Schools of Thought on Strategic Management

Schools of Thought on Strategic Management Strategies are among the most crucial key of an organization in order to accomplishing their specified goals and objectives. According to Mintzberg H Quin B (1997, p39) Strategy is the pattern plan that incorporates an organizational goal, policies and action successions at large. Hence, managers or the top level of an organization require to be very deliberate when choosing the strategy for them to put through in the market, to endure and to win their Rivals. In this assignment, the school of strategies which include planning school, culture school and positioning school of Minztberg will be examined to show these strategies were put into action to help organization be more active in the global market. This assignment also exemplifies some international theories which are Porters diamond, five forces and product life cycle of an organization by analyzing Tesco Plc case. School of Strategies overview It is undeniable that strategical evolution is the fundamental element for the endurance and success of every business. Evidently, each organisation ought to have appropriate strategies and conform it to the conditions that come up in a competitory market. Turner (2003) stated that in an attempt to channelize those whose task it is to put strategy into exercise, Henry Mintzberg, el at (1998) Depicted the process of a strategy campaign and has keyed out ten schools of thought in respect of strategy evolution. These schools have changed in popularity overtime. The ten different schools were separated into the groups of prescriptive, descriptive and synthesis. The difference point between the prescriptive schools and the descriptive ones is that the former concentrate on strategy preparation while the latter emphasize strategy development. The three prescriptive schools are considered the efficiency and constancy foundations which make directions as well as objectives for the growth of organisations. According to Stacey (2007), the three prescriptive schools are the design school, the planning school, the positioning school .These three schools become both profound and preconditioned factors of strategic development for each organisation.expanded to these schools, the different descriptive schools which are entrepreneurial school, the cognitive school, the learning school, the power school, the cultural school and the environmental school give deep insights in strategy preparation. All strategy views Acknowledge the relevancy of entrepreneurship. The last group is synthesis that comprises of the configuration school, which incorporates the aspects of all the other schools in terms of configurations or in term of transformations (Stacey, 2007). This school corresponds an attempt at integration which definitively recognizes the complexness of strategy. This assignment will take three schools which are the plamiing school, the culture school and the positioning school to analysis and apply to Tesco to show these models work and how an organisation apply these models to achieve their targets, objectives and be successful in global market. 2.1- The Planning School 2.1.1- Definition The planning school is a member ofthe prescriptive school which is normally more refer with how the strategy should be articulated instead of how they should be constituted. This model deals with consequences such as budgeting, scheduling and programming. Every business Demands to have program for them so to emergence and development, thus this model can be Implemented in many firms such as Tesco to help them be the global organisation. 2.1.2- Discussion Tesco was fotmd 1924 by Jack Cohen. Over many years, today, Tesco become one of the Biggest retailers in all over the world. How they become successful like theyre at present? They need to have a effective plan which is establish on predicting how the economic is going to be, what they prefer to be, what will be the market and so forth. The answer for these questions should be the planning school. Ftuthermore, the planning school retrospects the Ansoff Model which Tesco used to analyse their market and products. They want to be globalisation so they open Tesco in many countries of the world where they set up their products to acquire new markets. For example, Tesco opened stores in Japan where people prefer to buy fresh food each day, Hence, the existing hyper market formats dont meet the needs of local buyer. Tesco also has inducted big amount of money on product development. In following Ansoff marketing strategies, Tesco is attempting to increase number of customer and number of sales. This school also aspects intimately at the SWOT model, the internal strength weakness as well as the external opportunities and threat as mention in Marko Makipaa (2004). Tesco applied SWOT model which can tell them their strength such as branch name, national store network to evolve and win their challengers. It also shows them their weakness such as deficiency of Worldwide scale or menace of takeover to assist them find the way to tix it and to change it in near ihture. They recognised the extemal opportunities of Tesco can be beyond the sea growing market in Eastern Europe and Asia and financial service which might be a good opporttmity to focus on and to become progressively participate in global market. In addition to that, the threat of Tesco is the entry of Walt Mart, the evolving of local Sainsbury, etc. So by using the planning school which relates to Ansolf Model and SWOT analysis, an organisation will know the theories , plan for their new product and market , manage their budgeting, schedule, programme, select the best choices and methods to fit their aim and objectives. This model also antecedences its strategies by hierarchy. The long-run strategies is the ones, which are at highest order, accompanied by the average and then by short-term plan. 2.1.3- Limitation Nevertheless, while applying this model,company may be confronted by some disputes as this model comprises some issues which can impact on organisation. First of all, planners may focus too much on rendering newer strategical concepts, thus directing the current aims at sub standard level, amusing the attention from the original purpose directing to false beliefs. Risk is major issue in this model as people who apply these concepts could decide to try and Vie against rival challengers and therefore bring forth new strategies, which could be very risky as in Sadler P(2003). Second, planning school is all out forecast and anticipating future based on some strategies and current trend of economy, even so, it will be very diflicult and risky to make the decision and put through it before. Establishing strategy and decision on Supposition and doubts could due to the diverting the organisation original strategy and also disregard the organisations necessity of strategy. 