Click to add text to title page ACCT3583 Management Accounting 2

ACCT3583: Seminar 1 Administration

Seminar 1 Analysing the External Environment

Welcome to ACCT3583 Management Accounting 2! We will begin with a course overview referring to the ACCT3583 Course Outline Outline. This is an opportunity to discuss learning outcomes, assessments and general course admin., as well as providing a subject overview We will then cover Topic 1: Analysing the External Environment
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ACCT3583 Management Accounting 2

ACCT3583 Teaching team

TeachingTeam Contactdetails
BrianBurfitt (LecturerinCharge)
Natalie Buckmaster

ACCT3583 Teaching team

Consultation
Wed 9.30-11.30am

TeachingTeam Contactdetails
Kar Ming Chong

Consultation
Mon 4-5pm Wed 12-1pm

Email:b.burfitt@unsw.edu.au Telephone:93855807 Office:Quad3081 Email:n.buckmaster@unsw.edu.au Telephone:93855837 T l h 9385 5837 Office:Quad3071

Tues 1 3pm 1-3pm

Email:KM.Chong@unsw.edu.au Telephone:93855916 Office:Quad3096

Yee Shih Phua

Email:Y.Phua@unsw.edu.au Telephone:93855812 Office:Quad3062

Thurs 12 2 Th 12-2pm

Linda Chang

Email:linda.chang@unsw.edu.au Telephone:93855817 Office:Quad3074

Tues 10am-12noon

Jonathan Yuen

Email:jonathan.yuen@unsw.edu.au Telephone:93856283 Office:Quad3089

Friday 1-3pm

Mandy Cheng

Email:M.Cheng@unsw.edu.au Telephone:93856343 Office:Quad3108

Tues 3-5pm

Yichelle Zhang

Email:yichelle.zhang@unsw.edu.au Telephone:93856283
Tues 4-6pm
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ACCT3583 Management Accounting 2

Office:Quad3089 ACCT3583 Management Accounting 2

ACCT3583 Seminar overview

ACCT3583 Course assessment

Seminar overview

Seminars comprise lecture content and in-class discussions You must read the assigned readings and complete the assigned questions BEFORE coming to class h i d i i l Please note the 80% attendance requirement for this course

Please refer to ACCT3583 Course Outline for course assessment components Please refer to In Class Quizzes 10% Handouts on Syndicate Case Project 25% Blackboard in coming weeks Syndicate Presentation 10% Individual Reflection 5% Statement Final Exam 50% Please note:

ACCT3583 Management Accounting 2 5

ACCT3583 Management Accounting 2

The satisfactory performance rule! (usually = 50% in EACH assessable component) Read the Course Outline carefully for more details! Please plan your time to meet all deadlines

In Class Quizzes (10%)

Syndicate Case Project (25%)

This assignment: is due at the beginning of your assigned Seminar 9 class; requires the application of strategic thinking to resource management issues for a listed Australian company; must be completed on time; involves peer evaluation; and includes a syndicate nomination form that must be submitted in Seminar 3 (please refer to the Course Outline for further information).
Please organise and co-operate with your syndicate group if you have any issues or challenges in your group, please discuss them with your Seminar Leader as soon as they arise

To be held at the beginning of your assigned Seminar class. Those selected to be graded will be at the discretion of your Seminar Leader. Quiz content will be based on the CURRENT week. For eg. If the quiz is held in Week 5, the quiz content will be on Topic 5.

ACCT3583 Management Accounting 2

ACCT3583 Management Accounting 2

Syndicate Presentation (10%)

Individual Reflection Statement (5%)

Each syndicate group will be required to make a presentation during class in Seminar 12, based on their submitted assignment Details of the presentation requirements will be placed on Blackboard

This is based on your individual reflection on your involvement in the Syndicate case project and presentation preparation. More information will be provided at a later date.

ACCT3583 Management Accounting 2

ACCT3583 Management Accounting 2

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Are you an HONOURS student?

ACCT3583 Course resources

Are you enrolled in an Honours class? Seminar questions to be posted by the end of this week, either in normal seminar file or new Honours file Direct any enquiries relating to enrolments to Dr Paul Andon

Honours criteria: 75% average

Direct any enquiries relating to course content to Dr Paul Andon onour students must do their readings too! (Before the

Dedicated Seminar Leader Get to know your Seminar Leader Seminar Leaders Consultation hours This time provides an opportunity for individual consultation with your Seminar Leader. Please be proactive in raising any learning concerns or issues you may have in this individualised context. Management Accounting 2 Customised Textbook (Cengage customised publication) 2011 Supplementary material Please read subject Readings and prepare responses to Questions in advance of your Seminar Please use the PPT slide content during seminars and for revision Course Blackboard website Please check regularly for additional questions and information EDU Learning Assistance Centre Available for individual and group consultations to assist with writing and academic performance
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ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

ACCT3583 Course introduction: What does ACCT3583 cover?

