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Business Case Study: Thoja Cosmetics Company

Decent Essays

1. Introduction (50 words)
Thoja Cosmetics Company (“Thoja”) is a retailer of high quality and prestigious beauty product. This report will address Thoja’s means of competitive advantages, business mission as well as their key success factors, and what are the useful Management Accounting System procedures and routines to achieve them. Besides this, the report will also discuss possible reasons on why Thoja house-brand initially failed and some Management Accounting System procedures and routines that could have prevented it.
2. Thoja Cosmetics Company
2.1. Means of Competitive Advantages (150 words)
Thoja is pursuing a business strategy of differentiating itself from its competitors on three dimensions; high quality beauty products, prestigious …show more content…

(Customer Profitability Analysis by Leonard Brown)
Businesses use traditional accounting methods which does not help in calculating profitability at the customer level, but rather at the entity level. Thus, it is assumed that if products are selling above costs and overall profits are earned by the business, these mean that customers are profitable. Another assumption is that customers with high sales volume contributes the most to profits which may not be the case. (Management Accounting by Brooks, Oliver, Vesty, Eldenburg, …show more content…

CPA also provides a basis for well-informed pricing decisions and discounts to customers. (Raaij, Vernooij, Triest, 2003) It could help Thoja to analyse and revise its product pricing structures whereby instead of pricing products lower than competitors, Thoja has to take into account costs like filling orders and transport costs, and reflect them in their selling prices at a competitive rate as well. Lastly, CPA results could introduce customer retention and customer development programs (Raaij, Vernooij, Triest, 2003) where highly profitable customers will need to be retained and if possible, increase their business while non-profitable customers will be converted into profitable ones and if unable to, relationships with these customers may be

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