2.2- The Culture school 2.2.1- Definition The cultural school is one of subclasses of descriptive schools. This school ascertains strategy Constitution as a corporate process. The approach of this school attempts to involve the several groups and sections within the company: strategy establishment is deemed a fimdamentally collective and combined process. The strategy thats formulated is a manifestation of the corporate culttue of the organisation. . This model centers on the all-important role the social procedures, opinions and values are playing in decision making and in strategy establishment. ln addition to this, it not only explains opposition to strategic change but helps to deal with paramount values in organisations or in regions also. 2.2.2- Discussion The culture of Tesco plays a critical part in the company; this is a great deal of concerned about the way in which people in the organisation interact with one another. If people didnt interact Comfortably with one another, this could be bad for decision making; this could also lead to poor decision being induced. Tesco have a positive culture. The type of culture of Tesco is a customer ridden culture. Customer driven culture is everywhere in the business and makes a real effort to improve customer service, marketing research, hiring right people, and training. The business is trying to update the teclmology e- commerce. It also has a positive culture where staff and workers communicate well. They also respect change as chance than not a treat. Furthermore, the culture of Tesco is seen as a dynamic one. This is proved in the way a business is looking for a change how they work better, and always anticipating new ideas to attract more customers. 2.2.3- Limitation A apportioned dedication to beliefs encotuages consistency in an organisations behaviour, and Hence by admonishes changes in strategy. Its culture that profoundly accommodated opinions and understood asstunptions that act as powerful internal barriers to fimdamental change. Also, the vague of this model is main reason leading to opposition to change. It can be missed to justify the status-quo. Consequently, each organisations attention has also been addressed at how to overcome the strategy limitation of organisational culture. 2.3- The Positioning School 2.3.1- Definition The Positioning school is where the organisation can formulate its strategic position within the industry. Put differently, positioning is oneself in competitive strategy. This model ascertains strategy structure as an analytical development. Porter (1980) was the founder of the positioning school; he revolved around the formation of industries and their effect on strategies. The positioning approach looks at the companys place in the economic market lay whose goal is to differentiate the organisation from others within the same field. (Steward C, el at ,2005) 2.3.2- Discussion This model has been applied in many firms such as Tesco to help them to positioning itself in the market so that theyll situate out amongst the rest, and how to accomplish high profit than other firms through market position. Tesco use Porters five force analysis to empathise the competition. Porters Five Forces Model implies that business are being acted upon by five forces i.e. supplier power, threat of replacements, customer power, barriers to entry and competition. This model also entails that business requirement be able to be well aware of the industry Condition in which they function. For TESCO, their main challenger is ASDA. The competition is firm between the two food retail companies as healthy as with others like Sainsbury. ASDA is possessed by WalMart which is the leading grocery succession in the United States. They are famous for low priced items. This is among the reasons why people lean to go to their stores for their frequent shopping necessitates. When they expanded in the Great Britain, they brought by way of them their cost leadership strategy. This led to the similar success that theyve in the United States. All the same, TESCO was competent to preclude ASDA last year. How Tesco conquer ASDA using Porter strategy is explained as follows: According to Porter (1985), a business position is based on its strength and strength is classified into two cost advantage and distinction. When these strengths are applied, it Leaves aftermath to three generic strategies focus, distinction and cost leadership strategy. Out of these three generic strategies, cost leadership strategy plays a important undertaking in the achievement of TESCOs competitive benefit over ASDA. Cost leadership strategy means that the business is the low cost producer or supplier of a definite quality item in a Intended industry. 2.3.3- Limitation While considering the positioning school, manager or an organisation must aware of some limitation and taking into concern regarding it. First of all, the top level in hierarchy of an organisation will be the one who fonnulate the strategies whilst execution will be done by the lower level. This could induce the problem such as incompatibility. Managers could have sets of the ideal but they fail to interpret these ideal to lower levels and due to the Abortive execution. It also creates the de-motivation for their employees. (Susanne, R 2005). The additional problem of this model is its direction. Its a bit much constrict in that its just concerned in the information thats either economic or quantifiable. The social, technological or political which is really crucial information havent taken into consideration. This model also established on the anticipation of succeeding tendency by generalising the present tendency which alters quickly in the time period for variety of reason. If th e preceding and present trends are the only reference used to anticipate the succeeding trends, the strategies are really insecure to go wrong in execution. Whittington school of strategies Nevertheless, in notion of Whittington, schools of strategies are of four types and it will be poor if we discuss the strategic management without referring the theories of Whittington. Each theory presses out the disputes about human capability to think moderately and act more efficaciously. Once each manager straightaway confronts with these conflicts, he will be better able to examine their own action and eventually select which most common theory is most appropriate with their requirements. Hence, these four views are regarded as the crucial tools for strategic management of each business. Lets look at the figure below, well see the summary about the four more common theories: It can be easily to see that Tesco remain in evolutionary part since their strategy is to keep price low, do publicity and their choice open which can appeal increasingly customer come to them. Comparing the cost of Asda, Sainbury with Tesco , it always show that the cost in Tesco is very much lower and they also do more publicity than their rivals. Furthermore, people who come to Tesco to purchase something cheaper not only buy those particulars but they also buy the other things which they require. Therefore, even do more publicity and the price is cheaper, Tesco still persist their sales and budget. So, using this strategy is the right way for Tesco and they can be progressively successful in the time to come. All the same, by a systemic view, theres no better way of strategy: only play by the local rules. Its visible that the four approaches to strategy widely dissent in their advice to management. Realising and know how to enforce each approach in the business system are the fundamental factors which prompt each organisation to participate more actively in the global market. The succeeding