100 Managerial Accounting for Managers, 4th Edition
Exercise 1-5 (60 minutes)
Company
Strategy
1.
Deere
Product leadership: “Nothing runs like a
Deere”
2.
FedEx
Operational excellence: “When it absolutely,
positively has to be there overnight”
3.
State Farm Insurance
Customer intimacy: “Like a good neighbor,
State Farm is there”
4.
BMW
Product leadership: “The Ultimate Driving
Machine”
5.
Amazon.com
Operational excellence: Huge selection of
products that are promptly delivered straight
to your door
6.
Charles Schwab
Customer intimacy: “Talk to Chuck”
Solutions Manual, Chapter 1 11
Exercise 1-6 (15 minutes)
Industry
Type of Risk
Control
Airlines
An airplane might
crash.
Implement a preventive
maintenance program.
Pharmaceutical drugs
A customer might be
harmed by a drug.
Design tamper-proof
packaging.
Package delivery
A package may get lost.
Implement an
electronic package
tracking system.
Banking
Customer credit card
numbers may be
stolen.
Implement computer
system firewalls to foil
computer hackers.
Oil & gas
An oil spill may damage
the environment.
Create contingency
response plans in the
event of an oil spill.
E-commerce
The company’s website
might crash.
Develop a backup
system that can be
easily activated.
Automotive
Customers may not like
the appearance of a
new car model.
Use focus groups to
assess reactions to new
model prototypes.
120 Managerial Accounting for Managers, 4th Edition
Exercise 1-7 (20 minutes)
1. If all automotive service shops routinely tried to sell parts and services
to customers that they didn’t really need, most customers would
themselves, or customers would hire an independent expert to verify
that the work is really needed. All three of these alternatives impose
costs and hassles on customers.
2. As argued above, if customers could not trust their service
representatives, they would be reluctant to follow the service
representative’s advice. They would be inclined not to authorize work
Solutions Manual, Chapter 1 13
Exercise 1-8 (10 minutes)
The type of cognitive bias revealed by this data is called self-enhancement
bias. This bias occurs when people overstate their strengths and
understate their weaknesses relative to others. This bias may cause
enhancement bias by establishing a “devil’s advocate” team of managers
that are charged with challenging proposed courses of action.
140 Managerial Accounting for Managers, 4th Edition
Exercise 1-9 (20 minutes)
State University students that will be able to avoid Dr. Candler.
The power of rationalization is a very important topic when discussing
ethics and decision making. When students are asked a generic question
Solutions Manual, Chapter 1 15
Exercise 1-10 (20 minutes)
the needs of a broadly defined group of stakeholders may disagree with
the quote. Third, some students may argue that the shareholder-focused
and stakeholder-focused philosophies of business management are not
160 Managerial Accounting for Managers, 4th Edition
Exercise 1-11 (20 minutes)
1. This question gives students a platform for discussing the merits of
a lively debate.
2. This question gives students an opportunity to discuss the roles of
3. This question gives students an opportunity to discuss the
implementation of compensation systems within organizations. To
Solutions Manual, Chapter 1 17
Exercise 1-12 (20 minutes)
1. Most students are likely to recommend reinforcing the sections of the
2. Perceptive students may realize that this is a classic case of selection
bias. Selection bias arises when decision makers rely on a sample that is
During World War II statistician Abraham Ward recommended that the
portions of the planes hit least often should be reinforced. “Ward
Business Review
, Volume 83, Issue 4, pp. 114-119.
180 Managerial Accounting for Managers, 4th Edition
Exercise 1-13 (20 minutes)
does it so it is okay.”
The power of rationalization is a very important topic when discussing
ethics and decision making. When students are asked a generic question
Note to instructors: Before beginning a classroom discussion, allow