Managerial Accounting Module 10 Assignment
In my original review of the modules for this course, I was interested in most of the topics given my academic and professional background which includes both finance and accounting. Two of the three modules that intrigued me the most at that time would remain as my favorites with one more addition.
The modules on “Short Term Business Decisions” and “Capital Investment Decisions and the Time Value of Money” cover theories I still use currently in my professional life. In coupling additional textbook theory and case studies with my real-world experiences in my everyday business, I feel I was able to maximize my understanding of the material and put the knowledge to better use moving forward. As a business owner, my goals remain to maximize revenue and profit, while retaining current customers and attracting new ones. Many of the exercises in pricing with regards to product line, along with the concept of capital investment and the time value of money helped me understand my goals and the methods to reach them better. I look forward to learning even more than I already know and use my new knowledge in these areas of managerial accounting in my business and in future endeavors.
As for the modules of least interest to me, after reading the entire textbook and completing the assignments, I would still select the “Performance Evaluation and the Balanced Scorecard” and “Statement of Cash Flow and Financial Statement Analysis” modules. I believe this stems from the least amount of real world application I have for the decentralization of growing companies, as our company is very small without any interest of adding significant infrastructure for the foreseeable future. I also feel I have a strong grasp of cash flow statements and analysis at this time, but appreciated the reinforcement and case studies.
In the real world, the topic I chose to comment on at the beginning of the course was the difficulty that young and veteran businesses alike have in pricing their products effectively. It is important for companies to find a balance in their pricing approach that will at once cover costs, retain market share, and create brand loyalty. It is a very complicated dynamic that we see successful businesses struggle with every day, and the textbook case studies and exercises I completed during the course helped me to see this in an even clearer light. I am able to identify some strategies now that may be applicable in addressing these issues, specifically for the example I provided in my first module assignment.
As I mentioned then, many large companies have established strong market share through seemingly successful pricing of products (Apple, Google, Amazon), while many smaller firms struggle with these decisions and implementations.
Currently, many small business owners still struggle with pricing. They are confronted with difficult decisions on how to prioritize covering costs or gain market share at the expense of profit and cash reserves. They also need to determine proper pricing that the market can support when attempting to recruit new and keep existing customers. Discounting and exceptions also become part of the big picture pricing formula.
In Chapter 8, we learned about short term business decisions and what strategies managers can use in order to price effectively. One of the first things I learned that I didn’t know was that pricing has become more and more of a short term decision making process for managers because of the evolution of shorter product life cycles in most industries. Although certain industries like fashion and technology have traditionally always had shorter life cycles, even autos and housing and other industries not part of this group in the past can now identify with shrinking product life cycles.