Strategic Cost Accounting, Planning & Control at BlueScope

This case study provides an in-depth analysis of BlueScope Company's cost accounting practices, strategic planning, and decision-making processes. It begins with an introduction to BlueScope, highlighting its global presence, partnerships, and strategic focus on innovation and market expansion. The analysis includes a detailed examination of the company's value chain, covering inbound logistics, operations, outbound logistics, marketing and sales, and after-sale services. The study also explores BlueScope's planning and controlling processes, emphasizing the importance of environmental analysis, objective formulation, and corrective actions. Furthermore, the decision-making process is outlined, focusing on information gathering, alternative analysis, and implementation. Finally, the case study reviews the management accounting information and tools used by BlueScope, such as income statements and balance sheets, to inform strategic decisions. The report concludes with recommendations for leveraging these insights.

0
COST ACCOUNTING
Group Names
Cost Accounting
Course Studied
Unit Title
Unit Code
Professor’s Name
Institutional Affiliation
Department
Date

1
Cost Accounting
Introduction
The BlueScope company was established in 1915 as a manufacturing company in the
Australian economy. The company has since then been periodically developing until today. The
company is fit for analysis in this research because it is a substantial and an international
company that does not only operate in Australia but other countries in Asia. The company is
strategically determined to improve its popularity regarding innovation, technology, and
potential experts as a way of improving its competitiveness in the market. The firm is firmly
established to promote development especially in economies whose economic establishment is
rapidly increasing across the globe.
Furthermore, the company has been successful in promoting partnership with not only
with the customers served but also other manufacturing companies in the market. Some of the
companies with which BlueScope has managed to form partnerships include Tata conglomerate
which is located in India. One of the most fundamental partnerships formed by the company is
the venture formed with the Nippon Steel in Asia. This partnership has enabled the company to
expand its market coverage through the diversification of the products as the venture has enabled
the manufacturing of coated products. Additionally, the company has been successful in helping
more than five hundred fortune companies to make their business operations more economical
through the reduction of the construction schedules. The Fortune 500 companies are the major
clients of the company with who the firm has managed to venture into constructive partnerships.
Furthermore, the company has been on the forefront in offering employment
opportunities to different people in the residential economies. The company today operates in
approximately seventeen countries globally. The company has managed to employ a total of

2
approximately 14,000 people who are responsible for serving thousands of customers across the
globe. The popularity of the firm is defined by its greatest brands on the market. Some of the
BlueScope's strong steel brands under which partnership venturing has been successful across the
globe include but not limited to COLORBOND®, LYSAGHT®, and ZINCALUME® steels.
Other brands include the engineered buildings such as the Butler® and Varco Pruden®.
Currently, BlueScope is an international leader in the manufacturing of painted and
coated steel products. Additionally, the company is position one in the market regarding building
and construction. The firm has not only a great potential but also strength in the manufacturing
of engineered building materials in the market. The strategic focus of the company is to expand
the market of premium painted and coated steel in areas such as North America, Asia Pacific,
China, and Australia.
The best performing steel plant in the United States of America is the North Star
BlueScope. The competitiveness of the plant is not limited to the northern sides of the US but
one of the best plants in the world. North Star BlueScope Steel has maintained consistency in
financial performance and a substantial return on the invested capital. BlueScope is determined
and more strategic to ensure high value in the steel making in both New Zealand and Australia.
The company is determined to offer high-value products throughout the cycle. The fundamental
strategy of the company is maintaining financial strength while creating a higher value for the
investors. The company is also focused on enhancing the growth not only in the returns on
invested capital but also the balance sheet entirely. The company is made up of a hierarchical
organization structure. In this case, the company is led by Board directors and the Executive
Leadership Team (Bluescope.com. 2018). Under the Board of directors, the panel is led by a
chairman who is independent. From the chairman, we drop down the chain to the Managing

