Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Bannister, was convinced that her firm needed to adopt a revenue growth and cost reduction strategy to increase overall profits. After a careful review of her firm’s condition, Mandy realized that the main obstacle for increasing revenues and reducing costs was the high defect rate of her products (a 6 percent reject rate). She was certain that revenues would grow if the defect rate was reduced dramatically. Costs would also decline as there would be fewer rejects and less rework. By decreasing the defect rate, customer satisfaction would increase, causing, in turn, an increase in market share. Mandy also felt that the following actions were needed to help ensure the success of the revenue growth and cost reduction strategy: a. Improve the soldering capabilities by sending employees to an outside course. b. Redesign the insertion process to eliminate some of the common mistakes. c. Improve the procurement process by selecting suppliers that provide higher-quality circuit boards. Required: 1. State the revenue growth and cost reduction strategy using a series of cause-and-effect relationships expressed as if-then statements. 2. Illustrate the strategy using a strategy map. 3. Explain how the revenue growth strategy can be tested. In your explanation, discuss the role of lead and lag measures, targets, and double-loop feedback.

BuyFind

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
BuyFind

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter 13, Problem 13E
Textbook Problem

Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Bannister, was convinced that her firm needed to adopt a revenue growth and cost reduction strategy to increase overall profits.

After a careful review of her firm’s condition, Mandy realized that the main obstacle for increasing revenues and reducing costs was the high defect rate of her products (a 6 percent reject rate). She was certain that revenues would grow if the defect rate was reduced dramatically. Costs would also decline as there would be fewer rejects and less rework. By decreasing the defect rate, customer satisfaction would increase, causing, in turn, an increase in market share. Mandy also felt that the following actions were needed to help ensure the success of the revenue growth and cost reduction strategy:

  1. a. Improve the soldering capabilities by sending employees to an outside course.
  2. b. Redesign the insertion process to eliminate some of the common mistakes.
  3. c. Improve the procurement process by selecting suppliers that provide higher-quality circuit boards.

Required:

  1. 1. State the revenue growth and cost reduction strategy using a series of cause-and-effect relationships expressed as if-then statements.
  2. 2. Illustrate the strategy using a strategy map.
  3. 3. Explain how the revenue growth strategy can be tested. In your explanation, discuss the role of lead and lag measures, targets, and double-loop feedback.

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Chapter 13 Solutions

Cornerstones of Cost Management (Cornerstones Series)
Ch. 13 - Define the three processes of the process value...Ch. 13 - Identify three objectives of the learning and...Ch. 13 - What is a testable strategy?Ch. 13 - What is meant by double-loop feedback?Ch. 13 - Identify and explain three methods for achieving...Ch. 13 - Norton Company has the following data for one of...Ch. 13 - Craig, Inc., has provided the following...Ch. 13 - Harmon Community Hospital developed the following...Ch. 13 - The following comment was made by the CEO of a...Ch. 13 - A Balanced Scorecard expresses the complete story...Ch. 13 - The Balanced Scorecard is an approach that has the...Ch. 13 - Consider the following list of scorecard measures:...Ch. 13 - Hatch Manufacturing produces multiple machine...Ch. 13 - Computador has a manufacturing plant in Des Moines...Ch. 13 - Refer to Exercise 13.9. Assume that the company...Ch. 13 - The following if-then statements were taken from a...Ch. 13 - Consider the following quality improvement...Ch. 13 - Bannister Company, an electronics firm, buys...Ch. 13 - Refer to Exercise 13.13. Suppose that Mandy...Ch. 13 - In a balanced scorecard, a key strategic if-then...Ch. 13 - Which of the following objectives would be...Ch. 13 - A manufacturing cell produces 40 units in five...Ch. 13 - Which of the following objectives would likely be...Ch. 13 - Which of the following objectives would likely be...Ch. 13 - Carson Wellington, president of Mallory Plastics,...Ch. 13 - At the end of 20x1, Mejorar Company implemented a...Ch. 13 - Refer to the data in Problem 13.21. 1. Express...Ch. 13 - The following strategic objectives have been...Ch. 13 - Lander Parts, Inc., produces various automobile...Ch. 13 - Auflegger, Inc., manufactures a product that...Ch. 13 - Mulhall, Inc., has a JIT system in place. Each...Ch. 13 - At the beginning of the last quarter of 20x1,...

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