Management Accounting: Value Chain Analysis and Cost Allocation

Management Accounting 1
MANAGEMENT ACCOUNTING
By (Name)
Name of the School
Name of the Tutor/ Professor
Name of the University
Name of the City
Date
Executively summary

Management Accounting 2
The report is focused on providing several aspects of the operations of the Bank
of Queensland. The bank of Queensland is branded as BOQ and it’s located and
headquartered in the Australian city of Brisbane. It is one of the biggest and
oldest financial institutions in Queensland. It has close to 252 branches across
Australia. The Bank of Queensland was incorporated in 1863. This paper shall
include an analysis of its Value Chain Analysis over the course of its planning.
Potential sources of competitive advantage will be identified. The firm/company
is a collection of different activities that share relatedness to some extent. The
paper shall also include an investigation of the concept of cost allocation within
an organisation and calculations associated with allocating costs in an
organisation.
Question 1
a Explain the value chain concept and discuss two 2 ways the value
chain concept benefits organisations. [3 marks]
The value chain concept entails a set of activities performed by a firm operating
in a given industry as a basis for delivering a valued service or product for the
market it serves (Angel, 2012). The concept is a component of business
management. The value chain analysis was first defined by Porter Michael within
his 1985 preeminent-seller (Bank of Queensland, 2018). Given the ever
increasing cut throat competition for unique products, customer loyalty and
unrivalled prices, it is important for organisations to keep examining and
analysing the value they put out to be in a position of building further and also
consolidating their competitive advantage. The concept of value chain analysis
has several benefits and some of them are explained as below;
The value chain analysis helps the organisation to gain a competitive edge and
thereby boosting its level of profits (Bustinza etal.2015). To be in a position of
capturing a competitive advantage, the company undertakes the mapping out of
its particular activities contained in the five universal value chain activities.
Through such activities the company can be able to create efficiencies. The five
generic activities for value chain analysis include inbound logistics, outbound
logistics, service, operations as well as sales and marketing (Horngren, 2013).
Value chain analysis also helps the organisation to ensure that the value created
does exceed the cost. The analysis of the service, sales and marketing, inbound
and outbound logistics, as well as operations all of which activities within the
value chain analysis helps the company ensure that the value it creates exceeds
the cost associated with creating the value (Elisabeth, 2012).
(b)
I. Company’s mission and objectives.
The bank of Queen’s land mission is to build long term customer relationships
which have their basis on understanding as well as mutual respect. The bank
intends to achieve this mission through focusing on the provision of banking
products which honestly meets the financial needs of the customers. The bank’s
strategy is to be focused on niche segments where customers have a preference
for a more friendly banking experience.

Management Accounting 3
The most fundamental company objective pursued by the leaders as well as
strategists at the Bank of Queensland is to help the organisation be in a position
of building a competitive advantage that is sustainable while thwarting
competitive challenges posed by the other players within the regional financial
industry.
ii. A description of the competitive strategy i.e. cost leadership,
differentiation or focus of the company.
Bank of Queensland’s competitive strategy is focused on ensuring that the
company maximises its operational efficiency while also ensuring an improved
product quality through the improvement of processes. The bank of queen’s
competitive strategy is underpinned by three models including differentiation,
cost leadership and focus. Bank of Queensland attains its differentiation
advantage through an investment in the analysis of various value chain
processes. To differentiate its products, the company is engaged in the
procurement of unique as well as valued inputs which are very hard to get for
the competitors (Hodes, 2011). The company has also been involved in the
altering of the cost drivers such as interrelationships, integration, linkages as
well as scaling to ensure that uniqueness in terms of the company’s products,
operations and services is attained. To better differentiate its products and
services, the company is engaged in forward integration to enhance its capacity
to exercise improved control over its inputs (Kirchoff, etal. 2016). The company
has also invested in the implementation of state-of-the-art process technologies
which competitors cannot afford. In terms of its cost advantage strategy, the
Bank of Bank of Queensland of Queensland avails them through the reduction of
the costs related to the activities of the value chain. The company undertakes
the mapping of such activities before associating costs with them to ensure that
the necessary adjustments are made (Mocciaro, etal.2012). The company’s cost
leadership strategy focuses on ensuring that operational costs are reduced as
much they possibly can be (Dekker, 2013). The company follows the policy of
optimising every single element within the value chain to ensure that a
comprehensive effect is felt. The company makes an effort to ensure that it
negotiates the best possible prices while ensuring the maximisation of the in-
bound as well as out-bound process of transportation (Chatterjee, 2017). Bank of
Queensland also implements the focus strategy. The company has decided to
target niche segments including agribusinesses, accountants as well as medical
personnel to provide customised and highly specialised service. The company
has invested significantly into such a focused segment and it is expected for it to
achieve much faster growth than the other businesses. The company can further
use Porter’s universal strategies to enhance its competitive advantage. Similarly,
the company can apply the value chain model to set a solid foundation for its
competitive advantage. The diagram below illustrates the competitive advantage
model developed by porter and suitable for application by Bank of Queensland.