Methods / Techniques of Cost Accounting - 5029 Words

Ex-MBA 2011-2014 ( Batch - Weekend ) Semester - 2 Subject: Managerial Accounting ------------------------------------------------- Title : Methods / techniques of cost accounting Submitted by : Vishwajeet Gaikwad – 2011G04 Submitted to : Prof. Sameer Deshmukh INDEX SR NO | TITLE | PAGE NO | 1 | INTRODUCTION | 3 | 2 | METHODS OF COST ACCOUNTING | 4 | 3 | TECHNIQUES OF COST ACCOUNTING | 8 | 4 | USEFULNESS | 10 | | | | | | | 5†¦show more content†¦The system is used generally in cases where government happens to be the party to give contract. D. Batch Costing This method is employed where orders or jobs are arranged in different batches after taking into account the convenience of producing articles. The unit of cost is a batch or a group of identical products instead of a single job order or contract. This method is particularly suitable for general engineering factories which produce components in convenient economic batches and pharmaceutical industries. E. Process Costing If a product passes through different stages, each distinct and well defined, it is desired to know the cost of production at each stage. In order to ascertain the same, process costing is employed under which a separate account is opened for each process. This system of costing is suitable for the extractive industries, e.g., chemical manufacture, paints, foods, explosives, soap making etc. F. Operation Costing Operation costing is a further refinement of process costing. The system is employed in the industries of the following types: a. The industry in which mass or repetitive production is carried out b. The industry in which articles or components have to be stocked in semi-finished stage to facilitate the execution of special orders, or for the convenience of issue for later operations The procedure of costing is broadly the same as process costing except that in this case, cost unit is anShow MoreRelatedBusiness Innovation And Skills Of Uk Government1563 Words   |  7 Pagesthe below discussion. Generally, accounting is a necessary to all kind of enterprises, it helps firms to make decisions and to increase the efficiency and profitability. Moreover, management accounting such as Job Costing, Cost-Volume-Profit Analysis(CVP), Pricing and Target Costing etc. are also commonly used in businesses which help SMEs to calculate the cost and budget. In the following discussion, I am going to investigate different accounting tools and techniques and see whether they are suitableRead MoreEthical Issues Of Financial Accounting984 Words   |  4 Pagesthe reporting to whom. Financial accounting is meant for external reporting to all who are interested in the company’s activities. But in management accounting it is altogether an internal reporting aimed at helping m anagers in discharging their responsibilities. Financial accounting basically contains monetary information. But managerial accounting will contain both monetary and non-monetary issues that are helpful to the management. For example financial accounting will show only finance relatedRead MoreCase Study Questions On Management Accounting1670 Words   |  7 PagesAssessment 2 – Management accounting written assignment NEXT Plc Case Student ID Number: 1423839 May 2016 Contents 1. Introduction 3 2. Background 3 3. Review of management accounting 4 4. The key management accounting techniques and methods for NEXT Plc 5 4.1 Planning and Budgeting: 5 4.2 Balance scorecard 5 4.3 Cost-volume-analysis 5 5 The analysis’s strengths and weaknesses 6 5.1 Strengths 6 5.2 Weaknesses 6 6 Conclusion 7 References 8 â€Æ' 1. Introduction Management accounting in the recent daysRead MoreManagement Accounting : Planning And Performance Management Systems1625 Words   |  7 PagesManagement accounting is described as â€Å"a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organisations strategy† (Blocher, et al., 2009). 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Beside the above, the CEO is also keen to know about the following terms: (a) Sunk Cost (b) Relevant Cost (c) Incremental Cost (d) Opportunity Cost In your discussion to the above terms, use appropriate examples. Introduction:Read MoreBritish Airways1624 Words   |  7 Pages, how it began it operation its activities, the services it provides, its annual turnover, how it has grown over the few years, the comparison between its competitors and how management accounting can help it grow even better. This report will focus at a background of a chosen organisation, company analyses, cost structure strength and weakness and review it nature and how Management Accountant can supply information to assist the Management of British airways . COMPANY BACKGROUND British airwaysRead MoreCost Control: The Definition of Standard Cost Essay1609 Words   |  7 Pagesof standard cost according to the CIMA London, â€Å"predetermined cost which is calculated from management’s standards of efficient operations and relevant necessary expenditure.† They are the predetermined costs on technical estimate of material labor and overhead for a selected period of time and for prescribed set of working conditions. In other words, a standard cost is a planned cost for a unit of product or service rendered. (Langfield- Smith, 2009) The technique of using standard cost for the purposesRead MoreAdvantages Of International Accounting Standard 161446 Words   |  6 PagesFrom 1904, some people suggest that we need a uniform accounting standard in the world. After the work hard in more than half century, in 1973, international accounting standard committee has been found. Although this is a non-government organization, they set up accounting standard for all the country, which is convenient to international trade, comparison, and analysis. With the increase of recognition, there are more countries used it, but many organizations and people disagreed the standard.

