0
0
The success of any business is grounded in the basics of profitability and cash (liquidity) availability. This course is designed for accounting and finance managers and will reinforce these tenets and their connection to the key functions within managerial accounting.
Revisit and evaluate traditional and new approaches to cost control and profitability analysis. Develop project management skills. Increase productivity by appropriate use of information technology. Develop negotiating styles and understanding. Understand the importance, variety and sensitivity of user needs that accounting and finance serves. Develop your organization’s ability to obtain and understand competitive intelligence. This course teaches you to apply practical approaches to managerial accounting and finance. Implementation of these tools and techniques will help improve profitability, liquidity, project management and overall finance and accounting services.
Objectives:Prerequisite: Management responsibility in finance, operations and accounting
733341
Chapter 1
Competitive Intelligence
Learning Objectives
Managerial accounting supports the operational decision maker. In this chapter, we will examine how better access as well as understanding of competitive intelligence can influence the decisions that managers make. Competitive intelligence has become more important in recent years as companies search for every opportunity to gain an advantage in profitability. In this chapter we will cover the following:
Introduction
If we were to scan the traditional textbooks for managerial accounting courses, we will find items such as cost behavior, operating leverage, profitability analysis, analysis of cost, volume and pricing, cost accumulation tracing and allocation, etc. It is true that all these help to make a better-informed decision within the overall organization structure. However, many of the above processes are incomplete unless the manager considers the steps that their competitors are taking. These steps are better understood and countered by the use of Competitive Intelligence.
Let us examine a brief example. The author was trying to sell an HVAC company in Chicago. He used all of the business valuation tools and came up with an appropriate methodology to determine what price should be asked for the company. Through appropriate valuation techniques a realistic value was arrived at. However, the author also had access to www.bizbuysell.com. This is an internet site that lists businesses for sale across the entire country and even some international locations. On that site, there were forty HVAC companies for sale. In almost all cases, the asking price, the cash flow, and the revenue size were provided on the companies as well as the general location where the companies resided. It was a very simple process to calculate the following ratios:
Once the multiples were calculated, a range of valuations was created for the forty companies. The Competitive Intelligence dictated what the market value was for an HVAC company. The traditional valuation methodology was not as significant as compared to the actual asking price in the market. The forty companies on the market would dictate the price. Even though this is a merger and acquisition example, the same concepts hold for the analysis of managerial accounting work that is performed within our companies. We can create fantastic analysis and determine all of the proper numbers based on internal information. If the competitive information is ignored, there is a chance that the decision that is reached will be erroneous. That is why we will spend the time to understand the role of Competitive Intelligence and how we can use it to improve operational decisions.
Competitive Intelligence Defined
To begin, let us understand what Competitive Intelligence is. There are many different definitions of Competitive Intelligence. For our purposes, we will use the definition that was created by the Society of Competitive Intelligence Professionals. Their website is www.scip.org.
Competitive Intelligence: A systematic and ethical program for gathering, analyzing, and managing external information that can affect your company's plans, decisions, and operations.
Put another way, CI is the process of enhancing marketplace competitiveness through a greater – yet unequivocally ethical – understanding of a firm's competitors and the competitive environment.
Specifically, it is the legal collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors conducted by using information databases and other open sources and through ethical inquiry. SCIP members conduct CI for large and small companies providing management with early warning of changes in the competitive landscape.
CI enables senior managers in companies of all sizes to make informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies. In effect CI is a continuous process involving the legal and ethical collection of information analysis that does not avoid unwelcome conclusions and controlled dissemination of actionable intelligence to decision-makers.
Competitive Intelligence Benefits
What are the benefits of having a Competitive Intelligence function?
733341
Customer Service
Customer Service
Customer Service
Back to Browsing Products