part will be some strategies which Tesco applied or can be applied in Tesco to accomplish their goal and objectives. Global Retail Strategic Decision Among the most debatable trends in todays retail industry is globalization. The global arena has proved highly hard for numerous retailers over the preceding two Xs. Retailers Functioning in local marketplace is extremely acted upon by fluctuation in consumer behaviour. Newcomers in market such as Brazil, Indonesia and Thailand ascertain articulated deviations in consumer testes, purchasing behaviour and expense. Several retailers have tried and failed to establish themselves into Global marketplaces. This part of assignement will help in understanding and the preparation of global strategy for Tesco Plc. The section will use Porter 5 force, Porter Diamond strategy, Porter generic and PLC model analysis to render an penetration into Tescos position in the intenational market. This will help management in constituting to correct strategical selections in terms of corporate and global strategy to keep off the trouble which could come from unfamiliar of new environment of each countryy that Tesco expand into it, such as new customer, new supplier and new competitor. 4.1- Overview of Tescos Strategy The way Tesco PLC raise revenues is by trying to make Tesco more attractive to customers, so that more people prefer to shop with them. Theyre hading best for one simple reason: globally, millions more customers have chosen Tesco with 10 million more visits a week to their stores around the world. In 1997, when Tesco first exhibited their four part, strategy; a strong UK business, non-food, retailing services and international . at present they are a truly international retailer, with arising strength in non-food and retailing services. It appears that Tesco have opted a really beneficial strategy for international marketplace , as a matter of fact Tesco still have trouble when they expand business into some countries , for example in 2002 ;Tesco had went through troubles with expansion in Poland, Tesco faced with the economic problem and that make their cost higher to market presences. Another example in Taiwan (2000), Tesco was facing rivalry from the French titan Carrefour. These days, there are suppositions about Tescos withdrawal fiom Taiwan. From these abortive experience, Tesco realized that flourishing into new international markets is harder, Hence Tesco should be aware more about market competitory environment. Poters analysis is nevertheless useful in evaluating the competitive environment of firms these days. 4.2- Porters Five Force 4.2.1- Discussion According to Porter (1980), this model can be applied to many organisations. It postulates the external environment analysing and revolving around the structure of the industry. The objective of this type of analysis is to formulate a strategy that will enable firms to develop chances and protect them from threats. By executing so, can lead business firm competitive positioning. This concept is dividing by 5 force call Porters 5 force. The threat of entry of new competitors: In supermarket retailing, barriers to entry are high. High initial investment and fixed costs are likely to preclude many likely newbies. Additional barrier to entry is economies of scale. Tesco and other large supermarket are able to buy large bulks of goods in a lower price. In contrast, smaller new entry parties are more expected to buy smaller volumes of those goods at relatively higher prices. New firms also have to be aware that Tesco already have dedicated customers. The threat of replacements: Which, Tesco threat of replacements is high because product that Tesco sell same with to the other retailing shop. which is Tesco should examine to what extent its conceivable for customers to switch to the replacement. In such cases, Tesco should make certain that buyers gratified on their products or services. On the other hand, other companies in the same industry may choose to vie on price, which will bring down margins of profit. The bargaining power of suppliers: generally, most people have a option between another supermarket chains, who contend on price and several promotions. This can make supplier have high bargaining power. Nevertheless, Tesco is ascertaining the situation by not just order from one big supplier but by accepting a number of smaller ones. In counterpoint, the bargaining power of Tesco is expanded. If a specific supplier is committing too much, Tesco can switch to another supplier. The degree of competition between existing competitors: As we seen in the market at present that all main players in Global market as Carfoure and Wal-mart trying so hard for increase their market share. Therefore, the foodstuff market is especially challenging. 4.2.2- Challenges Tescos strategy, structure and competition are established on the framework. Its strategy is authorise, with development being acted on from four areas, the core UK grocery business, non-food, international expansion and retailing services such as financial services, the dotcom business and telecom packages. Essentially, Tesco is using its strong stable core to keep the business ticking over while it contrives new more hazardous areas of growth. 4.3- Porter Diamond strategy 4.3.1- Discussion With this strategy, the aim is to become the lowest-cost producer in the industry. Tescos sections in the industry are provided with the stress placed understating costs. If the accomplished asking price can at the least equal (or near) the average for the market, then the low-cost manufacturer will enjoy the most beneficial profits. This strategy is usually affiliated with mass businesses offering standard products with comparatively small distinction that are absolutely satisfactory to the bulk of customers. At times, a low-priced leader will also give up its product to maximize sales, specially if it has a substantial cost advantage over the competition and, in doing so, it can further step-up its market share. Tesco has established afresh affordable food line in its supermarkets as it gears up to take on discounters Aldi and Lidl. Tesco have to launch its own variants of the discounters products Within its existing stores. This way it hopes it can keep its existing customers happ y while hopefully appealing new ones. 4.3.2- Challenges As the firm aspects new situations and makes little errors through trial-and-error extending, management form more naturalistic percepts of the foreign market. The need for learning by doing at the local spacial level suggests that learning from the intemationalisation process will often be a gradual, iterative process .Tesco experienced that the opporttmity to grow a mass business in France was improbable to be accomplished under the current envirornnent where planning permit is difficult and accomplishment ratings are high. Consequently, Catteau was becoming less strategically significant. Tesco have leamed that advisors can only advise but thats all. Dont trust any investment bank today, when new decreasing, particularly in European Union or UK marketplaces demand is higher and higher, overall oil price and liquidity crisis will intensify and that will pull demand back. Tesco is foodstuff retailer, so as a whole food and agriculture industry faces hike and even peoples carrying on to feed their natural necessity. Maybe Tesco need to invest more to future food supplements. The other challenge for them is about technology as all major technology today is based on oil, gas or coal. Tesco like companies will close their door like last winter another UK retailer. Even E-commerce could be a focus for Tesco. 