3
director who is also the acting Chief Executive Officer before getting to the non-executive
officers who are also independent. Following the Executive leadership team, we have the
Managing Director and the CEO at the top position followed by the Chief Legal Officer and the
Secretary before getting to the Executive General Manager of the people.
Value chain
The ideology sounds irrational to speak about the value chain of a company before
exploiting the meaning of the term Value Chain. The term value chain refers to all the operations
done by a company or any other business entity to add value to an article. Usually, the operations
begin all away from the inputs to the production all along including the after sale operations.
Therefore, the value chain is made up of five primary parameters. This components of the value
chain include the outbound logistics, inbound logistics, sales, marketing, operation and service
(Tarver, 2018). Inbound logistics are all input based activities like receiving, inventory control
and warehousing (Christopher, 2016). Operations entail all the activities that lead to the
conversion of the resources (inputs) into the final product. Outbound operations are value-adding
operations that promote the transition and transportation of the final products to the respective
clients (Zailani, Jeyaraman, Vengadasan, and Premkumar, 2012). Marketing and sales refer to
the process of obtaining potential buyers for the purchase of the final products. Lastly, the
service logistics relates to all the operations that thrive to improve the value of the product. A
typical example of a service logistics activity is the customer services.
The five components of the value chain are fundamental for the competitive achievement
of a company. While in need of improving the competitiveness of a company, all the parts of the
value chain should be critically analyzed to identify the gaps which require development.

4
Usually, the improvement of the value chain can boost the competitiveness of a company either
minimizing the production cost or improving the production capacity.
Following the BlueScope Company as a steel manufacturing company, several concepts
can be brought forth regarding the value chain analysis. The inbound logistics in the case of the
BlueScope Company include activities such as obtaining of the relevant raw materials, stacking
and reclaiming them and finally transitioning the materials to the respective departments.
Operations are also termed as production management as per the definition provided
earlier. Operations in the case of BlueScope Company include processing and handling of the
raw materials. The raw materials used by the company in the manufacturing of steel include
boiler coal, iron, and the coking coal. The operations involved in such a case are crushing of the
lump ore and screening, and making of divers’ products such as coke, pitch bonded magnesia
bricks, sinter, lime, wire rods, iron production and rolls repairing. Other activities include the
generation of chilled water, liquid nitrogen, oxygen and argon, gaseous argon, nitrogen and
oxygen, steam and plant air.
Additionally, operations include the manufacturing of spare parts to cater the
requirements of the plant, conducting the repair activities of the various units of the plant, and
electronic equipment repair. Some of the electronic equipment in the steel manufacturing
company include meters, control panel, and the PLCs. Finally, operations include planning,
design, and monitoring of the production process.
Outbound logistics in the BlueScope Company include planning, controlling and
directing the distribution and transportation of the steel to the respective customers. The

5
activities also include the transportation of the steel products such as the iron sheets made in the
company. Usually, the outbound logistics can be encompassed in the principal operations.
Marketing and sales activities in the BlueScope Company includes but not limited to the
Controlling, planning, directing and organization of the prices, placement, products, domestic
sales and promotions in the business environment (Terho, Haas, Eggert, and Ulaga, 2012). Some
of the typical examples of the domestic sales, in this case, includes but not limited to the retail,
actual and project sales (Acharyulu, Subbaiah, and Narayana, 2015, p.49). The marketing and
sales activities also entail the management of the export sales of the special steel, legislation
management and formulation of the prices of the byproducts.
After sale services in BlueScope company include commercial terms, post-sale contacts,
and follow-ups, settlement of the after sale complains from the clients (Mitra, and Sebastian,
2014). The services also include product quality management. The after sale services can also be
encompassed in the principal activities.
Planning Process
Planning is the fundamental role of any manager of a given company. Failure to perform
effective planning may lead to failure of the business. Usually, a business plan is a written
document that outlines the objectives of the company together with the courses of action of
achieving the formulated goals. The planning process in the BlueScope Company follows the
formal planning process documented by different pieces of pieces of literature on the internet.
The steps below outline a step by step planning process of the company.
i. The study and analysis of the external and internal environment to take
note of the available opportunities
ii. The formulation of objectives

6
iii. Conducting the preliminaries whereby the factors likely to affect the
planning process are defined followed by possible solutions to the
problems
iv. Formulating a variety of courses of action for the achievement of the
formulated objectives
v. Analysis of the formulated courses of action to pick the most appropriate
alternative
vi. Execution of the most appropriate course of action
vii. Formulation of supportive courses of action to stabilize the main strategy
viii. Evaluation process to find out the weaknesses of the plan while making
the relevant corrections
Controlling
Controlling refers to the process of ensuring the actual operations of the business work in
line with the expectations documented in the plan to achieve the desired objectives of the firm
(iEduNote.com. (2018, p.1). Usually, the controlling process takes a three-step operation as
illustrated below.
i. Setting the standards of the operations
ii. Comparing the actual performance of the company against the set standards to
realize the strengths and weaknesses presented
iii. Executing a corrective mechanism against the gaps presented while maintaining
the strengths.
Decision Making Process

