Product/customer critical evaluation
Article Abstract:
Businesses that want to improve their profitability must implement a critical evaluation of their customers and products or services on a periodic basis to determine whether they are consistent with the organizational core capabilities. The key is to analyze the strategic importance of a particular customer or product as well as the contribution of this customer or product to the firm's profitability. This can be achieved by reviewing hidden cost components such as inventory carrying costs, billing, collection and payment processing costs, customer service costs and quality control and inspection costs. Once the strategic importance and revenue contribution of a customer or product have been evaluated, the next logical step is to decide whether that customer or product needs to be nurtured.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1999
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It's time to stop overselling activity-based concepts
Article Abstract:
Activity-based concepts are widely touted as foolproof management tools that can turn any business into a profitable global competitor. Unfortunately, the ability of these concepts to give companies a competitive edge is vastly overrated. While it is true that activity-based costing can help organizations plan their strategies in such areas as pricing or making product mix decisions and improve operations, long-term competitiveness can only be achieved if managers concentrate on obtaining total customer satisfaction instead. Managers should start this process by developing a costumer-focused mission statement. They must then help every organizational member see the importance of improving the particular processes in which they work.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1992
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