4.4- Product Life Cycle (PLC) 4.4.1- Discussion The PLC model is useful in explaining production models for some types of products, such as exchangeable consumer goods, but is less useful in anticipating future pattems, particularly in industries commanded by some global players. The framework presents dynamic comparative advantage. The country thats the comparative advantage in the production of the product changes from the innovating (developed) country to the growing countries. Tesco is ever expanding its business in order to keep up the rivalry to a very high level, so consequently, its critical that Tesco invest in fresh services and products so that customers demands are fulfilled. Tesco is an example of a large supennarket chain can use their customer dedication to broaden and extend their product array. Foodstuffs are always attending be the core product for Tesco but in their website or in their stores, it can be seen to find information on a range of other products completely unrelated to foodstuffs. Tesco is developing these new products and selling to their existing customer base to be able to enter these new markets. There is Tesco Finance and Insurance where access to apply for the Tesco credit card and savings account, products that in the past you would have approached the bank for. Tesco Direct is a catalogue shopping service and is seen as taking on conventional catalogue brands like Argos. By understanding the product life cycle, Tesco is able to identify new areas to move in. Presently Tesco has an electronic range of goods and services that they offer, but one thing they lack is low-cost laptops. Until now, Dell and PC World are the leading retailers of low-cost laptops. Tesco needs to buy quality laptops at a competitive price to maximize sales and increase productivity. 4.4.2- Challenges According to Daniels (2007) because of very rapid innovation, have extremely short life cycles, a factor that makes it impossible to accomplish cost simplifications by moving production fiom one country to another. As it has been told Tesco is a global retail market and still being globalized around the world. Hence, Tesco needs to move some products to a new market and an environment. In this case Tesco challenges it competitions by reducing its cost and removing products. There are plenty of difficulties in this competition such as making good research about environement to make a perfect anticipation about the best products which can be used to beat the competitors in the global market. Conclusion Properly speaking, all strategy schools and patterns are looked upon a tool for strategic information from an constitutive view and as a process for comprehending a number of different futurities for a company. This level sets the business firms goals and objectives and decides on its investments and the deployment of its resources. Thanks to applying strategic models in functioning, Tesco has took part more actively in the global market. it has proved by the success and development of Tesco in many countries in the world. References Books 1. By Marko Makipaa, The roles and types of business inhrmation in school of thought strategic management. Frontiers of e- business research Available at http://www.cs.uta.f1/isliulkaisut/2004/2004_Makipaa_2.pdf 2. Daniels J., Radebough L.H., Sullivan D. (2007), International Business: Environments And Operations, 11th edition, Pearson/Prentice Hall, New Jersey, Pg 221 3. Fernie J (2005), International Retailing, Vol 33 No 1, Emerald Group Publishing, Pg 36 4. Hill C. W. L.(2007), International Business: Competing In The Global Marketplace, 6th Edition, McGraw-Hill International Edition, New Jersey, Pg 188 _ 5. Mintzberg H and Quinn B(l997), Strategic process, concept; context and case, European Edition, Prentice Hall 6. Mintzberg H, Ahlstrand B, Lampel J (1998), Strategy Safari The complete guide through the wilds of strategic management, Finance Times, Prentice Hall 7. Morrison J (2002), The International Business Environment. London, Palgrave 8. Porter E M (1985) Competitive Advantage, The Free Press , New York 9. Ttuner, P (2003), Organizational Communication: the role of the HR prokssional, Chartered Institute of Personnel Development, p69 10. Sadler P(2003), Strategic Management, 2d Edition, London, Kogan Pages. 11. Stacey, R D (2007), Strategic Management and Organizational Dynamics, Prentice Hall Financial Times, 5 Edition, p23 12. Stewart Clegg, Martin Kornberger, Tyrone Pitsis, (2005), Managing and Organizations. An Introduction to Iheoiy and Practice , Published by SAGE 13. Susanne Royer (2005), Strategic Management and Online Selling: Creating Competitive Advantage with Intangible Web Goods, Published by Routledge 14. Whittington, R (2003), What is strategy and does it matter, Thomson, 2d edition, p1O. Internet 15. http://www.accaglobal.com/documents/corporate_sector.pdt, date accessed on 29.01.09 16. http://bizcovering.com/international-business-and-trade/tesco-2/s date accessed on 16.02.09 17. http://wwvv.bizcovering.corn/international-Business-and-Trade/Tesco, date accessed -on 3-0.01.09 18. http://www.12manage.com access on 02.02 .2009 19. http://www.tesco.co.uk accessed on 28 .01. 2009 20. http://www.retailweek.com/News/2008/09/tesco__introduces__new_1owcost_food_offer .html , date accessed on 12.02.09 21. http://WWw.prneWswire.co.uk/cgi/news/release?id=l5880, date accessed on 15.02.09 22. Tesco(2008), Annual Report and Financial Statement, date accessed on 23 .01. 2009, Available at http://wwW.tescoreports.com/downloads/teseo_report_i`1nal.pdf

Generation Y Essay -- Youth Papers

Generation Y "Your generation is nothing but a bunch of computer addicted slackers. You kids don't care about anything." These phrases and others can be overheard coming from the mouths of baby boomers, those born between 1946 and 1964, and other Generation Y predecessors. What happened? For years now, Generation Y, those born between 1977 and now, have been viewed negatively (Alch 1). Though the origins of the "slacker" title are uncertain, the term has certainly stuck. It could be considered a fitting title. After all, Generation Y performs poorly in school, has no motivation to work, and doesn't get involved with the issues, right? Well no, not exactly. Generation Y is largely misunderstood. They're actually extremely concerned with what goes on around them and are working harder than ever. These people are well on their way to reshaping society as we know it. Generation Y is a confident generation, with high self-esteem. They are opinionated and value their privacy (Article 15 1). They have a strong work ethic and have grown up understanding the electronic economy. Unlike their predecessors, Generation Y has demonstrated a sense of responsibility by having part time jobs while in high school and college. Often, they even help pay for their schooling (Alch 1). Clearly, it is worth taking a second glance before prematurely judging this generation. Sure, young Americans are addicted to the computer, but why wouldn't they be? Generation Y, also known as the echo-boom generation, has grown up digital. Forget them buying notebooks for school, they're buying laptops and zip disks instead. Times have changed and so have their focuses. Contrary to popular belief, this new generation sets their sights high t... ...ey're riding high on the technology wave, too, and are a hardworking, focused people. At this point they definitely have the upper hand by understanding the technology the rest of the world can't grasp. Upon closer evaluation, Generation Y may even have a certain charisma that the baby boomers lack. Bibliography: Works Cited Alch, Mark. "Get ready for the net generation." Society for the Advancement of Education 2000. 