Learning Objectives
execute processes?
2. How are competitive forces driving decisions to downsize and restructure operations?
4. Why are firms adopting enterprise resource planning systems, and how are such systems used?
5. What are strategic alliances, what forms do they take, and why do firms participate in them?
changes in accounting methods and practices?
7. What are the three generic approaches that firms can take in controlling environmental costs?
EMERGING MANAGEMENT PRACTICES
CHAPTER
19
Chapter 19: Emerging Management Practices IM 2
publicly accessible website, in whole or in part.
Terminology
Business process reengineering (BPR): a method of examining processes to identify and then
eliminate, reduce, or replace functions and processes that add little customer value to products or
services
Data mining: a form of analysis in which statistical techniques are used to uncover answers to important
Downsizing: any management action that reduces employment upon restructuring operations in
Enterprise resource planning (ERP) system: a packaged software program that allows companies to
(1) have a single, comprehensive, enterprise-wide database; (2) make quicker decisions based on real–
Open-book management: a philosophy about increasing a firm’s performance by involving all workers
and by ensuring that they have access to the operational and financial information necessary to achieve
performance improvements
Organizational memory: the aggregation of data, facts, experiences, and lessons learned that is
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publicly accessible website, in whole or in part.
Lecture Outline
LO.1: How do business process reengineering initiatives cause radical changes in the way firms
execute processes?
A. Introduction
1. Firms are presently decentralizing information, authority, and responsibility to make decisions.
3. This chapter discusses innovation in management practices and the impact of innovation on
accounting.
technology.
B. The Changing Workplace
changes in business organizations.
presented in text Exhibit 19.1 (p. 773).
4. Business process reengineering is one tool with which to achieve large, quick gains in
C. Business Process Reengineering
1. Business process reengineering (BPR) is a method of examining processes to identify, and
then eliminate, reduce, or replace functions and processes that add little customer value to
products or services.
strategic plan.
Chapter 19: Emerging Management Practices IM 4
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publicly accessible website, in whole or in part.
b. BPR is designed to bring radical changes to an organization’s operations and is often
associated with employee layoffs, outsourcing initiatives, and technology acquisition.
2. Three major business trends are promoting the increased use of BPR in the 21st century:
a. the advancement of technology;
and reduce costs.
5. Text Exhibit 19.2 (p. 775) provides the steps for implementing BPR.
6. Accountants are important participants in the BPR process because they can provide baseline
7. The following keys to a successful BPR implementation highlight the importance of involving
customers, suppliers, and top-level managers in the process:
management;
c. To the extent possible, involve in the reengineering project all constituents of the value chain,
especially customers and suppliers;
9. The focus of BPR is on improvement of organizational operations and so whether the issue is
10. BPR’s radical change is often implemented via downsizing and restructuring, which can have a
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publicly accessible website, in whole or in part.
LO.2: How are competitive forces driving decisions to downsize and restructure operations?
D. Downsizing, Layoffs, and Restructuring
1. Global competition and survival requires firms to improve product quality continually while
2. Many methods discussed in the chapter, including the use of automated technology to replace
3. One impact of such improvements is the creation of excess personnel as fewer and fewer
4. Downsizing is any management action that reduces employment upon restructuring operations
in response to competitive pressures.
5. Firms can find that layoffs have depleted their in-house talent pool.
a. The collective workforce knowledge or organizational memory may have been reduced to the
b. After downsizing, many firms have found positions that once served as feeder pools for future
top management talent have been eliminated.
6. Successive rounds of layoffs diminish worker morale, cause worker trust in managers to wane,
a. Workers often fear that sharing information could provide insights to management about how
7. Downsizing can destroy a corporate culture that embraced lifetime employment as a key factor in
8. Downsizing is an accounting issue because of its implications for financial reporting and its role in
connected with employee layoffs.
9. Before recommending downsizing to improve organizational efficiency, accountants should
10. Text Exhibit 19.3 (p. 777) demonstrates that strategic decisions affect the manner in which
customers.
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publicly accessible website, in whole or in part.
11. Financial analysis of the downsizing decision is complex as it relies on comparing cost savings
additional technology.
LO.3: In what ways, and why, are operations of many firms becoming more diverse? How does the
increasing diversity affect the roles of the firms’ accounting systems?
E. Workforce Diversity
education levels.
2. Corporate policies and information systems must adapt to the changing workforce and greater
3. Accounting concepts, tools, and measurements can be the medium through which people of
diverse languages and cultures communicate.
application of another universal language—mathematics.
4. Within the United States, there is a trend toward increasing workplace diversity driven partly by
5. Text Exhibit 19.4 (p. 778) presents the results of a survey seeking to identify why self-interested
firms seek a diverse group of employees.
used?
F. Enterprise Resource Planning Systems (ERP)
1. Firms commonly use networked personal computers and minicomputers to handle the information
management requirements of specific business functions such as finance, marketing, and
manufacturing.
decentralization of information.
b. As data management and storage have become more decentralized, firms have often lost the
ability to integrate information across functions and to access quickly information that spans
multiple functions.
c. Text Exhibit 19.5 (p. 779) shows how internal processes and functions are distributed across
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publicly accessible website, in whole or in part.
reconcile and optimize conflicting organizational goals; (5) standardize business processes; (6)
products and best possible service.
4. Text Exhibit 19.6 (p. 780) illustrates an integrated centralized information system. In theory, the
5. The benefits of an ERP package to a business are in reduced overheads, improved customer
of independent systems.
6. ERP’s key concept is a central repository for all organizational data so that they are accessible in
real time by and in an appropriate format for a decision maker.
software;
b. Second, financial specialists will be responsible for analyzing the data repository to support
management decisions;
i. Data analysis often involves “drilling down” from aggregate data (such as total sales) to
tracking a user’s internet browsing activities).
c. Third, ERP installation places a burden on financial specialists to maintain the integrity of the
data depository.
i. Fulfilling this obligation requires accountants to monitor the ERP modules and to be
required for the main depository.
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publicly accessible website, in whole or in part.
ii. Financial specialists are also accountable for integrating externally purchased data (such
two or more firms.
LO.5: What are strategic alliances, what forms do they take, and why do firms participate in them?
G. Strategic Alliances
3. Strategic alliances can take many forms including joint ventures, equity investment, licensing,
joint R&D arrangements, technology swaps, and exclusive and buyer/seller agreements.
a. A strategic alliance differs from the usual interactions among independent firms in that there
is a joint output and the rewards of the joint effort are split among the allied firms.
organizations with the new entity.
5. Establishing strategic alliances involves a series of complex decisions that are based on inputs
from many specialists.
6. The process of managing an alliance requires the use of virtually every tool and concept
discussed in the text, including cost management systems, product costing systems, relevant
LO.6: What are the characteristics of open-book management, and why does its adoption require
changes in accounting methods and practices?
H. Open-Book Management
1. General