Analysing cases in Acctg321

Acctg321 focuses on the role of management accounting information to guide and informan organisation’s strategy. The course is built around case studies in which organisations face complex, open-ended problems. In these settings, you will need to:

1.    diagnose the issues the organisation is facing;

2.    identify (from multiple sources) and analyse accounting information; and

3.    determine key insights from the analyses to guide actions for improvement.

We have chosen a set of cases that pose different challenges that organisations may face. Hence, there is no ‘one right answer’. In your seminars,we will be practicing the skill of case analysis. Like all new skills, it will take time and effort to master this process.

To start you off, this document outlines a general process to case analysis. We will be following this general structure in seminars, though we will vary the steps depending on the problem in the case. Below, we have provided i) a checklist of steps to take on your own or in your groups; and ii) aset of questions we will be asking over and over to prompt deeper analysis.

General approach to case analysis

1. Understand the context and management’s concerns

.    Skim the case to get first idea of issues and courses of action being considered.

.     Read, in detail, the case again this time paying attention to facts, statements, and accounting information relevant to issues and actions under consideration.

You should aim to understand what type of company it is, its strategy or how it has positioned itself to compete in the market, and the immediate issue of concern.  What are possible causes of these issues? For example, weaknesses in internal processes or changes in the competitive environment?  You can also start thinking about how these weaknesses or changes may impact the future of the company.

2. Prepare analyses to understand the current situation

.     Determine the information needs of management

.    Apply the week’s management accounting technique to the case to provide this information

This is the core of the course.  Effective case analysis requires you to think deeply about what accounting information management would find useful to solve their problem.  It is not a case of conducting analyses to get the ‘correct’ answer. You should think about how the week’s technique helps understand the current position of the company – its current profitability, product costs, customer profitability, etc.  Generally, you will be conducting detailed analysis to establish a baseline against which to compare proposed courses of action. Do not take manager’s statements in the case at face value!

3. Brainstorm actions to betaken from the accounting information to address the issue

.    Critically evaluate management's issues using your accounting analysis of the current situation

.     Identify key weaknesses to be mitigated and strengths to pursue

Having completed the analysis of the issues and accounting data, your nextstep is to propose changes to current arrangements.  The key questions managers are interested in are ‘what is the impact of the proposed changes?’ and ‘What difference will the changes make – on cost? On profitability? etc’ .  It may help to review the context and the current issues and consider how different accounting analysis could  reveal insights into the situation under consideration.

Action plans are most convincing if you can connect the issue, accounting results, and potential effects. The best analyses will include some further analysis to show the impact of the changes. This will be your job in team presentations. Some cases may be less clear about the type of analysis to undertake and so   presenting teams need to invest time for solution seeking.

4. Present results

.     Prepare tables/slides that highlight the key results of your accounting analysis

.    Think about a focused message that emphasises the ‘so what’ of your analysis

Find away to present the information so that it is easily comprehensible to management, without being overly detailed.  Graphs, charts and tables are very useful for summarizing the results.  You should be

able to succinctly state the key insight or take away from the information you present here.

5. Propose justified recommendations

.     Present your recommendations, justifying them with the case issues, accounting analyses, and potential effects

Based on your analysis, you can make informed recommendations to management.  When making

recommendations, consider both the immediate and longer term time frames. The analysis may provide a straightforward action plan to address the immediate issue but students are encouraged to critically evaluate how well this solution will hold in the future – given likely changes in the competitive environment, technology etc.

Remember that this is a management accounting course. Our focus is on the use of management accounting analyses to inform problems.  If you have not completed the analysis, you cannot make a recommendation. Other issues such as engineering, marketing, and sales can add detail to your action plans, but they must not be the only focus.

The Ten Commandments of Case Analysis

From:A Guide to Case Analysis

https://highered.mheducation.com/sites/dl/free/.../362614/guide_to_case_analysis.pdf

1            Read through the case at least twice, once for a quick overview and once again to gain full command of the facts.  Take care to explore the information in everyone of the exhibits.

2            Make a complete list of the problems and issues that the company’s management needs to address

3            Be thorough in your analysis of the company’s situation. Complete your calculations, find additional information in the case relevant to those calculation, and use both to diagnose the situation

4            Look for opportunities to apply relevant management accounting concepts and analytical tools

5            Do enough number crunching to discover the story told by the data presented in the case.

6            Support any and all off-the-cuff opinions with well-reasoned arguments and numerical

evidence.  Don’t stop until you can move away from “I think” or “I feel” and instead are able to say “my analysis shows…” and your recommendations flow from your analysis

7            Prioritize your recommendations and make sure they can be carried out in an acceptable timeframe with the available resources

8            Support each recommendation with persuasive argument or reasons as to why it makes sense and how it should improve company performance

9            Review your recommended action plan to see if it addresses all of the problems and issues you identified – any recommendations that fail to address all the problems is incomplete    and insufficient

10          Avoid recommending any course of action that could have disastrous consequences. Be

alert to the downside risks of your recommendations as you are to the upside potential and appeal

Analyzing Management Accounting Cases

Source: Henk vanden Brink, Kees Kokke, Ivo de Loo, Peter Nederlof & Bernard Verstegen (2003).