7 November 2000. Article 15. 7 November 2000. "New survey shows that most young adults have strong opinions on top campaign issues, but many still not planning to vote." 25 September 2000. The Henry J. Kaiser Family Foundation 11 November 2000. Raising Student Achievement. White House. 11 November 2000. What happened the year you were born? SLACK Incorporated. 11 November 2000.

Denim Finishing Company Case Essay

Mrs. Kelsey Bowser using the ABC method decided to use the number of garments as the cost driver of the change-over costs. Nevertheless, I argue that this was not the best possible choice. I will try to defend my point using the following example. Let’s assume that Guess Who Jeans demands 600, not 500 garments per shipment. Although the number of garments changes, the total change-over costs would stay the same, because no additional retooling of the machine would be necessary. The whole change-over process takes 3 hours regarding if the number of garments is 200, 500 or 800. Furthermore, let’s strictly theoretically assume that the company is able to achieve some extra capacity and one batch is now composed of 150 garments instead of 100 garments. Still, although the total number of garments would vastly increase, the change-over costs would be altered only partially. The opportunity cost measured as a lost contribution margin would slightly increase, but the out-of-po cket costs would stay the same, as the wages of the employees and supplies costs will not change. Thus, it is clear that the number of garments is not the proper cost driver for the change-over costs. In my opinion the number of shipments would be a much better cost driver for the change-over costs. Regarding the number of garments or the number of batches Guess Who Jeans demands every shipment requires the change-over costs to be incurred twice. For instance, if 99 shipments were made, the total change-over costs would equal $351 * 198 = $69,498, because two change-overs ($702) would not have to be undertaken. Thus, the number of shipments clearly drives the analyzed costs. Unlikely the previous example with the number of garments per batch increasing to 150, the number of shipments fully ‘drives’ the change-over costs. Every time the number of shipments rises or falls, the change-over costs change by the full amount of the two per-changeover costs which properly reflect the real situation. Using such a cost driver may be problematic when the allocation of the chang e-over costs is analyzed. Nevertheless, I argue that those cost should be solely allocated to the propriety denim finishing. The demand for the stonewashing services exceeds the company’s capacity. Thus, if the Guess Who Jeans’ offer was declined, the company would use the whole capacity for stonewashing. However, if the offer was accepted the stonewashing processes would be somehow ‘interrupted’ by the propriety denim finishing. Each ‘interruption’, and therefore each shipment would require incurring the change-over costs twice. No factor connected with stonewashing ‘drives’ those costs. Regarding the number of batches or garments used in the stonewashing process each shipment necessitates the cost of $702. Therefore, I believe this cost should be associated with every shipment done by Guess Who Jeans. In Appendix A I present the product profitability analysis using the number of shipment as the cost driver. Moreover, Mrs. Kelsey Bowser claims that the change-over costs should be treated as product-sustaining costs. Nevertheless, I believe her opinion is wrong. I believe these costs should be on the batch level in the cost hierarchy. Hence, I believe the initial analysis undertaken by Mrs. Bowser was correct, although the cost driver she selected was improper. Product-sustaining level costs could be defined as ‘activities that are needed to support an entire product line but are not performed every time a new unit or batch of products is produced’ [Hilton 2010]. Although the first part of the definition applies to the change-over costs, it is clearly not the case when the second part of the definition is concerned. The change-over costs have to be incurred every time the shipments is delivered and the propriety denim finishing has to be done. Therefore, I believe these costs should be rather placed as the batch-level costs in the cost hierarchy. Batch-level costs are believed to ‘arise from activities performed once for each batch or lot of products’ [Zimmerman 2011]. Since the change-over costs need to be incurred every shipment, placing them at this level in the hierarchy seems reasonable. 2. It is clear that before accepting the proposal several nonfinancial issues have to be considered in order to make a reasonable decision. First, the management should think how accepting the Gues Who offer would affect the relations with the other clients. Since Guess Who requires the Denim Finishing Company not to offer the particular type of finish to other customers, it is very likely that relations with other firms will worsen. The Denim Finishing Company has been cooperating with many companies for a long time. Therefore, those companies may dislike the fact that the new client receives the special treatment, while such benefits could not be observed in their case, even though they have been the customers for ages. Consequently, the Denim Finishing Company’s reputation may shrink and furthermore the firm may lose some of its customers that it had long term relations established with. Accepting the Guess Who offer, as mentioned before, would require the Denim Finishing Company to offer the certain time of finish exclusively to Guess Who. Hence, the firm would be prohibited from providing other companies with this service. Before making the decision it should be analyzed if that could lead to potential losses in the future. For instance, although cooperating with Guess Who may be beneficial, the potential gains from offering that type of finish to other clients could be higher. If so, the Denim Finishing Company should rather provide the service to other firms. Naturally, before making such a decision it has to be determined if other firms would require the Denim Finishing Company to offer the service exclusively to them, like it is the case for Guess Who. Offering exclusive service to one company may result in other companies’ (not only potential clients as mentioned in the previous paragraph, but also current ones) demands for exclusive treatment. If other clients, especially those who have been