HS100 Unit 7 Essay - 985 Words

Medical Office Management Kaplan University CURRENT ISSUES Modern Healthcare (2014, February 17) Vol. 44 Issue 7. Retrieved from http://eds.b.ebscohost.com.lib.kaplan.edu/eds/detail?vid=2sid=d9a8e670-8b72-4046-81cebf8aa0879a68%40sessionmgr113hid=102bdata=JnNpdGU9ZWRzLWxpdmU%3d#db=bthAN=94517676. This article discusses how the implementation of the new ICD10 codes are costing more than originally planned. All practices are required to use 2014-certified electronic health-record technology in order to receive funding from a federal electronic health record incentive program. The new estimates for the ICD10 implantation include the cost of such things as education, IT and documentation†¦show more content†¦The AMA offers information on continuing education and advocacy topics. Also offered is the JAMA network that allows you access to medical journals through apps and e-readers. The AMA promotes improved public health and an improved doctor patient relationship. EDUCATIONAL RESOURCES Bureau of Labor Statistics. U.S. Department of Labor (2014). Occupational outlook handbook, 2014-2015 edition. Retrieved from http://www.bls.gov/ooh/ The Bureau of Labor statistics (BLS) website allows you to search occupations to see what the median pay level is, what level of education is required for the job, if on the job training is available, and also the amount and projected growth rate is for the job selected. The BLS also lets you search by the type of occupation and then list the different job titles as well as a job summary, education, and pay. You may also search for occupations by the highest pay, fastest growing, and the most new jobs. The BLS also offers resources such as frequently asked questions, a glossary, a teacher’s guide, and occupational outlooks. Centers for Medicare and Medicaid Services. Retrieved from http://www.cms.gov/ The Centers for Medicare and Medicaid Services (CMS) website offer a variety of information on Medicare, Medicaid, and Chip. For information concerning Medicare this site offers you an abundance of information such as eligibility and enrollment, health plans, prescription drug coverage,

Functional Analysis of Team Problem Solving free essay sample

Function Analysis for Team Problem Solving Tom Warwick, CVS Vice President NT Associates Jupiter, Florida This document was presented at the 1994 International Conference of the Society of American Value Engineers (SAVE) in New Orleans, LA. It was published in the SAVE Annual Proceedings and is copyrighted ( ©SAVE, 1994), Permission to upload this document to the LEAP Forum Library has been given by SAVE. Theodore C. Fowler, CVS, Fellow, SAVE Tom Warwick, author of many technical papers and recognized for several patents, has directed value studies, seminars and workshops saving hundreds of millions of dollars. He has graduate degrees in engineering from RPI and the University of Florida. Before joining NT, he served as value manager and in other senior positions at Pratt Whitney. ABSTRACT This paper presents an early up-front demonstration of function analysis for team problem solving. It presents a problem solving exercise with three function analysis examples to show that The Way to conduct function analysis is really many ways. We will write a custom essay sample on Functional Analysis of Team Problem Solving or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This paper is a sequel to a 1993 SAVE Proceedings paper, â€Å"Value Assessment of Team Problem Solving. INTRODUCTION Function analysis is the principle means for individuals and teams to achieve extraordinary problem solving, outstanding outcomes with superior value. Function analysis provides a multi-dimensional structure to study, both separately and together, partially or completely, numerous existing and alternative value solutions at many different levels of abstraction. Most problems have many solutions, so many that they can overwhelm us. The analysis of function, top-down or bottom-up or both, is a systematic disciplined means to better address these many solutions. When function analysis is inadequately performed or is not performed at all, quite often symptoms are solved rather than root causes, real requirements and expectations. The systematic disciplined analysis of function differentiates Value Engineering (VE) from other problem solving methods. Function analysis understanding and use can be difficult for both VE practitioners and participants. Before working VE projects, function analysis training and education are essential. Early instruction during the beginning hours of a study, seminar or workshop allows VE practitioners and participants to obviate function analysis difficulties that occur while working live projects. EXERCISE A brief introduction of function analysis with a VE study job plan is presented before value