Strategic Cost Management
Aarhus University
Summer Programme-2015
Course Title:
Strategic Cost Management (SCM)
Faculty:
Parvinder Arora, Ph. D.
Professor (Finance and Accounting) and Assistant Dean (Post Graduate Programs)
S P Jain Center of Management, Sydney (Australia)
Email Address: parzira@gmail.com
Course Description
The course has been designed for business/accounting/finance students who have completed Management Accounting/Cost Accounting
course. This course builds on the tools and techniques learnt in Management Accounting/Cost Accounting. The course shifts the perspective of
cost analysis from a tactical and short-run focus to strategic and long run issues. The relationship between management accounting/cost
analysis and strategy is established by using different strategic management tools. Drawing upon strategic management concepts, the course
analyses business problems from a financial perspective, and attempts to establish relationship between cost analysis and strategic
management concepts like; value chain analysis, strategic positioning analysis, and cost driver analysis, thereby culminating into the theme of
Strategic Cost Management (SCM). SCM evolves as a supporting tool for decision makers involved in planning and implementing organizational
strategies. Primarily, the course attempts to make students appreciate the strategic alignment of cost accounting information.
Learning Objectives/Outcomes
1. Developing a fresh perspective to understanding and analyzing of familiar business problems and cost concepts
2. Revisiting some of the conventional cost/management accounting concepts and linking it with the strategy of the firm.
3. Understanding how cost/management accounting information that affects the strategic and operational decisions within the
organization.
Prescribed Reading:
Blocher, E.J., et al (2012), Cost Management: A Strategic Emphasis, Irwin/McGraw-Hill (6th Ed)
Supplementary Reading:
Shank, J (2006) Cases in Cost Management A Strategic Emphasis. South-Western
Detailed Session Plan
Session
Theme
Focus
1)
July 2
Thursday
Cost/Management
Accounting:
Relevance and Issues
Current Issues in Cost
Accounting
2)
July 3
Friday
Aligning
Information
Strategy
Cost Strategic Cost Analysis Vs.
and Conventional Analysis
Readings





NO CLASS
3)
July 6
Monday
4)
July 7
Tuesday
Aligning
Information
Strategy
Cost CVP Analysis Revisited
and
Strategic
Management
concepts and SCM
Value Chain Analysis and
SCM
Cases
Accounting Lag: The Obsolescence of Cost Mueller-Lehmkuhl
GmbH
Accounting Systems
Note on Confrontation Strategy
Chapters 1
Making Strategy Explicit in Cost Analysis: A Baldwin Cycles
Case Study.
Mavis Machine Shop
Chapter 11-12
SAYURDAY/SUNDAY

Chapter 9
Skyview Manor

Strategic Cost Management: The Value
Chain Perspective
Dairy Pak

How Chrysler Created an American
Keiretsu, Jeffrey H. Dyer

Chapters 2
5)
July 8
Wednesday
Strategic
Management
concepts and SCM
Cost Driver Analysis and
SCM
Activity Based Costing

What ‘Drives’ Cost? A Strategic Cost Morrissey Forgings
Management Perspective
Wilkerson Co

Time Driven ABC
Chapters 3,5
Strategic
Management
concepts and SCM
6)
July 9
Thursday
Strategic Positioning and
SCM
NO CLASS
7)
July 13
Monday
8)
July
Tuesday
FRIDAY/SATURDAY/SUNDAY
Management Control
and SCM
Activity-Based Budgeting

Stage IV: Using ABC for Budgeting and
Transfer Pricing
Tijuana Bronze
Machining
Strategic Profitability
14 Analysis
Profit Variance Analysis
conventional Vs Strategic
Context

Chapters 15
Kinkead Equipment
9)
July 15
Wednesday
10)
July 16
Thursday
American Investment
Management Services
(AIMS)
Creating
Customer Target Costing
Value Through Cost Value Chain and Target
Management
Cost
Creating
Customer Life Cycle Costing and
Value Through Cost SCM
Management
Software Associates

Control Tomorrow's Costs Through Today's Montclair Deep Colors
Designs


Chapters 13
Chapter 13
DEC and
Minicomputers
Dulux Lamps
Creating
Customer Quality Cost
Value Through Cost Measurement and
Management
Management
11)
July 17
Friday

NO CLASS
Sustaining the Cost
Management
Initiative- Aligning
Performance to
Strategy
12)
July 20
Monday
13)
July
Tuesday
Group Presentations
21 on the assigned Cases
14)
July 22
Wednesday
Group Presentations
on the assigned Cases
Balance Scorecard and
EVA
Chapters 17
Chalice Wines
SAYURDAY/SUNDAY





