d.). Retrieved May 8, 2020, from
https://transformco.com/docs/investor/code_of_conduct_5_15.pdf