program participants perform an up front â€Å"ice breaker† problem solving exercise. Because exercise problem solving is similar to live project problem solving, exercise problem solving helps value practitioners to really know and positively respond to individual and team weaknesses and strengths. For example, not infrequently the exercise approach taken to problem solving by value program participants lacks a needed and thorough function analysis. Problem solving performed under real world conditions sometimes skips VE study job plan steps needed to first analyze, brainstorm and evaluate project functions. The result invariably is a less than satisfactory low value outcome. Exercise problem solving excites and motivates value program participants. As will be shown, it also can and should be applied to improve individual and team knowledge and use of function analysis. Lost at Sea With your private yacht slowly sinking after a fire of unknown origin, you are adrift in the South Pacific, â€Å"Lost at Sea,† approximately 1000 miles south-southwest from the nearest land. You have a serviceable rubber life raft with oars large enough for yourself and crew. You and crew together have 1 package of cigarettes, several books of matches and 5 one dollar bills. You all also have 15 additional items. The exercise problem to be solved is to rank these 15 additional items by considering their survival value. Similar Exercises Other similar problem solving exercises nearly identical to the â€Å"Lost at Sea† exercise are available but only the â€Å"Lost at Sea† problem solving exercise is presented here. The other similar problem solving survival exercises, such as â€Å"Lost on the Moon,† are interchangeable with the â€Å"Lost at Sea† exercise. They all require correct ranking of the 15 survival items, performed first by team members as individuals, and then again by team members working together to reach a consensus, a genuine accord by all team members. Early Up-Front Instruction Essential As previously mentioned, not infrequently the approach taken by problem solving participants lacks a needed and thorough function analysis. The â€Å"Lost at Sea† exercise demonstrates this difficulty early up-front before live projects are worked. Rather than first determining function and value, VE participants invariably rank the 15 survival items immediately, not withstanding that an instruction review of function analysis and the VE study job plan are given just before starting the â€Å"Lost at Sea† exercise. That is, participants skip both function analysis and job plan steps, when problem solving as individuals as well as when problem solving together as team members. Many new and some veteran value program participants simply do not perform problem solving exercises in a systematic disciplined manner and do not conduct a thorough function analysis. The result is that participants frequently disagree with each other and with the Officers of the United States Merchant Marine who determined the â€Å"correct† ranking list for the 15 survival items of the â€Å"Lost at Sea† problem. It is within this real setting of value program participant frustration, following less than satisfactory â€Å"Lost at Sea† problem solving exercise results, that value practitioners have an excellent JIT (Just-In-Time) opportunity. It is the time for value practitioners to provide additional â€Å"learn by doing† training and education before starting live projects. At this early stage of a value study, seminar or workshop, function analysis training and retraining is the right thing at the right time to do. The following three â€Å"Lost at Sea† function analysis examples are representative of this JIT â€Å"learn by doing† approach. FUNCTION ANALYSIS EXAMPLES Of the three function analysis examples presented, the first is relatively easy. The next two are more difficult but are more informative. These three function analysis examples analyze, brainstorm and evaluate â€Å"Lost at Sea† survival items to reveal their ranked survival value. The three examples demonstrate to individuals and teams alike cardinal requirements and benefits of function analysis for team problem solving. â€Å"Butcher Paper† Documentation Value program participants are reminded to think before acting. In this case, before value ranking each of the 15 survival items, they are requested to consider many functions required for survival and to document these needed survival functions in a format of active verbs with measurable descriptive nouns. Judgment is required for ranking. Because suspended judgment improves creativity and free unconstrained associative thinking, immediately ranking functions as they are documented on â€Å"butcher paper† is not recommended. No additional instructions are given other than to request teams organize their own team functions. That is, each value team must assign