cooperating with the Denim Finishing Company for a long time, realize that it is possible to receive such a special treatment, they would likely claim for it too, as it could give them a competitive advantage over other firms in their industry. Thus, the Denim Finishing Company would undoubtedly face a big problem. It theoretically could increase the prices for the firms that demand exclusive service, but it could lead to losing those clients. Accepting or declining the Guess Who offer may also result in potential conflicts within the firm that have to be considered. For instance, Bruce Farrand who is against the offer may be so determined in defending his point of view that if the offer is accepted, he will decide to terminate his employment. However, he might be so valuable for the company that the gains from the cooperation with Guess Who would not compensate for the value added by Mr. Farrand. Moreover, some other conflicts could arise in the company after deciding either. Before making the decision it would also be recommended to analyze the potential influence the service offered to Guess Who could have on the machine. Since providing the finish would require constant and often retooling of the machine, it could negatively affect the lifetime of the machine. What is more, it is possible that the quality of services done by the machine would shrink because of those often changes. Hence, the satisfaction among clients could diminish and the high cost of purchasing new machine would have to be incurred soon. It also cannot be forgotten that the current demand exceeds the firm’s capacity and some of its clients already use services provided by other companies. Thus, if the Denim Finishing Company’s has even less time for stonewashing, these clients can shift to competitors. Finally, it should be estimated what potential nonfinancial benefits could cooperating with Guess Who bring to the Denim Finishing Company. Guess Who is considered to be a company that offers innovative and premium products. Thus, being an important business partner of such a firm could have a positive impact on the Denim Finishing Company’s reputation. Consequently, it could attract new clients and encourage more companies to cooperate with the Denim Finishing Company. Moreover, successful cooperation with Guess Who Jeans could lead to extending the business relations with that company. For instance, it could outsource more of its production to the Denim Finishing Company. 3. If I were Tom Corcoran, I would undoubtedly have a few questions for the controller. First, I would ask about all the problems mentioned in the two previous questions. As mentioned before, I believe that Mrs. Bowser did not place the change-over costs at the right level in the cost hierarchy. Hence, I would like to get to know why she decided to treat them as product-sustaining costs, while there are a lot of arguments supporting the idea to treat them as batch-level costs. Furthermore, the cost driver chosen by Mrs. Bowser is highly doubtful. I would require the explanation how and to what extent in her opinion the number of garments ‘drives’ the change-over costs. Since I believe the number of garments is not the right cost driver, I would ask Mrs. Bowser for some other type of profitability analysis, such as the analysis presented in Appendix A. The analysis presented at the meeting by the controller could be misleading. Both Exhibit 3 and Exhibit 4 present data that is in my opinion inaccurate. Moreover, as it was analyzed in the second question accepting or declining the offer could lead to multiple nonfinancial outcomes that may play a significant role on the company’s profitability. Hence, I would ask if such factors have been analyzed and if so, what possible impact they may have. I also believe that Tom Corcoran would be most interested in the total profit his company would have under both scenarios. Analyses presented at the meeting, as valuable as they might be, do not contain such information. For instance, they do not include the facility-sustaining costs that the Denim Finishing Company has to incur. Hence, it would be recommended to present Tom Corcoran with the yearly profit the firm may earn. Moreover, I would ask Mrs. Bowser about the accuracy of her assumptions in Exhibit 4. She estimates that the costs of the proprietary process, as well as the price paid by Guess Who Jeans wi ll not change during the year. However, it may not necessarily be the case. The analysis relies on historical costs that may not be appropriate for the future estimations. Thus, I would like to know if Mrs. Bowser took that aspect into account. Another question would regard the overhead rates of the batch- and unit-level costs. The rates were estimated when only stonewashing was done. However, accepting the offer from Guess Who Jeans would require retaining from using the machine for 600 hours. This could likely result in different overhead costs and consequently different overhead rates. The batch-level utility cost can be particularly problematic. It is ‘driven’ by the machine hours and as previously mentioned the machine is not used for 3 hours before and 3 hours after the shipment. Furthermore, the case makes it unclear whether drying is also performed by the Unit #4. The per-garment utilities cost includes 3 hours for washing and 3 hours for drying. However, when the change-over is undertaken, the washing is not performed, because the machine cannot be used. Therefore, during the change-over the utilities cost is possibly lower. This is especially important for the opportunity cost analysis. Since the case is lacking information explaining the problem, if I were Tom Corcoran I would like to clarify it. Finally, I strongly believe that it would also be necessary to ask Mrs. Bowser about the facility-sustaining costs. Such costs are ignored in the controller’s analysis. Nevertheless, they still affect the company’s profitability. Hence, I would like to get to know how big those costs are. Moreover, the facility-sustaining costs could also be somehow influenced by the possible cooperation with Guess Who Jeans. For instance, the security or insurance costs could rise, since the service is supposed to be offered exclusively to that particular client. Therefore, the analysis of the capacity-sustaining costs would also be useful. To sum up, if I were Tom Corcoran I would have many doubts about the controller’s analysis. I would probably ask her to prepare yet another presentation that includes my suggestions. However, if I were to make the decision, I probably would accept the Guess Who Jeans’ offer. The analysis in the Appendix A, although it does not include nonfinancial factors and may not properly reflect all the costs, clearly shows that such a scenario leads to increased profits. 