1. Strategic management accounting
According to the market competitors and customer needs, I have three different strategies for LEGO’s three strongest-selling product lines. First LEGO City faces the competition from MEGA’s high similarity but low price MEGA Bloks. The market situation is that competitor’s products price lower than LEGO but still capture low market share. That means LEGO has significant customer loyalty and good brand image. Even LEGO has most of the market share (LEGO’s sales revenue is 3.7 billion in 2010 and MEGA’s sales revenue is 0.368 billion almost 10% of LEGO), but the customers are price sensitive because the MEGA Blocks had seen 17 years sales revenue growth. According to economies of scale and learning…show more content… The economic case for SMA
Bromwich (1990) provided persuasive arguments in favour of SMA. Compared to papers, which up to that time relied on common sense to justify the case for SMA,
Bromwich draws on economic theories. He stated that we need to release “management accounting from the factory floor” to assist it to meet the global challenges in product markets, and to allow management accountants to focus on the firm’s value-added relative to competitors. There are two key themes captured in this paper.
The first theme, is that products are desired for the attributes that they provide
(Lancaster, 1979), and, thus, accountants have a role to play in costing various product attributes and monitoring the performance of such attributes over time. “Attribute costing” would require accountants to embrace strategic information as well as cost information. This would entail costing the attributes or characteristics provided by goods and monitoring and reporting these costs regularly. However, information about the demand and cost factors associated with those attributes must be relative to those of current and future competitors. To survive, a firm must continue to offer the cheapest way for consumers to obtain the desired bundle of attributes. Bromwich stated that this may require some organizational restructuring to enable the accounting and finance functions to be situated closer to the function that require and work with