positions of esponsibility to its members such as chairperson, scribe, gatekeeper and presenter. Each team also must review and tailor its own operating norms. Even though its function analysis frequently is incomplete, â€Å"butcher paper† documentation is a â€Å"starter† toward more disciplined function analysis problem solving by both individuals and teams. A typica l example of this relatively simple function analysis is shown. FAST DIAGRAM Over the years the Function Analysis System Technique has been expanded and improved with many variants making it increasingly complex. However, FAST fundamentals remain deceptively easy: â€Å"How† reads to right â€Å"Why† reads to left Basic function of a project or product is highest order primary function within scope lines Having functions documented on â€Å"butcher paper† allows both individuals and teams to more rapidly and easily create a FAST diagram. Instructions for FAST diagram creation are simple and concise: Identify primary functions Identify secondary functions Construct FAST diagram The FAST diagram is an important step for thorough and effective function analysis problem solving by both individuals and teams. It systematically connects and illustrates â€Å"How† and â€Å"Why† bi-directional interrelationships of many functions. The FAST diagram shown is a typical example. Function Structure Chart The functions listed by a function structure chart fully meet the primary overall objective of a project or product. Unlike some â€Å"butcher paper† documentations and FAST diagrams, a completed function structure chart at each of its function levels captures all the functions required to meet objectives 100%. A function structure chart offers a â€Å"middle-ofthe-road† approach to function analysis. That is, constructing a function chart is more difficult than â€Å"butcher paper† documentation but frequently is less difficult than a FAST diagram. Similar to FAST diagram creation, having functions documented on â€Å"butcher paper† allows both individuals and teams to more rapidly and easily construct a function structure chart. Instructions for function structure chart preparation also are simple and concise: Determine overall function objective Identify top-down all level 1 and subsequent functions Identify bottom-up all level N and subsequent functions Function structure chart levels are all equal. No function level is subordinate to another, they are just of different order to each other. Functions listed at each level must add up no holes. That is, each function level must be 100% complete as determined by the functions of the levels next to it. While not required by some value practitioners, ranking functions listed at each function level often helps make needed analyses and evaluations better. A function structure chart frequently has many levels each with a relatively large listing of functions. That is, its structure by design is very open, both broad and deep, to assure a thorough function analysis. Because of this completeness, a function structure chart improves baselining, benchmarking and best composite development and often serves as a template for brainstorming an entire class of projects or products. A completed function structure chart is an entry point to Value Control. The function structure chart shown is a typical example. (See Table 1) DISCUSSION When facilitating value activity, we somehow find lacking sufficient means for achieving and sustaining full utilization of function analysis by independent individuals and by team members problem solving together. The â€Å"new† and the â€Å"different† can surface a fear of personal embarrassment that is an ever present VE challenge and function analysis difficulty. Function analysis is a â€Å"new† and â€Å"different† technique to many people. Problem solving a benign survival exercise such as â€Å"Lost at Sea† offers a relatively safe way to expose, explore and resolve function analysis technical and emotional difficulties that otherwise would not be revealed before live projects are worked. The three examples presented by the previous section are only typical function analysis examples that might be performed together or separately or in a different sequence. The Way is really many ways. The presented examples and function analysis itself are no exception, they can and may be performed many, many ways. For example, for brevity and ease of understanding, the presented FAST diagram is incomplete. It lacks scope lines and, unlike the function structure chart, it does not include the 15 survival items, function level N. Both the FAST diagram and the function structure chart incompletely identify the â€Å"Lost at Sea† primary overall function objective as â€Å"Be Rescued† rather than â€Å"Save Life. † Also, additional function levels (such as level 4, level 5, are not shown by either the FAST diagram or the