4. Activity-based costing is undoubtedly a useful tool that could help the management to make the optimal decision. It is much more accurate that the traditional costing systems. Distinguishing various activities and determining cost drivers relating to them helps to more precisely allocate the costs. Using one cost driver for all the amount of the overhead could create the situation where the indirect costs are not really ‘driven’ by the particular cost. For instance, although direct labor hours might to some extent determine the value of the overhead, the influence may only be partial, especially regarding certain products. Using various cost drivers for various activities largely eliminates this problem. What is more, selecting particular cost drivers for respective activities enables ‘taxing’ certain activities. This internal tax system gives an incentive to reduce certain costs and therefore improve the company’s efficiency. For instance, if machine labor hours are chosen as a driver for the production activity there is an impulse to lower the number of machine labor hours which consequently results in decreased value of overhead, lower costs and higher profits. Under Activity-Based Costing the share of costs allocated directly to the products increases. Thus, the company better understand where its overhead costs go to. It enables the firm to identify the products that are not profitable and undertake relevant actions, such as decreasing costs, raising the price or withdrawing the product. However, the cost hierarchy helps to make such decision regarding not only particular products, but also batches and product lines. This undoubtedly allows making decisions that are more profit-maximizing. Moreover, in the ABC the practical capacity is used. Therefore, it is possible to determine the unused capacity. Diminishing the unused capacity is definitely helpful in maximizing the profits of the company. Hence, Activity-Based Costing provides the management with the information necessary to make optimal decisions. To compare, the traditional costing systems do not give such a possibility. However, the ABC method also has some flaws that may result in making a non-optimal production decision. Some of those disadvantages could be observed in the previous questions. First, the system is believed to be complicated. As noticeable in the first question choosing the proper cost driver for the particular activity might be problematic. Selecting the wrong driver could lead to biased results and consequently the decision that is not profit-maximizing. Furthermore, trying to maintain the cost hierarchy may also be difficult, as shown in the example of Mrs. Bowser from the Denim Finish Company. The results when the costs were determined as the batch-level where completely different than when they were analyzed to be product-level. Thus, such easily made mistakes could result in a non-optimal decision. Furthermore, as it could be seen in the second question Activity-Based Costing does not include any nonfinancial measures. Thus, even though pure financial values may show that a particular decision is profit-maximizing, it might not necessarily be the case. Other factors, such as e.g. loss of reputation could actually result in decreased profits. Finally, the ABC method requires gathering data from the whole company, often through interviews. Hence, there is a relatively big possibility that collected data is not perfectly accurate. To sum up, the Activity-Based Costing method is quite reliable tool in making optimal production decisions, especially compared to the traditional costing systems. However, the system has to be carefully planned and implemented, because any mistakes could lead to inaccurate results. Choosing the wrong cost driver and improper assignment of the costs in the cost hierarchy may result in undesired errors. Furthermore, as useful as the ABC is, the management cannot rely solely on financial values provided by the method. Before making the decision all nonfinancial factors have to be considered. Only such a consideration combined with the information supplied by the properly designed and applied Activity-Based Costing system can lead to the optimal production decision. 5. The marginal costing analysis may undoubtedly be a useful tool in making an optimal decision. However, it has to be used carefully, because some of its suggestions may be misleading. This could also be observed in the analysis presented by Mrs. Bowser. The concerns are somehow parallel to the questions raised before. First, the marginal costing analysis does not include any nonfinancial factors. Hence, although the particular activity may seem profitable, it might not necessary be true. Second, the analysis is based on the historical, not the actual costs. The actual costs and price that Guess Who Jeans would be required to pay may differ over the time. Similarly, the application of the overhead depends on the estimates rather than the actual values. Thus, over or underabsorption may happen. Moreover, as mentioned before, after accepting the offer the overhead rates could change. Thus, the costs provided by the controller in the analysis might be inaccurate. As pointed out in the previous question the case is lacking the information about the possible decrease in the utilities costs during the change-overs. If that was true, the opportunity cost associated with the lost contribution margin on sales of 70,000 stonewashed garments would considerably increase. Considerably, the incremental profit from accepting the new offer would diminish. Another problem with Mrs. Bowser’s analysis, as well as with all the marginal costing analyses is that they do not include the costs that do not change with the unit volume. However, such costs could also influence the decision. Although the analysis presented by the controller shows that accepting the offer would be highly profitable, the figures would not look so vastly appealing if the amount of capacity-sustaining overhead was included in the Exhibit. Furthermore, the presented analysis is only a short-term one. Nevertheless, before making a strategic management the management also has to cons ider the long-term perspective. The analysis shows that in the certain year the incremental profits from accepting the Guess Who Jeans’ offer would equal some particular value. The analysis only includes one year though. In the following years the profits could be lower and thus declining the offer could actually be a better decision. For instance, imagine that Guess Who Jeans needs the propriety denim finishing services for its new products that are just to be introduced to the market. The client may expect the high demand for the new product in the first year. However, in the following years the demand for the product, and consequently for the Denim Finishing Company’s services may shrink. Finally, the marginal costing analysis includes only one-case scenario. It assumes that the projected and the actual number of shipments will be equal. However, it is not certain if that will happen. If some unexpected events happen the marginal costing analysis will not properly reflect the real situation. It cannot be forgotten that the marginal costing analysis is a simple and straightforward tool that can support the decision making. It is particularly useful when two products or divisions are to be compared. Moreover, it can give the management the basis for analyzing the opportunity cost of declining the Guess Who Jeans’ offer. However, the marginal costing analysis should be used carefully. I believe it should be treated as a supportive instrument for decision making rather than the major source of information. Hence, if the controller alter a few things, the analysis could help to make the optimal, profit-maximizing decision.

