Alcan Application Management: Case Analysis

Assuming that the company’s goal is to maximize profits, the current cost system is not an appropriate tool for strategic planning. The ambiguity of the overhead costs per product makes it difficult to accurately analyze the cause and effect relationships of changes and/or improvements to specific product line.

Alcan's success and enormity are singular in its industry. As a 'highly vertically integrated' textiles and industrial materials manufacturer, the Montreal based firm is markedly profitable and diffusely networked. In spite of its highly enviable track record and profitability, the firm finds itself at a crossroads where its Information Technology (IT) solutions are concerned. With the appointment of Robert Ouellette as Chief Information Officer, Alcan would begin a new phase in its history centered on the reformation of its IT systems. With an emphasis on the improvement of central controls, consistency, cost oversight and personnel orientation, Ouellette would begin the process of transformation by weighing the pros and cons of both the present, outgoing system and the new incoming system. Evidence abounds that the changes rendered through the new IT system will have far-reaching effects in terms of improving the company's operations, efficiency and profitability.

Overall, developing countries have populations that are ageing and becoming more demanding. This, coupled with technological progress, pushes up operational costs faster than the general growth in prices or even incomes. The resulting cost-control pressures are one of the main drivers of IT expenditure. Improving service is also important but is generally secondary.

The management of EA cakes’ adoption of SAP was a predicament. The managements were put in between two equally undesirable alternatives. They have a choice of either

If a good cost-measurement system was set up, cost-plus contracts will demonstrate the advantages of cost-management better than fixed price contracts do. With a robust cost-measurement system, managers are able to know the real revenue drivers, to recognize the most valuable customers, and to offer more reasonable price bid. That is to say, cost-measurement system’s strength lies in differentiating clients’ value, projects’ value and operation processes’ value case by case. Under this circumstance, cost-plus contracts would surely dig more utilization and benefit more from such a system, because CitySoft would be able to charge different customers and projects for different prices, which is critical for increasing profitability.

An organization’s pricing strategy will vary depending on multiple factors. An organization needs to understand their competition and market share, the distribution chain, and ultimate goal of customer retention. This paper will review the pricing strategies of Intuit.

with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was

Salesforce.com (NYSE:CRM) has successfully redefined the economics of enterprise software market and generated $3B in revenue and a $256M loss followed by a record quarter of $892M in their latest fiscal period (Salesforce.com Investor Relations, 2013). Salesforce.com is the global leader in enterprise CRM software sales, and has successfully redefined the economics of the market to see operating expense (OPEX) spending as the means to pay for software that would otherwise have to be paid through capital expenses (CAPEX) and lengthy financing cycles. The following is a SWOT analysis of Salesforce.com.

INTRODUCTION Businesses – from manufacturing, merchandising and service industries alike – take careful consideration in the analysis of their costing systems in order to be able to set up competitive prices in the market. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods which Zauner Ornaments have used or is currently using and, in conclusion, be able to distinguish the advantages and disadvantages of each costing method. CASE CONTEXT The case seeks to assist Zauner’s comptroller, Yu Chia-yi, in determining the best costing method for their overhead costs. In addition we also aim to

1.The company that I have selected is Apple. This company designs and markets consumer electronics products. Manufacturing is done by third party companies. Apple's products are highly-integrated. This means that any given product will be a combination of the work of hardware engineers, numerous software engineering projects, industrial design and marketing teams. Applying cost factors to the different divisions is a challenge because of this. In addition, some products are produced by piggybacking on other technology. The mobile operating iOS operating system used on the iPad, for example, would have been an adaptation of the same iOS that was used for the iPhone a couple of years previous. This presents a challenge for cost allocation, because the iOS development cost would have been lower for the iPad as it was based on pre-existing technology. The company's current approach to costing is to consider many such costs as overhead, placing them under the different functional categories. The products in that case would have a high contribution margin that would serve to cover the fixed costs associated with research and development on various individual product attributes.

Activity-based management, activity-based costing and continuous improvement, all these help in the improvement of the efficiency in manufacturing, better control of overhead costs and the accurate costing of products. With this in mind, We disagree with the advice that Chuck Davis, the firm’s controller, gave Leonard Bryner. The traditional way of costing produce average costs that severely overstated or understated. Without the accurate costs, the firm would not be able to price properly their products and that would be damaging to the firm. With activity-based costing and management, all costs are accounted for with the help activity-drivers and overhead costs are decreased. In turn, the costs that the firm has for their products are more accurate and pricing is much easier.

Coca Cola Enterprises (CCE) embarked on a massive makeover of their information system in 2004 converting over to the SAP software. (http://www.beveragedaily.com/Formulation/CCE-SAP-join-forces-to-improve-supply-chain) This included a major overhaul of their legacy system and working with SAP to develop an app specifically for them. When this venture began in 1999 we must remember that the Spilt of Coca Cola Enterprises becoming an operation solely based in Europe had not occurred. Thus the implementation for SAP was not only in North America, but Europe also. Throughout the paper we will discuss how this conversion went and what exactly went and what effects

Free PESA Software with Purchase. Rather than regarding the PESA R&D as a sunk cost, I chose to distribute the costs to every server. The price under this route was determined to be $2,122 (see Appendix B). The primary drawback is that a customer who would have normally purchased the Tronn without the software would be charged a higher price ($2,122 vs. $2,000). Continuing with the tradition and norm of free software, staff would not have to be retrained and customers will not feel alienated. Furthermore, the one-bundle price could easily be transitioned to on-line sales, and the low price will increase market share. The “free” software could create an illusion of low perceived value. Finally, the lower price will result in lower profit margins, and it does not take into consideration the value advantage received by the customer.

Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.

Because of the stiff competition in the marketplace the margins of operations are drastically low. In such scenarios implementation of costly IT solutions will make the business unprofitable.