function structure chart, Figure 4 and Table 1. Function analysis sometimes is performed by participants with little or no direct involvement with the value practitioner. That is, the practitioner, â€Å"us,† outlines how it is to be done and then stands back as participants, â€Å"they,† do function analysis starting with a clean sheet â€Å"zero baseline. † An alternative and frequently more effective â€Å"jump start† approach is the value practitioner prepares â€Å"stake in the ground† baseline function analyses (â€Å"butcher paper† documentations, FAST diagrams, function structure charts, etc. . Then, participants with the practitioner, â€Å"we,† work in a close direct partnership. Together, we review the baseline and then benchmark and conduct best composite development followed by brainstorming for world class innovation and excellence. Doing function analysis only one way or another is a disservice to all. Creativity can be stifled by too much or too little mandated procedure; just enough systematic discipline is a needed delicate balance. Function analysis should be taught and done the common sense way or ways that best fit real needs of the particular situation at hand. CONCLUSIONS and RECOMMENDATIONS Function analysis with a disciplined VE study job plan is a principle means for individuals and teams to achieve outstanding results with superior value. A function structure chart might be a â€Å"middle-of-theroad† approach to function analysis for many people. It is a good motivator because it directly demonstrates the usefulness of function analysis for completely understanding and solving a problem systematically, front to back, back to front, top-down and bottom-up. â€Å"Butcher paper documentation† is a useful function analysis â€Å"starter. It can assist conducting and preparing more difficult function analyses such as the FAST diagram and the function structure chart. Value practitioners are encouraged to use â€Å"ice breaker† problem solving exercises such as â€Å"Lost at Sea† since these exercises are a means for JIT â€Å"learn by doing. † Early up-front problem solving exercises assist value practit ioners and participants by providing an opportunity window relatively risk free from personal embarrassment. Requirements and benefits of function analysis for team problem solving are many and require demonstration and additional training, preferably before starting live projects. ACKNOWLEDGMENTS The assistance and encouragement of Bob Bartlett, PE, Consulting Engineer, were most helpful. The interest and comments of Dan Sedam, PE, CVS, Florida Department of Transportation, and Steve Foster, PE, Foster Engineering, are appreciated. The support of Joe Lambert, CVS, Martin-Marietta, also was helpful and is appreciated. BIBLIOGRAPHY 1. 2. 3. 4. 5. Chaplin, Charlie, Modern Times, Magnetic Video, Twentieth Century Fox. , 1936. Korzybski, Alfred, Science and Sanity, Fourth Edition, The Colonial Press Inc. , 1958 Morison, Elting E. , Men, Machines, and Modern Times, The M. I. T. Press, 1969. Miles, Lawrence D. , Techniques of Value Analysis and Engineering, McGraw Hill Book Company, 1972. Nemiroff, Paul M. , and Pasmore, William A. , Lost at Sea: A Consensus Seeking Task, Annual Handbook for Facilitators, 1975. Minsky, Marvin, The Society of Mind, A Touchstone Book, Simon Schuster, 1986. Bartlett, Robert L. , â€Å"Function Value Deployment and Synthesis,† 1989 SAVE Proceedings. Ellegant, Howard, â€Å"Back to Basics Only Complete Client Centered Function Analysis Makes Legitimate Value Engineering in Construction,† 1989 SAVE Proceedings. Fowler, Theodore, C. Value Analysis in Design, Van Nostrand Reinhold, 1990. 6. 7. 8. 9. 10. Lambert, CVS, Joseph V. , and Megani, CVS, Peter S. , and Michaels, Ph. D. , PE, CVS, Jack V. and Wood, CVS, William P. , Value Institute Incorporated â€Å"Value Engineering Workshop,† certified by SAVE and accredited by the University of Central Florida, 8-12 January 1990. 11. Barker, Joel Arthur, Futu re Edge, William Morrow and Company, 1992. 12. Bryant, John W. , and Daucher, Dale E. , and Hannan, Donald, â€Å"Managing Value An Approved Module II Seminar,† International Joint Venture by Value Management Associates, East Sandwich, Massachusetts, USA and D. A. E. Hannan Associates, Canberra, ACT, Australia, 5-7 May 1993. 13. Lambert, Joseph V. , â€Å"Why Team Dynamics is a MUST in Value Engineering,† 1993 SAVE Proceedings. 14. Sperling, Roger B. , â€Å"The PDQ’s of FAST: Simplifying Function Analysis for Construction Value Studies,† 1993 SAVE Proceedings. 15. Warwick, Tom, â€Å"Value Assessment of Team Problem Solving,† 1993 SAVE Proceedings. 16. Bragaw, Louis K. , Jr. , and Warwick, Tom, â€Å"Value Assessment of Changing Technological Innovation,† Proceedings of the Fourth International Conference Management of Technology IV, Industrial Engineering and Management Press, February March, 1994.