Mayahuel - The Aztec Goddess of Maguey

Mayahuel was the Aztec goddess of maguey or agave (Agave americana), a cactus plant native to Mexico, and the goddess of pulque, an alcoholic drink made from agave juices. She is one of several goddesses who protect and support fertility in its different guises.   Key Takeaways: Mayahuel Alternate Names: NoneEquivalents: 11 Serpent (post-classic Mixtec)Epithets: The Woman of 400 BreastsCulture/Country: Aztec, Post-classic MexicoPrimary Sources: Bernadino Sahagun, Diego Duran, several codices, especially the Codex MagliabechianoRealms and Powers: Maguey, pulque, drunkenness, fertility, revitalizationFamily: The Tzitzimime (powerful destructive celestial beings who embodied creative powers), Teteoinan (Mother of the Gods), Toci (Our Grandmother) and the  Centzon Totochtin (400 Rabbits, Mayahuels children) Mayahuel in Aztec Mythology   Mayahuel was one of several Aztec gods and goddesses of fertility, each of whom had specific roles. She was the goddess of maguey, and patron of the 13-day festival (trecena) in the Aztec calendar that starts with 1 Malinalli (grass), a time of excesses and a lack of moderation.   Mayahuel was known as â€Å"the woman of the 400 breasts,† probably a reference to the many sprouts and leaves of maguey and the milky juice produced by the plant and transformed into pulque. The goddess is often depicted with full breasts or breastfeeding, or with many breasts to feed her many children, the Centzon Totochtin or â€Å"the 400 rabbits,† who were the gods associated with the effects of excessive drinking.   Appearance and Reputation In the existing Aztec codices, Mayahuel is depicted as a young woman with multiple breasts, emerging from a maguey plant, holding cups with foaming pulque. In the Codex Borbonicus, she wears blue clothing (the color of fertility), and a headdress of spindles and unspun maguey fiber (ixtle). The spindles symbolize the transformation or revitalization of disorder into order.   The Bilimek Pulque Vessel is a piece of carved dark green phyllite completely covered in complex iconographic signs, and in the collections of the Welt Museum in Vienna, Austria. Made in the early 1500s, the jar has a large head projecting out from the side of the vase that has been interpreted as the day sign Malinalli 1, the first day of Mayahuels festival. On the reverse side, Mayahuel is illustrated as decapitated with two streams of aquamiel squirting out from her breasts and into a pulque pot below.   Other associated images include a stele from the great classic period pyramid of Teotihuacan dated between 500–900 CE which shows scenes from a wedding with guests drinking pulque. A rock painting at the postclassic Aztec site of Ixtapantongo illustrates Mayahuel rising from a maguey plant, holding a gourd in either hand. Her head is crowned with the head of a bird and a feathered head-dress. In front of her is a pulque god and Pantecal, the father of her 400 children.   The Myth of the Invention of Pulque According to the Aztec myth, the god Quezalcoatl decided to provide humans with a special drink to celebrate and feast and gave them pulque. He sent Mayahuel, goddess of maguey, to the earth and then coupled with her. To avoid the rage of her grandmother and her other ferocious relatives the goddesses Tzitzimime, Quetzalcoatl and Mayahuel transformed themselves into a tree, but they were found out and Mayahuel was killed. Quetzalcoatl collected the bones of the goddess and buried them, and in that place grew the first plant of maguey. For this reason, it was thought that the sweet sap, the aguamiel, collected from the plant was the blood of the goddess. A different version of the myth tells that Mayahuel was a mortal woman who discovered how to collect aquamiel (the liquid), and her husband Pantecalt discovered how to make pulque. Sources Garnett, W. The Paintings at Tetitla, Atetelco and Ixtapantongo. Artes de Mà ©xico 3 (1954): 78–80. Print.Kroger, Joseph and Patrizia Granziera. Aztec Goddesses and Christian Madonnas: Images of the Divine Feminine in Mexico. Ashgate Publishing, 2012.Milbrath, Susan. Decapitated Lunar Goddesses in Aztec Art, Myth, and Ritual. Ancient Mesoamerica 8.2 (1997): 185–206. Print.Miller, Mary, and Karl Taube. The Gods and Symbols of Ancient Mexico and the Maya: An Illustrated Dictionary of Mesoamerican Religion. London: Thames Hudson, 1993.Taube, Karl. Las Origines del Pulque. Arqueologia Mexicana 7 (1996) :71----. The Bilimek Pulque Vessel: Starlore, Calendrics, and Cosmology of Late Postclassic Central Mexico. Ancient Mesoamerica 4.1 (1993): 1–15.