Strategy analysis and formulation
Topic 1 Topic 2

ACCT3583 Course introduction: Overview of ACCT3583 coverage contd.

Strategy analysis and formulation
Topic 1 Topic 2

Analysing the external environment

Topic 3

Analysing the internal environment

Topic 4

Developing strategy
Topic 5

Measuring performance

Managing shareholder value creation g g

Analysing the external environment

Analysing the internal environment

Strategy implementation and resource management

Resource management
Topic 6 Topic 7 Topic 8 Topic 9

Topic 3

Topic 4

Developing strategy

Measuring performance

Managing customer value and relationships

Managing supplier relationships and strategic outsourcing

Managing knowledge as a strategic resource

The environment and engaging in corporate social responsibility

Topic 5

Managing shareholder value creation

Topic 10

Topic 11

Managing strategic risks

ACCT5931 Strategic Management Accounting

Management Controls
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ACCT3583 Course introduction: Overview of ACCT3583 coverage contd.

Strategy implementation and resource management

Topic 1: Course content overview

Topic 1 Topic 2

Resource management
Topic 6 Topic 7 Topic 8 Topic 9

Managing customer value and relationships

Managing a ag g supplier relationships and strategic outsourcing

Analysing the external environment

Analysing the internal environment

Managing knowledge as a strategic resource

The Th environment i t and engaging in corporate social responsibility

Topic 3

Topic 4

Developing strategy

Measuring performance

Topic 10

Topic 11

Topic 5

Managing strategic risks

Management Controls

Managing shareholder value creation

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

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Topic 1: Desired Learning outcomes

Seminar Question 1: In small groups, please brainstorm the following key words
Strategy Value Resources Stakeholders

In Topic 1, we aim to be able to:

Appreciate generally what is strategy Undertake an analysis of the macro environment Undertake industry analysis using Porters Five Forces model Recognise opportunities and threats based on an analysis of an organisations external environment Understand the role of todays accounting and finance professionals
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ACCT3583 Management Accounting 2

ACCT3583 Management Accounting 2

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What is strategy?
Johnson, Scholes and Whittington (2010) state:
Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations.

What is strategic direction and scope? How long is long term?

DIRECTION is a combination of an organisations:

MISSION (statement of purpose, its raison detre); VISION (the kind of organisation it would like to be); and COURSE (e.g. the pursuit of differentiation or cost leadership programs)

SCOPE refers to how BROAD or NARROW is the strategy adopted by the organisation the markets it should compete in, and the activities involved Within a strategic planning context, the operational definition of LONG TERM is the next 5 to 10 years
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lets consider these definitional elements

ACCT3583 Management Accounting 2 Source: Exploring Corporate Strategy: Text and Cases, 8th Edition, FT Prentice Hall, p.2 19

ACCT3583 Management Accounting 2

Where is the organisations environment?

What are the organisations resources and capabilities?

The ENVIRONMENT refers to all external forces, factors and conditions that exert some degree of impact on the strategies, i t th t t i decision and actions taken by the firm Two types of external environments are identified in strategic analysis:

General (or macro) environment

RESOURCES may be classified as:

Organisation

Tangible resources (including physical, technological and financial resources) Intangible resources ( g (including human and g reputational resources)

Competitive (or industry) environment

CAPABILITIES represent the capacity of the organisation to integrate and deploy resources to achieve a desired objective

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

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Who are the organisations stakeholders?

Levels of strategy
There are three levels of strategy: CORPORATE

STAKEHOLDERS are those individuals or groups whose values and preferences shape the emergence of strategy Important stakeholders include the following: p g
Society
Shareholders

what business are we in? how does a strategic business unit (SBU) compete successfully in a particular market? how can the component parts of an organisation effectively deliver the Corporate and Business Unit level strategies in order to achieve sustainable competitive advantage?

BUSINESS UNIT

OPERATIONAL (not focused on in MA2)

Suppliers Employees

Customers

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

Source: Exploring Corporate Strategy: Text and Cases, 7th Edition, Pearson education Ltd.