Using the Balanced Scorecard as a Strategic
Management System
The Balanced Scorecard: Measures That
Drive Performance
To be decided
Chapter 2, 18
Cases/Topics will be assigned to different
Groups. Each Group will make a 20 minutes
presentation on case analyses followed by
Q&A
Cases/Topics will be assigned to different
Groups. Each Group will make a 20 minutes
presentation on case analyses followed by
Q&A
Pedagogy:
•
The most important requirements for this course are a thorough preparation and analysis of the assigned case and reading materials
and active participation in the classroom.
•
The course is built almost exclusively around the case method.
•
Only the assigned cases will be discussed in the class (not the assigned readings) but the readings will help students in tackling the case.
•
I expect students to have already thought through and analyzed the cases when they come to class. This way, we can devote the bulk of
the class time to thinking about, and responding to, each other's analyses of the cases and only the necessary minimum to getting the
facts out.
•
Each student group will be assigned one case each for making presentations. The presentations are expected to be based on detailed
analysis of each case. Each group is expected to make presentations using ExcelSheet/PowerPoint/other multi-media. All the groups are
•
required to hand in written case solutions before class starts. If, for some reason, you must miss class, e-mail me your case solution
before the start of class. Failure to follow this particular instruction will result in a grade of zero for the presentation. Case solutions
should include a cover page, a summary of case facts, and case questions with individual question solutions. If you make assumptions,
state them clearly.
With the possible exception of the “wrap-up” period at the end of each class, note taking is unnecessary. The instructor will provide
notes summarizing the key issues raised in each session in the class.
Guidelines for Case Presentations
 Witten case analysis to be submitted not exceeding 8 pages, double-spaced, exclusive of exhibits, using 12-point Times New Roman
font.
 PowerPoint presentation not exceeding 10 slides.
 Wherever the material has been referred to (e.g. published papers, articles, books or website), citation to the source must be shown in
the text itself. This is very important.
 Each Group will get maximum 20 minutes for presentation followed by Q&A.
Evaluation:
1. Case Analysis and Presentation*
2. Quizzes
3. End Term Test
20 Marks
(Submission/Presentation of Case Analysis)
20 Marks
(To be conducted during the course)
60 Marks
*(To be evaluated on the basis of quality of case analysis, reference to other materials, balancing the content, not-too-much and not-tooless,and quality of presentation)
Readings:
1. Kaplan, Robert (1986) Accounting Lag: The Obsolescence of Cost Accounting Systems, California Management Review, Vol. XXVIII, No.
2. P 174.
2. Cooper, R. (1994) Note on Confrontation Strategy, Haravard Business Publishing, Product No. 9-195-105
3. John K. Shank and Vijay Govindarajan, (1998) Making Strategy Explicit in Cost Analysis: A Case Study, MIT Sloan Management Review,
Vol. 29(3): 19-29
4. John K. Shank and Vijay Govindarajan (1992) Strategic Cost Management: The Value Chain Perspective, Journal of Management
Accounting Research, Volume 4, Fall.
5. Jeffrey H. Dyer (1996) How Chrysler Created an American Keiretsu, Harvard Business Review, July.
6. John K Shank and Vijay Govindarajan (1993) What ‘Drives’ Cost? A Strategic Cost Management Perspective, , Advances in
Management Accounting, Vol 2, pp. 27-46
7. Robert Kaplan, Time Driven ABC, Harvard Business Review
8. Robert S. Kaplan and Robin Cooper (1997) Stage IV: Using ABC for Budgeting and Transfer Pricing, Harvard Business Press, (Product
number: 1610BC-PDF-ENG)
9. Robin Cooper and Robert S. Kaplan (1998) The Promise-and Peril- of Integrated Cost Systems, , Harvard Business Review, July.
10. Using ABC to Manage Customer Mix and Relationship, Harvard Business Press (Product No. 9-197-094)
11. Robin Cooper and W. Bruce Chew (1996) Control Tomorrow's Costs Through Today's Designs, , Harvard Business Review, January.
12. Robert S. Kaplan and David P. Norton (2007) Using the Balanced Scorecard as a Strategic Management System, , Harvard Business
Review, July.
13. Robert S. Kaplan and David P. Norton (2005) The Balanced Scorecard: Measures That Drive Performance, Harvard Business Review, July.
Cases:
1. Mueller-Lehmkuhl GmbH, Harvard Publishing (9-187-048)
2. Baldwin Cycles, Harvard Publishing (TCG 001)
3. Mavis Machine Shop
4. Dairy Pak
5. Morrissey Forgings
6. Skyview Manor
7. American Investment Management Services (AIMS)
8. Wilkerson Co, Harvard Publishing (9-101-92)
9. Tijuana Bronze Machining
10. Kinkead Equipment
11. Software Associates, Harvard Publishing (9-101-38)
12. Montclair Deep Colors
13. Chalice Wines
14. DEC and Minicomputers
15. Dulux Lamps