Renting and Netflix free essay sample

At the moment a lot of people are downloading and watching movies online. Some of them it’s free no monthly payments required. There are also pirating movies online for free and other free sources are available. It is available through online piracy to get the same movies which are offering Netflix. Five -force analysis: Threat of substitutes: Probably other websites which offer to watch movies online for free and satellite companies. Walmart, Blockbuster, Sky store online. Also pirating movies on the Internet which is for free and illegal. Substitutes price availability. Suppliers Bargaining Power: It is very High. There are not a very big choice of suppliers. It is important to chose the right supplier fo your demand. Suppliers has the power on the movies. It is important to maintain good relationship with movie providers. Barriers to entry: Netflix has the leadership position in the market at the moment. The other competitors are not so strong as people not renting DVD’s as much, as few years ago. We will write a custom essay sample on Renting and Netflix or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Netflix outcompeted his competitors because provide high quality, high definition and wider product selection, advanced technology. Actually entry into movie market and attract the customers it’s not so easy. Buyer Bargaining Power: Buyers is the most important and powerful in this type of business. If the buyers has no money movie rental business will go down. Or if the buyers has alternative options to rent DVD’s in store or stream. Also piracy affecting Netflix. If the price is not suitable for the subscriber he/she will switch to competing company. Furthermore rights of the buyers for e. g. Netflix allows to cancel subscription any time, so you don’t have to sign any contracts. It is necessary to avoid delays in orders, because can increase customer dissatisfaction and affect the company. Competitors: There are increase in competitors at the moment. Blockbuster, Netflix, Redbox, Hulu Plus, iTunes, HBO, Amazon, Wudu and TV providers. And these competitors are very active, because every company has to attract the customers and to increase the revenues. Netflix offering one month for free, unlimited streaming. The main factors competitors has to focus on technology, price, various availability provide different packages. 2. What forces are driving changes in the movie rental industry and are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability? The economy is the main reason what drives changes in the movie rental industry. In nowadays less and less people are renting movies. As there are other options available for them. Now most of the people have internet at home, so they can download movies online and is more cheaper and more convenience. And it is faster it can take just few minutes, only fast broadband is required. There are a lot of movie providers online one of them is Netflix. They offer for monthly fee to watch movies or TV programs online. There are few companies offering unlimited watching for the same price. Also Internet is getting faster so quality of movies will be better, higher standards. Furthermore could be cheaper price availability from other companies. The unfavorable effect in the future will be more competitors in the same market. Also competing for the license with the same entertainment video providers. Difficult can arise to guess each country subscriber’s taste, lifestyle. The subscriber’s taste can change time after time. Netflix will have to spend on marketing wich required of a lot of money. The favorable effect will be expanding internationally, as will lead to increase in customers, which lead to increase in company’s profits. 3. What key factors will determine a company’s success in the movie rental industry in the next 3-5 years? There are factors which will help to survive Netflix in the movie rental industry: Technology will be one of them (allow streaming movies on new devices), the price is very important. Keep providing easy convenience service to the customers (streaming and DVD’s by mail). Blockbuster provide service online and has many stores across, but Netflix has a huge audience even don’t have any stores. To keep the stores open it’s costly, have to pay to the staff, for the rent and other bills. Furthermore the key success of the business is their customers. Netflix company has to keep them happy and also make new recommendations to them. Employees should be trained how to communicate to the customers and make sure that the right deliveries are made on time. It is important to have a large choice of movie available and for the different segments. To maintain strong relationship with movie suppliers, as poor relationship can destroy the business. The cost of plans in the future must be compared with other companies, because customers might switch to others if they provide the same quality and cheaper price. In 2012, when Netflix signed an agreement with Apple TV, it was an increase in streaming of movies. Also company to has to promote and to spend on marketing to attract the customers. Furthermore, to work more with other electronic partners, where subscribers could watch Netflix movies. 