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The linear model of strategy formulation

Analysis of the external environment

Previous literature presumed that strategies unfolded in a logical sequence. In this sequence, analysis precedes implementation The phases in this strategy formulation process are:
articulation of organisational mission and goals analysis of threats and opportunities in the external environment analysis of strengths and weaknesses in an organisations internal environment the choice of an appropriate strategy

Aim: To identify the THREATS and OPPORTUNITIES that exist in the GENERAL and COMPETITIVE environments of the organisation
SWOT analysis:
Strengths

Opportunities
Analysis of the firms EXTERNAL environment

Analysis of the firms INTERNAL environment

Weaknesses

Threats

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

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General environment

Analysis of the General Environment using a PESTDG Framework

SEGMENTS Political/ Legal Economic Socio-Cultural EXAMPLES OF SOME KEY TRENDS
Changes to workplace relations and superannuation; Carbon Tax; Rising interest rates; GFC; Inflation & unemployment rate stability Climate change concerns; Increase in casual and part-time work force; Greater concern for health and fitness Wireless communications; Growth in hand-held devices; Genetically modified products Aging population; Growing disparities in income levels Growth in Chinese and Indian economies; Regional free trade agreements GFC;

The general environment (AKA macro environment) represents the broad collection of factors that directly or indirectly p y have the potential to influence every firm in every industry within the economy Firms cannot control factors in the general environment - which are usually difficult to predict

Technological Demographic Global

ACCT3583 Management Accounting 2

Source: Pitts & Lei (2000) Chapter 2 of Strategic Mgmt: Building & Sustaining Competitive Advantage

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ACCT3583 Management Accounting 2

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General environment continued

Seminar Question 2

Analysis of the general environment is conducted by:

1.

2.

Dividing it into six segments, and identifying the y g key trends and events in these segments; and Analysing the impact each of the key trends and events in these six segments will have on the organisation (or industry) being considered

Form into groups of 5-6 Characterise the general environment for Qantas
a)

Based on the above analysis identify 2 major analysis, threats and opportunities.

Lets look at an example. As we do so, consider how some of the key trends we discuss may impact a company with which you are familiar

ACCT3583 Management Accounting 2

Source: Pitts & Lei (2000) Chapter 2 of Strategic Mgmt: Building & Sustaining Competitive Advantage

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ACCT3583 Management Accounting 2

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Competitive environment

Using strategic groups to define industries

The competitive environment includes the key forces shaping competition in an industry. Analysis of the competitive environment focuses on the impact these forces have on industry attractiveness (i.e. potential for profitability)

A set of firms emphasizing similar strategic dimensions and using similar strategies

ACCT3583 Management Accounting 2

Source: Pitts & Lei (2000) Chapter 2 of Strategic Mgmt: Building & Sustaining Competitive Advantage

Competition between firms within a strategic g group is g greater than between a member of the strategic group and a firm outside of that strategic group. There is more heterogeneity in the performance of firms within strategic groups. Similar market positions Similar products Similar strategic actions
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ACCT3583 Management Accounting 2

The World Automobile Industry: Strategic Groups

Strategic Groups within Industries

Value of strategic groups as an analytical tool

Identify barriers to mobility that protect a group from attacks by other groups Identify groups whose competitive position may be marginal or tenuous Chart the future direction of firms strategies Thinking through the implications of each industry trend for the strategic group as a whole

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

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Competitive environment continued

To analyse the competitive environment, we use Porters Five Forces of industry attractiveness
1. Threat of new entrants Potential entrants

1. Threat of new entrants

INDUSTRY COMPETITORS Suppliers 3. Bargaining power of suppliers 4. Rivalry among existing firms Buyers 2. Bargaining power of buyers

Barriers to entry represent economic forces (or hurdles) that slow down or impede entry by other firms Common barriers to entry include:

Substitutes

5. Threat of substitute products and services

ACCT3583 Management Accounting 2

Source: Reproduced with permission of The Free Press, a division of Simon & Schuster, Inc, from Competitive Strategy: Techniques for Analyzing Industries & Competitors by Michael E. Porter (1980, 1998)

Capital requirements of entry Economies of scale Product differentiation Switching costs (for customers) (Strong) Brand identity Access to distribution channels Cost disadvantages independent of scale e.g. from proprietary product, government subsidies
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ACCT3583 Management Accounting 2

2. Bargaining power of buyers

3. Bargaining power of suppliers

Buyer power/leverage is likely to be high when:

Supplier power is high when:

Buyers are knowledgeable Large purchases are involved Product is not perceived as critical to the buyers needs There is a hi h concentration of b Th i high t ti f buyers relative t suppliers l ti to li (buyers have more alternatives when seeking suppliers, and can seek better terms on price and service) Standardised, undifferentiated products Few switching costs (switching costs lock the buyer to particular sellers) There is a threat of backward integration (potential for buyers to enter into the market)
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Products or inputs are crucial to buyer Industry is not an important customer of the supplier group Products are differentiated or have high switching costs There is a concentration of suppliers relative t b Th i t ti f li l ti to buyers (leads to better bargaining position over prices) There is a threat of forward integration (suppliers can fairly easily enter the industry they are supplying)

ACCT3583 Management Accounting 2

ACCT3583 Management Accounting 2

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4. Intensity of rivalry among industry competitors

5. Threat of substitute products & services

Competitive rivalry is high and industry profitability tends to be low when:

An industry has no clear leader i.e. equally balanced competitors There are a large number of industry competitors There are high fixed costs in an industry There are high exit barriers (e.g. specialised assets, shared facilities) Competitors have little opportunity to differentiate their offerings There is slow or diminished market growth

Substitute products or services can perform the same function as the industrys offerings Substitutes take different forms, including:

Product substitution (e.g. electronic mail substituting letters) Substitution of need (e.g. airline industry facing competition (e g from more efficient forms of teleconferencing)

Substitute products or services of most threat are those that:

1.

2.

are subject to trends improving their price/performance value relative to an industrys product; or are produced by industries earning high profits

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

Source: Dess, Lumpkin & Taylor (2004) Chapter 2 of Strategic Management: Text and Cases

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Competitive environment continued

Summary of Five Forces impact on industry attractiveness

Analysis of the competitive environment is conducted by:

1.

Industry has higher profit potential, if:

Threat of new entrants is low (i.e. there are higher barriers to entry) Industry has higher bargaining p y g g g power relative to its buyers and suppliers Competitive rivalry is low Threat of substitution is low

2.

3.

Analysing each of Porters Five Forces of industry attractiveness (using the criteria discussed on subsequent slides) Assessing whether each force is low, medium or high for the industry being analysed; and Concluding on whether overall industry attractiveness is low, medium or high

As we walk through each of the Five Forces, rate the force as low/ medium/ high for an industry with which you are familiar
ACCT3583 Management Accounting 2 41

Review the ratings you assigned to each of the 5 forces for an industry with which you are familiar how does the industry rate overall? Is industry attractiveness low, medium or high?
ACCT3583 Management Accounting 2 42

Summary of Five Forces impact on industry attractiveness

Seminar Questions 3 & 4

Industry has lower profit potential, if:

Threat of new entrants is high (i.e. there are higher barriers to entry) Industry has lower bargaining p y g g power relative to its buyers and suppliers Competitive rivalry is high Threat of substitution is high

Form into groups of 5-6 Question 3: Using Porters Five Forces Model, analyse the industrial environment of Qantas. a) What are the key forces at work in the industry? b) Given thi analysis, i th d Gi this l i is the domestic/ i t ti / international ti l industry attractive or unattractive? Question 4: Based on your analysis in question 2 and 3, what are some of the major opportunities and threats faced by Qantas in the domestic (Australian) market?

ACCT3583 Management Accounting 2

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ACCT3583 Management Accounting 2

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ACCT3583: Seminar 1 Review Questions

Topic 1: Review of Desired Learning outcomes

What is strategy? What tool do we have available to analyse the macro environment? What are the six segments we analyse here? What tool do Wh t t l d we use t analyse th competitive to l the titi environment? What are the forces assessed in this type of analysis? Rivalry is most intense when there are high exit barriers and high industry growth. True or False? What is SWOT analysis? Which part of the acronym relates to analysis of the external environment?
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Based on Topic 1, you should be able to:

Appreciate generally what is strategy Undertake an analysis of the macro environment Undertake industry analysis using Porters Five Porter s Forces model Recognise opportunities and threats based on an analysis of an organisations external environment Understand the role of todays accounting and finance professionals
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ACCT3583 Management Accounting 2

ACCT3583 Management Accounting 2

ACCT3583: Where to from here?

Topic 1 Topic 2

ACCT3583: Seminar 1 Wrap-up

Analysing the external environment

Analysing the internal environment

Topic 3

Topic 4

Developing strategy

Measuring performance

Topic 5

Read the material for Topic 2 and prepare your responses to the questions contained in your Supplementary Material Please also read the Australian Financial Review and/or Business Review Weekly this week look for key trends and forces impacting the external environment in which Asia Pacific-based companies operate

Managing shareholder value creation

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