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Chapter 1

MGT323H5 Chapter Notes - Chapter 1: Cost Leadership, Downside Risk, Value Chain

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Yue Li

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Management Information Systems: includes databases – consists of small,
detailed bits of info that can be used for several purposes  details about dates,
quantities, cost per unit, etc
Stores info in a way that allows sales, distribution, and production managers
to access info they need  many call this an Enterprise Resource Planning
(ERP) system
Cost Accounting: measures and reports nancial and nonnancial information
related to costs of acquiring and using resources – show how costs accumulate as
corp use resources to produce and sell g&s  cost recovered when customer
purchase g&s
Cost Management: include activities of identifying, reporting, and analyzing all
costs of operations  management decisions range from quantity and quality of
materials used to whether to shut down on entire company  integral part of
general management strategies and implementation
Financial Accounting report to external parties (investors, gov agencies, banks
and suppliers). Goal = present fairly to external parties how business activities
during specic time period a'ected the economic health of company  GAAP
Economic Substance: Financial outcome of all di'erent types of business
transactions that happened
Management Accounting: measures, analyzes, and reports nancial and non
nancial information to internal managers – goal to use past performance to predict
future  internal reports plainly inform managers of nancial results of actual
Management Accountants reorganize and analyze nancial and non nancial
data using rigorous methods
Operations: activities that convert various resources into a g&s ready for sale –
procuring and converting resources most e+ciently with a limited amount of money
and time = economics of conducting business

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Obtaining and converting resources create costs that cannot be recovered until a
sale is made
Business operations are complex set of activities and to max prot considerable
information, analyses and decision making required in advance of actual action
Strategy speced how an organization matches it’s own capabilities with
opportunities in marketplace
1. Cost leadership
2. Value leadership by means of product di'erentiation
Value chain = sequence of business functions in which customer usefulness added
to g&s – 3ow of costs incurred in corp classied into value adding activities of R&D
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