Question

Company XYZ operates a chain of bakeries in Canberra that specialises in supplying a range of cakes
to restaurants and coffee shops. Major products include lamingtons, scones, and custard tarts. Until
last year, sales levels fairly stable. However, sales have been decreasing for the last 18 months. John
Brown, the marketing manager of Company XYZ, is worried, and has visited major customers to find
out the reasons for their decreasing sales orders. The comments of the owner of one of the most
popular Canberra Coffee shops sum up the general response: ‘John, your style of cakes is oldfashioned.
They are not what people want any more. Our customers prefer lighter, tastier food. They
want variety and are willing to pay more for high quality innovative creations’.
At a recent meeting, Brown stated that the company should expand its product offerings, or there
may be no future for the company. Specifically, he believes that there are untapped markets for
gourmet pies. The managing director is uncertain; he states: ‘I really don’t think that we can afford
to invest time and money into fads. We sell cakes, we are not a gourmet caterer!’ Brown points out
that it is these new items that customers are asking for, so it makes sense from a strategic point of
view to develop these products. However, the managing director is till uncertain: ‘I have no idea
whether we are going to make a profit this year, and cash is always tight. We don’t need strategies, I
prefer to just sell good products’.
Slick understands why the managing director is resisting his plea to be more innovative with
products-the bakery has been producing the same line of cakes for 30 years. Brown also knows that
there has never been any formal planning undertaken within the company, or consideration of
objective or strategies.
Required:
1. John Brown has asked for your help. As the new management accountant, prepare a report
for the managing director outlining the advantages of implementing process to determine
organisational objectives, strategies and planning systems.
2. What types of information do you think may be of interest to Brown and the managing
director? Consider both financial and non-financial

Answer 1

In order to survive for a business organisation in the competitive market it is very much required that the organisation must be updated and innovative in the products it manufactures or sells.

Customer satisfaction is the only key for a business to expand and grow in the competitive world.In order to acheive this strategic planning is very necessary.

Strategic plan can be defined as:

A)Setting of long term objectivs.

B)Identifying the strategies.

C)Assigining responsibilities

in oder to acheive the goals of the organisation.

It is other words known as corporate planning.

The advantages of implementing process to determine organisational objectives, startegies and planning systems are as follows:

1.It will help in decision making.

2.It results in group discussions where each and every member gets a chance to express their ideas, views, opinions and each member's contribution is appreciated.

3.By discussing the main issue the management can get the solution faster and to reach to a same conclusion.

4.Implementation process helps in converting plans and strategies into actions.

5.It provides the company the right direction in which it needs to move so that the company can deliver quality services in a short span of time.

6.Planning is nothing without implemetation as planning addresses what is the problem but implementation identifies what is the cause of the problem.

7.It helps to focus on the priorities rather than to discuss the day to day business operations.

2)The information that may be of interest to Brown and the director in order to increase the sells and make the product innovative:

Non Financial Data:

1.Needs to identify the goals and objectives and the targets to be acheived.

2.Identify the strenghts and weakness of the business.

3.Threats and opportunities in the outside world.

Financial Data:

1.Cash Flow Statement.

2.Operating capital cost

3.Vaue additions ie Net Income - Operating Cost.

4.Management of current assets and current liabilities data

5.Capital Structures.

6.Profitability Ratios.

7.Tax liabilities data.

8.Profit and Loss Statement.

9.Balance Sheet figures of the current and past years.