MGMT 59000 -­‐ Strategic Cost Management (SCM) Syllabus Spring 2013 – Module 3 Professor Lynda Thoman Course objective: Strategic cost management (SCM) refers to the development and use of cost information to create, communicate, implement, and control strategies. This course will expose you to a variety of important tools that can be used to examine management issues, initiatives and situations. Topics include: • Strategy • Incentives and decision making • Game theory • Activity Based Management (ABM) • Cost of capacity • Time Driven Activity Based Costing • RCA • E-­‐procurement and reverse auctions • Cost of quality • Pricing/bidding • Sourcing • Supply chains • Budgeting • Balanced Scorecard and alignment • Benchmarking • Life cycle costs • Transfer pricing • International strategic issues The main objective of this course is to understand how these tools work and to explore how they are can be used to help a company make better choices. The readings are taken from both the academic and professional literatures. Audience: This course should be of interest to consultants, marketing professionals, supply-­‐chain professionals, engineers, general managers, etc., or basically anyone in the business world since using/understanding numbers strategically is essential to a successful business career. Grading Policy Assignments 60 points 30% Class Participation 60 points 30% Final Exam (comprehensive) 80 points 40% Total 200 points 100% Assignments (60 points): Each student should join a team of 2-­‐4 people. Each team will write up (at least) 3 cases of their choice during the module; each case write-­‐up will be worth 20 points, and is due the day the case will be discussed in class. If a team chooses to write up more than 3 cases; the best 3 will be counted. The cases will be graded as follows: General set-­‐up and write-­‐up 5 points Answering the assigned questions 10 points Discussion/ideas that go beyond the assigned questions 5 points TOTAL 20 points Additional information about the case write-­‐ups and assigned questions for each case are available in a separate document. The class schedule for the first 2 weeks has been set (see the Schedule below). Possible topics 9 and readings for the rest of the classes follow the schedule for the first two weeks. Students will have input into which topics will be covered. Class Participation (60 points): The class will be conducted as a mixture of lecture and case/article discussion. It will be expected that each student has read every case/article with sufficient care to be able to contribute to the discussion. It will not be expected that any assigned computations have been completed (unless one has elected to submit the case as an assignment). Points will be awarded for the quality of the comments, not the quantity of remarks. Final Exam (80 points): The final exam will be a case or paper that will be distributed in class one to two weeks prior to the exam period. While the reading itself will be provided ahead of the exam time; the questions will not be available until the exam date. In addition, some information, not included in the reading itself, may be provided in the final exam. One is free to work on the reading ahead of time with any person, and one may bring all notes/books one wishes to the final exam. SCM (Mgmt590) – Reading list Spring 2013 Prof. Lynda Thoman Tues.
Jan. 8
Topic:
Introduction to the numbers and strategic management
Read:
“Beyond the Boundaries: Future Trends in Cost Management” Thurs.
Jan. 10
Topic:
Game Theory
“Game Theory and Business Strategy” “The Right Game: Use Game Theory to Shape Strategy” Tues.
Jan. 15
Topic:
Review of use of accounting numbers
Case to
skim:
“Salem Telephone Company” Thurs.
Jan. 17
Topic:
Product/service costing: Capacity issues
Case:
Anagene, Inc. McNair, C. J., Cost Management, January/February 2007 HBSP, product # 9-­‐705-­‐471 (Felix Oberholzer-­‐Gee, January 2005) HBSP, product # 95402 Skim:
(Adam Brandenburger, Barry J. Nalebuff, Harvard Business Review, July 1995) Option Games: The Key to HBSP, product # R0903H Case/
Reading: Competing in Capital-­‐Intensive (Ferreira, Nelson, et al., Harvard Industries Business Review, March 2009) Read:
HBSP, product # 9-­‐104-­‐086 (Bruns, William, 2005) HBSP, product # 9-­‐102-­‐030 (Robert S. Kaplan, Christina Darwall, 2002) Topics for the rest of the course will be taken for the following list.
Students will determine which topics are covered
1.
Topic:
Read:
Case:
Product/service costing: Time Driven ABC “Time-­‐Driven Activity-­‐Based HBSP, product # 9-­‐106-­‐068 Costing” (Robert S. Kaplan, 2007) Kemps LLC: Introducing Time-­‐ HBSP, product # 9-­‐106-­‐001 Driven ABC (Robert S. Kaplan, 2006) 2.
