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ORIGINAL QUESTION:

Assignment 1: Discussion—

Predicting and Developing a Long-Term Growth Strategy

To develop a strategic plan, as a nonaccounting manager, you need to analyze and link management accounting data and performance information with business strategies. You also need to extend the scope of management accounting beyond the organization. For this perspective, you will need to focus on variables that are external to the firm, such as variables relating to markets, customers, and competitors. This external focus will help you develop a sustainable competitive advantage, which is the primary element of your long-term growth strategy.

In this assignment, you will analyze the factors that affect the long-term growth strategy of a company.

Tasks:

Respond to the following:

• What can you learn from the financial statements of competitors that determine the relative cost position of your company?
• What are some of the ways in which you can secure a sustainable cost advantage over the competition?
• How does maintaining a strong understanding of relative costs help you maintain the competitive advantage?
• How do you use cost structure to differentiate products? Do you think product differentiation is a successful growth strategy? Why or why not?
• What is the usefulness of conducting a customer profitability analysis?

STUDENT RESPONSE:

Predicting and Developing a Long-Term Growth Strategy

Benchmarking is one of the ways in which reliable information and data can be obtained from business competitors. The objectives and goals of any business organization is to make profits. Therefore, they should indulge in activities with minimal risks to avoid making unnecessary mistakes. For instance, a business organization must look and analyze the failures made by other competing businesses to ensure it does not make the same errors (Roth, 2004). Nonetheless, Walmart must exercise and implement all successful strategies used by competitor businesses and produce the desired results. As such, Walmart should rely on the financial statement for comparison with competitors.

In a perfect market, businesses must take advantage of the sustainable competitive advantage. Therefore, a business can increase their profit margins while expanding their market sales. As such, Walmart can decide to venture into retails and understand how different markets work and eventually secure cost advantage and increase. On the same note, Walmart must identify the segments that are not utilized by their competitors and take advantage of it to intensify on sales. Additionally, Walmart should sustain high market sales by probing their customer needs and meeting them thereby, retaining the customers. Such a strategy is possible if Walmart can identify its core strengths and unique abilities that is void with their competitors and utilize it to retain customers while offering quality services (Wagner & Hollenbeck, 1998).

To achieve higher margins in profit, Walmart must understand the relative costs of its services and products. Maintaining the employees on long-term contracts lowers the operational cost thus the profits remain high. Also, it can rely on use cost structure to differentiate their products. Notably, competitors always sell similar products, and in such a market Walmart can increase sales by slightly lowering the price. Additionally, it can use the product differentiation strategies and maximize the endorsement of their product by retaining a good business name based on high quality of products. The positive image automatically increases its market share, and eventually, the company can sell more than their competitors and make more profits (Hill & Schilling & Jones, 2017).

Lastly, high costs incurred due to the low-profit customers can be avoided through Analysis of customer profitability. Similarly, the strategy should be utilized to get rid of customers costing that reduce the profitability of the organization (Murphy, 2005). For instance, In the case of Walmart, elimination should be done on customers who could be causing incurrence of more costs than profits. 

References

Hill, C. W. L., Schilling, M. A., & Jones, G. R. (2017). Strategic management: Theory. 

Murphy, J. A. (2005). Converting customer value: From retention to profit. Chichester [u.a.: John Wiley. 

Roth, M. (2004). Analysing company accounts. Milton, Qld: Wrightbooks. 

Wagner, J. A., & Hollenbeck, J. R. (1998). Organizational behavior: Securing competitive advantage. Upper Saddle River, NJ: Prentice Hall.

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