,Chapter 1
1) At one time, management at General Motors decided to improve the competitiveness of its
products by stressing product quality, style, and innovation. The objective was to improve the
image of GM vehicles and thus improve sales and brand loyalty. Managers decided to push
this strategy in both the manufacturing and marketing divisions of the firm. One of the key
moves to implement this strategy was to insist that GM dealers stop price-cutting and push
brand value and image instead. GM exerted some control over dealers' pricing/selling
strategy in part by reducing the money it set aside for dealers to use in local ads.
Required:
Was General Motors following a strategy of cost leadership or differentiation at this time?
Comment on how effective you think the new strategy in dealer relations is likely to be.
2) In six months you are scheduled to graduate with a degree in business; you are majoring in
accounting and minoring in finance and management information systems. In the first few
chapters of your cost management text, there are repeated references to the following two
terms: strategic management and the strategic emphasis to cost management.
Required:
Explain these ideas, using as a framework your need to develop a plan for interviewing
successfully for a challenging professional opportunity within the next six months.
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,3) One of the many changes in the business environment in recent years that has had significant
impact on cost management practices is a focus on the customer. You are part of the
management team in a medium-size computer service company. The company is just three
years old and is growing fast, doubling its customer base every six months.
Required:
1. (a) Describe your typical customer's needs and service expectations.
2. (b) How has the doubling of your firm's customer base every six months affected its
ability to maintain this focus on the customer? If this dramatic growth continues, what are
some specific actions your firm can take to retain its goal of "focus on the customer"?
4) Apex Corporation manufactures a complete line of high quality bits for electric drills. Apex
has a good record for product innovation and effective marketing and distribution. An
increase in domestic and international competition during the past two years has limited the
firm's sales growth to 3 percent per year, down from the previous five-year average annual
growth of 5 percent. In addition, market share declined by 0.5 percent this past year. Apex is
experiencing profit reductions caused by price competition and manufacturing cost increases.
Required:
Choose one of the 13 contemporary management techniques introduced in Chapter 1:
Explain why the technique you selected is appropriate in helping Apex develop a plan for
reversing the decline in sales growth and controlling the growth in costs.
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, 5) The manager of a business unit of a large corporation made some projections regarding sales
and profits for the upcoming final quarter of the year. The manager's performance evaluation
and compensation depended significantly on his ability to meet budget goals. The manager
discovered that the final quarter would have to be a particularly good quarter in order to meet
these goals. He decided to implement a sales program offering liberal payment terms in order
to pull some sales that would normally occur next year into the current year. Customers
accepting delivery in the fourth quarter would not have to pay the invoice for 140 days. Also,
he sold some equipment that was not being used and realized a significant profit on the sale.
Required:
Are these actions ethical? Why or why not?
Version 1 3
1) At one time, management at General Motors decided to improve the competitiveness of its
products by stressing product quality, style, and innovation. The objective was to improve the
image of GM vehicles and thus improve sales and brand loyalty. Managers decided to push
this strategy in both the manufacturing and marketing divisions of the firm. One of the key
moves to implement this strategy was to insist that GM dealers stop price-cutting and push
brand value and image instead. GM exerted some control over dealers' pricing/selling
strategy in part by reducing the money it set aside for dealers to use in local ads.
Required:
Was General Motors following a strategy of cost leadership or differentiation at this time?
Comment on how effective you think the new strategy in dealer relations is likely to be.
2) In six months you are scheduled to graduate with a degree in business; you are majoring in
accounting and minoring in finance and management information systems. In the first few
chapters of your cost management text, there are repeated references to the following two
terms: strategic management and the strategic emphasis to cost management.
Required:
Explain these ideas, using as a framework your need to develop a plan for interviewing
successfully for a challenging professional opportunity within the next six months.
Version 1 1
,3) One of the many changes in the business environment in recent years that has had significant
impact on cost management practices is a focus on the customer. You are part of the
management team in a medium-size computer service company. The company is just three
years old and is growing fast, doubling its customer base every six months.
Required:
1. (a) Describe your typical customer's needs and service expectations.
2. (b) How has the doubling of your firm's customer base every six months affected its
ability to maintain this focus on the customer? If this dramatic growth continues, what are
some specific actions your firm can take to retain its goal of "focus on the customer"?
4) Apex Corporation manufactures a complete line of high quality bits for electric drills. Apex
has a good record for product innovation and effective marketing and distribution. An
increase in domestic and international competition during the past two years has limited the
firm's sales growth to 3 percent per year, down from the previous five-year average annual
growth of 5 percent. In addition, market share declined by 0.5 percent this past year. Apex is
experiencing profit reductions caused by price competition and manufacturing cost increases.
Required:
Choose one of the 13 contemporary management techniques introduced in Chapter 1:
Explain why the technique you selected is appropriate in helping Apex develop a plan for
reversing the decline in sales growth and controlling the growth in costs.
Version 1 2
, 5) The manager of a business unit of a large corporation made some projections regarding sales
and profits for the upcoming final quarter of the year. The manager's performance evaluation
and compensation depended significantly on his ability to meet budget goals. The manager
discovered that the final quarter would have to be a particularly good quarter in order to meet
these goals. He decided to implement a sales program offering liberal payment terms in order
to pull some sales that would normally occur next year into the current year. Customers
accepting delivery in the fourth quarter would not have to pay the invoice for 140 days. Also,
he sold some equipment that was not being used and realized a significant profit on the sale.
Required:
Are these actions ethical? Why or why not?
Version 1 3