Topic:
Read:
Case:
Support department costs “Assigning Support Department Expenses to Production Cost Centers (A)” Xyberspace Consulting, Inc. HBSP, product # 9-­‐197-­‐046 (Robert S. Kaplan, February 2000) HBSP, product # UV0221 (Luann J. Lynch, November 2000) 3.
Topic:
Read:
Read:
Case to
skim:
Case to
skim:
Cost of quality
“Measuring the Cost of Quality for Management” “Managing for Quality: An Interview with Armand V. Feigenbaum Texas Instruments: Cost of Quality (B) Texas Eastman Co. I will do the work on these two cases. Gary Cokins, Quality Progress, September 2006 The McKinsey Quarterley, September 2007 HBSP, product # 9-­‐189-­‐111 (Robert S. Kaplan and Christopher Ittner, November 1988) HBSP, product # 9-­‐190-­‐039 (Robert S. Kaplan, June 1993) 4.
Topic:
Read:
Lean Accounting and other “Current” Quality programs
“Lean Accounting” Ross Maynard, Financial Management, March 2008. 5.
Topic:
Sourcing: E-procurement and reverse auctions
Read:
“Reverse Auctions in Industrial Marketing and Buying” Case:
HPSP, product #BH073 (Larry Smeltzer, Amelia Carr, March 2002) Procurement at Betapharm Corp. HBSP, product # 9-­‐105-­‐030 (A) (Susan L. Kulp, Taylor Randall, March 2005) 6.
Topic:
Benefits and Costs of Corporate Social Responsibility
Read:
“The Sustainable Economy” Read:
Southwest Airlines One Report Topic:
Balanced Scorecard
Read:
“Having Trouble with Your Strategy? Then Map It” Case:
Amanco: Developing the Sustainability Scorecard Volkswagen do Brasil: Driving Strategy with the Balanced Scorecard HBSP, product #R1110B (Yvon Chouinard, Jib Ellison, Rick Ridgeway, October 2011) HBSP, product #9-­‐411-­‐042 (Robert Eccles, Belting Cheng, Susan Thyne, December 2011) 7.
or
Case
8. Topic: Read: Read: Benchmarking “Benchmarking Accounting Practices in a Global Economy” “Dare to Be Different: Beyond Benchmarking” HBSP, product # R00509 (Robert S. Kaplan, David P. Norton, September, 2000) HBSP, product #9-­‐107-­‐038 (Robert S. Kaplan and Ricardo Reisen de Pinho, 2008) HBSP, product #9-­‐111-­‐049 (Robert S. Kaplan and Ricardo Reisen de Pinho, December 2010) John C. Lee The CPA Journal, Nov. 2009, p. 10-­‐12. HBSP, product #2555BC (Jeffrey Pfeffer, July 2007) 9.
Topic:
Read:
10.
Budgeting and setting targets
“High Performance Budgeting” Read:
“Challenges of Target Setting” Skim:
“Why Budgeting Fails: One Management System is Not Enough” Transfer pricing
Topic:
HBSP, product # U9901A (Charles Wardell, Harvard Management Update, January 1999) HBSP, product #B0707D-­‐PDF-­‐
ENG (Janice Koch, 2007) HBSP, product # B0409C (Peter Horvath, Ralf Sauter, September 2004) Read:
“Making Transfer Pricing Fit Your Needs” W. L. Cats-­‐Baril, J. F. Gatti and D. J. Grinnell CMA Management; June 1988; 62, 5; pp. 40-­‐44. William K. Carter, David M. Maloney and M. H. Van Vranken Journal of Accountancy; July 1998; pp. 37-­‐40. HBSP, product #908B01 (Ivey) (Lindsay Brock, 2008) Read:
“The Problems of Transfer Pricing” Case:
Part King, Inc. Topic:
Environmental costs
Read:
“Environmental Reporting: Toward Enhanced Information Quality” Topic:
International issues
Read:
“Note on International Tax
Regimes”
HBSP, product #9-206-014
(Mihir A. Desai, August 2005) Case:
Corporate Inversions: Stanley Works and the Lure of Tax Havens HBSP, product #203008 (Mihir A. Desai, Mark F. Veblen, James R. Hines, Jr., 2002) 11.
HBSP, product # BH446 (Cecily A. Raiborn, Janet B. Butler, March F. Massoud, Business Horizons, 2011, Vol. 54, pp. 425-­‐433) 12.