Teaching management accounting in a competencies-based fashion. Accounting Education, 12:3, 245- 259

Students should look at particular aspects of a problem, which are really rather self-evident in a course that focuses on management accounting and its facilitating role in organizational decision-making. These aspects are:

.    the surroundings of the organization or part of the organization that is relevant;

.    the problem situation at hand;

.    the parties involved;

.    the available information technology;

.    the management accounting methods and techniques that may be of use;

.    the actual choice of a solution for the problem from a whole set of possible solutions, and the management accounting methods and techniques that may be relevant therein;

.    the consistency of the line of argumentation.

To cover each of these aspects along, thematic, and broadly-applicable questionnaire has been comprised that can be regarded as a heuristic. The questionnaire contains a problem-solving method that centres around typical issues like ‘who?’, ‘what?’, ‘where?’, ‘when?’, ‘how much?’, etc., but a specific management accounting flavour is interwoven into these issues. The questionnaire is shown in the Appendix.

Appendix: general questionnaire

1.   The organization and its surroundings

.    Which organization or part of an organization is relevant?

.    What type of organization is it?

.    What are the goals of the organization, or of the relevant part of the organization?

.    What are its surroundings in terms of culture? What are its surroundings in terms of law?

.    What are its surroundings in terms of meso-economic conditions?

.     How does the (relevant part of the) organization position itself in its surroundings?

.     How did the (relevant part of the) organization position itself in its surroundings?

.     Did the position change overtime?

2.   The problem situation (note: there maybe more than one problem contained in a case)

.    Which concrete problem situation is relevant?

.     In what way does the problem reveal itself?

.    Which type of decision making is relevant: strategic, organizational, administrative, or operational decision making?

.     How did the problem come about?

.    What circumstances caused the problem to arise?

.    When was the problem noticed?

.     How severe is the problem? Is it clear what the problem really is?

.     Is the problem simple or complex?

.     Is it a problem that can be solved routinely in the organization?

.     Is the timing of decisions important?

.    What will happen if nothing is done about the problem?

.    When does a solution have to be found?

.    What information is required to take a decision?

3.   The actors (persons, departments, groups, etc.), their culture, roles, preferences, limitations, behaviour, and information. The actors are studied:

.    with regard to one another;

.    with regard to the surroundings;

.    with regard to the concrete problem situation

.    Which actors are present?

.     How do the actors relate to one another in an organizational context?

.     Is the actors’ behaviour of influence in the decision-making process?

.    Which cultural factors affect the actors’ behaviour?

.    To which groups do the actors belong? How are these groups interrelated, both within and outside the organization?

.    What roles or functions do the actors have within these groups?

.    What are the relevant group values and norms?

.    What habits do the actors have?

.     How do the actors perceive their surroundings?

.    What is their attitude towards their surroundings?

.    Which economic incentives, such as a system of compensation, are of influence on the actors?

.     How are the actors limited and activated by legislation or by past decisions?

.    What does their set of choice alternatives look like?

.    What are the actors’ interests with regard to the problem under consideration?

.    Who may benefit from the decisions to betaken and who may not?

.    Which differences in information are present between the actors?

.    Will the actors be willing to share information?

.    Should the actors’ behaviour be changed in order to solve the problem?

.    What person, or which group, takes the final decision in solving the problem under consideration?

.     Do all actors think that this is the right person or group to take the decision?

.    What knowledge, skills, attitudes and insights does the person or the group taking the final decision have to have in order to ensure that an effective decision is taken?

4.   The information technology used

.    Through which technology is information generated?

.     How can we judge the quality of this information?

.    Which relevant information currently cannot be generated?

.    What potential improvements in technology do you see, given the problem under consideration?

5.    Methods and techniques

(a) The management accounting methods and techniques that are currently used

.    Which methods and techniques from the realm of management accounting are relevant, as far as solving the problem is concerned?

.    Are all of these methods and techniques currently in use?

.    Which are and which are not?

.     How have the methods and techniques that are in use been implemented?

.    Were these methods and techniques designed at will?

.     If so, by means of which criteria have they been designed?

.     Did these methods and techniques evolve in one way or another?

.     If so, can the evolution path be described?

(b) Possible alternatives

Are there alternative management accounting methods and techniques that may be used to help solve the problem?

.    What are the advantages and disadvantages of the various alternatives as compared to the methods and techniques that are currently being used, with respect to speed of information transport and the robustness against external shocks?

.     Do you consider all alternatives useful in tackling the problem at hand?

.    Are there problems to be expected when working out and implementing the alternative management accounting methods and techniques?

(c) The information that the various methods and techniques generate in order to solve the problem

.    What information do the various alternatives generate when the proposed management  accounting methods and techniques are applied to yield information that may be used to solve the problem at hand?

(d) Links with other aspects of the organization

.     How far is the effective use of the proposed management accounting methods and techniques dependent upon the cultural norms and values that are present in the   organization, group behaviour, socio-organizational aspects, the past, the actors’ preferences, and the information technology?

.     Do you think that changes should be made in the socio-organizational relationships in the organization, or in the system of incentives, when applying the previously discerned alternatives?