4. Netflix’s strategy -Netflix trying to be different than other companies. Transformed into worldwide online international subscription provide service for people rented movies and and previous broadcast TV shows. Goals of Netflix- build the world’s best Internet movie service, keep improving and offer faster service than rivals, attract the customers and grow long term earnings per share and strengthen the brand name and reputation. Subscribers could enjoy unlimited rentals, without the added worry of late fees or shipping handling. The warehouses are located in various places and helps reduce time of delivery. Netflix is collecting of reviews by subscribers. Netflix members can instantly watch unlimited movies and TV episodes streamed over the Internet to PCs, Macs, Gaming consoles, and TVs. Makes easier for subscribers to identify movies or TV programs and trying to attract as many as possible customers. Delivering as quickly as possible. Advertising campaigns for new entered countries for example offering one month free trials. Also promoting US customers to stream movies than order by mail. Moreover Netflix is trying to expand more globally. Which five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Netflix is taking? The most closely fit from 5 approach is differentiation strategy. Using this competitive strategy requires to study os subscriber’s behaviour and needs. What will be important for the customers and what they will pay for it. Netflix offers subscribers online delivery or through mail receive movies or TV programs and return them whether they want. There are a big choice of movies in the library for different segments of buyers. Moreover people can stream movies quicker and watch through different mobile devices, computers, TV’s. This is a big advantage for the Netflix to provide movies and entertainment to all types of Internet connected devices and an anywhere, and anytime. Additional Netflix is the leader in Internet streaming segment in the VOD (video on demand). What type of competitive advantage is Netflix trying to achieve? The customers is very important for the business as without customer business won’t survive. Moreover Netflix is trying to be different than the competitors. Convenience for the customer’s and customer information was very important competitive advantage. In 2010 Netflix offered an app for the Apple iPad, iPhone and iTouch. Also added an app for the iPad just for kids and offering movies for kids for age 12 and younger and entered mobile movie market. DVD was mailed to the customers with prepaid return envelope which came with each movie ordered. People could keep DVD’s as long as they want no late fees, no shipping fees. Netflix focus on offering movies on tablets and smartphones. The other competitors as Amazon, Hulu reduced the prices, but Netflix increased by 60% , because Netflix established leadership position in the market. Also software technology scan movie’s length. The movies were rating , also customers can watch a preview of the film. 5. What does a SWOT analysis of Netflix reveal about the overall attractiveness of its situation? SWOT Analysis: Strengths-convenience for the subscribers, developed software (helps for various types of audience), low price plans no annual fees, quick delivery DVD’s to the customers, large selection of movies available. Netflix is a leader in the movie market, so has a good reputation and strong brand name. Netflix provide service widely geographically. Established strong relationship with entertainment and movie providers, which allows them to get new release as early as possible. Weaknesses- that still advertise movies by mail, limited streaming, make sure that new release movies will be available as quick as possible. Keep subscriber confidence is important for the company also keep safe from the hackers. Not all the movies subscribers can stream. Weakness for the company, as they have to pay delivery and return cost themselves. As increase in subscribers from 2010-2011 in this case the movie supplier also increased fees for streaming rights. Movies by mail if post service is increasing postal charge will affect Netflix financial position. Opportunities: expand relationships with movie/entertainment providers. Also to find to offer more new ideas for subscribers, not only movies and TV programs, but also various types of games. As technology changes Internet is going faster everything you are able to get on internet cable TV replace to Internet TV. Satellite subscribers will be fewer. As the main competitor HBO is thinking about HBO app its allow customers to watch movies and other programs and it’s more convenience for the customers. Create new apps Netflix online. Threats: piracy of movies it’s increase a lot, people trying to avoid monthly subscriptions. Another important factor technology changes. Nowadays there are more options available to watch movies for e. g. Sky, Hulu, Blockbuster, Redbox. The competition is rising for streaming movies. The biggest competitor at the moment HBO. Also Amazon and Youtube entering in movie rental market. If company cuts movies by mail will lose part of the customers. Or Netflix will lose supplier contract also can decrease companies revenue. 6. What is your appraisal of Netflix’s operating and financial performance based on the data ? What positives and negatives do you see in Netflix’s performance? Netflix revenue increased in 2011 comparing with previous years. The large amount of money came from subscribers (Exb. 2). The company managed to increase the customers over recession time. Company spent a lot of money to grow their brand name. Compare all previous years in (Exb. 2). Company invested more money in technology and development. The money were used to improve technology, because there was a number of â€Å"Netflix-ready† devices. For e. g. PlayStation 3 consoles, Wii, Xbox. Expenses for Marketing increase dramatically in 2011 it is a little bit concerning, as Netflix used different marketing channels for advertising to attract more customers. Advertisement was used in new entered countries. There is increase in investment since 2010. Probably were bought large amounts DVD’s, it was required to keep customers also if would like to provide quicker delivery to the customer company need to have more DVD’s. Company’s cash flow look positive. Customers was disappointed and many subscribers canceled. But in the third quarter this mistake was corrected, which lead to an increase number of people again. Operating expenses: Technology and Development- 2011-2010- increased by 58. 6%. 2010-2009-increased by 42. 6%. From 2010-2011 were rapidly changes in technology, so Netflix spent money for technology improvements. 2011- 8% of revenue 2010-8% of revenue 2009-7% of revenue 2007-6% of revenue Marketing- 2011-2010-increased by 37%. 2010-2009-increased by 23. 6% 2011-12. 5% of revenue was spent in marketing. 2010-13. 5% of revenue 2009-14. Company spent in advertising to attract more customers. Also expanded worldwide (UK, Ireland). But these expenses spent its the most worried thing, because Netflix don’t know will these will help to increase in numbers of subscribers and will increase company’s profits. Net Income: 2011-2010-40. 6% 2010-2009-38. 7% 2009-2007-73. 8% Its just slightly increase in net income, because tax provision amount increase and interest slightly increase. Also net income was affect as a lot of money was spent in marketing, in technology and development and others. From cash flow data: Net Investment in content library: 2011-2010 Netflix invested large amount in movies and TV entertainment. Which lead an increase in assets Working Capital 2011-2010-Netflix Working Capital increased by 352. 6m. By selling 2. 86m shares of common stock. Company increased the capital for safety reason as cash on hand and future cash flows from operations are squeezed. (Exhibit 4) Comparing monthly subscription plans the highest price were 2010 through June 2011. From September 2011-2012 Price plan slightly decrease. Also 2011-2012 Netflix added unlimited streaming services plus DVD’S. What 2-3 top priority issues does Netflix management need to address? First issue will be poor advertisement. Should advertise clear that Netflix is for all ages and there are not only movies, but there TV programs. And the other issue will be that for older generation is not so easy to use the internet especially streaming the movies. Piracy of movies it’s the main factor which affected movie industry. DVD’s delivery and return cost What 2-3 top priority issues does Blockbuster management need to address? The Blockbuster has few major competitors- Netflix, HBO, Amazon The other issue that main business is renting DVD’s in stores. There is an extra cost for the business to pay rent, pay salaries for the staff, others bills. In first half of 2012 Financial Statement showed weak performance. Piracy of movies online and pirating DVD’s were sold in the markets. 7. What recommendations would you make to Netflix CEO Read Hasting? Advertising is the main thing to attract more subscribers. Advertise everywhere on TV, newspapers, magazines and suggest that this is for different ages starting from young age to older generation. Moreover increase availability of DVD’ and streaming library availability. Also revise how long rented DVD in store could be kept provide various promotions for the customer in store. Create more contracts with movie suppliers to increase variety of movies or TV shows, this will attract more people. In addition to this they should create customer loyalty cards online for long term customers. Improve the website of Netflix. One thing could be done, that for kids won’t be available to watch certain kind of movies. To continue expand worldwide, build strong world of mouth (only positive), improve customer experience, brand awareness. 8. What recommendations would you make to Blockbuster CEO James Keyes ? There are few recommendations to the CEO James Keyes: Company has high debts, has to find the way to reduce the debts. To operate more money for the business and to survive in the movie market first has to change business strategy. Next focus more on new release movies, different subscription deals or different segments. Also expand they business worldwide as Netflix does.