7
Decision making refers to the identification of the best alternative from a diversity of
choices (Dartmouth, U. 2018, p.1). The BlueScope Company employs a standard decision-
making process to be competitive in the market. The decision-making process employed by the
company is formulated below.
i. Identification of the decision. In this case, the decision maker fully defines the
decision he/she is interested in making.
ii. Information gathering. In this case, the decision maker gathers the relevant
information regarding the decision made. Information about the decision made
can be found either externally in materials such as books, journals and on the
internet or internally through self-assessment.
iii. Identification of the alternatives regarding the decision made
iv. Analysis of the decision made against the alternatives.
v. Selection of the best alternative
vi. Execution process. This step entails putting the best alternative into action. This is
also known as the implementation stage
vii. Evaluation step. In this step, the results of the made decision are evaluated to find
out the gaps which are tackled through action.
Management Accounting Information and Tools
Management accounting tools simply refer to the data recorded by the business
concerning the accounting principles for decision making (Shpak, 2018, p.1). The accounting
tools by BlueScope Company is the income statement and the balance sheet. The accounting
information on the income statement is the total annual revenue, profit, and loss. On the other
hand, the accounting information on the balance sheet is the total assets, liabilities and owners'

8
equity. Following the latest fiscal year reporting, the company has a total revenue amounting to
$11,497.8M which is an increase of 9% compared to the previous fiscal year. The company has a
total net tangible asset per share amounting to &7.90 which is an increase of 30% compared to
the previous fiscal year reporting. Finally, the company has a cash liability reporting of ($63.6M)
which is a reduction by 127% compared to the previous fiscal year.
Recommendation and Conclusion
Just as it is in practice, I would recommend the company to use the income statement,
balance sheet, and cash flow statement as the accounting tools in the business operations. The
major reason for the existence of the company is to increase profitability. It is therefore
important for the company to tress its profitability level and take actions where necessary for the
prosperity of the business operation. This ideology necessitates the importance of the profit and
loss account.
Additionally, the total revenue presented on the income statement tells if the business is
growing or not. It's also important to note the financial position of the business to avoid working
blindly with a collapsing enterprise. A business is worthwhile if it's able to pay off all the
liabilities on the balance sheet without venturing into individual incomes. Cash flow statement
tells the liquidity of the business. A business can only be able to carry out daily operations if it
has the adequate cash (cash inflow should be more than cash outflow). Therefore, the profit and
loss statement, Cash flow and the Balance Sheet are the recommended accounting tools for the
business.

9
References
Acharyulu, S.G., Subbaiah, K.V. and Narayana, K., 2015. Value Chain Model for Steel
Manufacturing Sector: A Case Study. International Journal of Managing Value and
Supply Chains (IJMVSC) Vol, 6, pp.45-53.
Bluescope.com. (2018). Executive Team - BlueScope Corporate. [online] Available at:
https://www.bluescope.com/about-us/executive-team/ [Accessed 10 Sep. 2018].
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dartmouth, U. (2018). Decision-making process. [online] umassd.edu. Available at:
https://www.umassd.edu/fycm/decisionmaking/process/ [Accessed 12 Sep. 2018].
iEduNote.com. (2018). What is Controlling? Importance of Controlling in Management. [online]
Available at: https://iedunote.com/controlling [Accessed 12 Sep. 2018].
Mitra Debnath, R., and Sebastian, V.J., 2014. Efficiency in the Indian iron and steel industry–an
application of data envelopment analysis. Journal of Advances in Management
Research, 11(1), pp.4-19.
Shpak, S. (2018). Managerial Accounting Tools for Business Decision-Making. [online]
Yourbusiness.azcentral.com. Available at:
https://yourbusiness.azcentral.com/managerial-accounting-tools-business-
decisionmaking-3325.html [Accessed 12 Sep. 2018].
Tarver, E. (2018). How does a strong value chain management team help a company? [online]
Investopedia. Available at: https://www.investopedia.com/ask/answers/043015/how-
does-strong-value-chain-management-team-help-company.asp [Accessed 12 Sep. 2018].

10
Terho, H., Haas, A., Eggert, A. and Ulaga, W., 2012. ‘It's almost like taking the sales out of
selling’—towards a conceptualization of value-based selling in business
markets. Industrial Marketing Management, 41(1), pp.174-185.
Zailani, S., Jeyaraman, K., Vengadasan, G. and Premkumar, R., 2012. Sustainable supply chain
management (SSCM) in Malaysia: A survey. International Journal of Production
Economics, 140(1), pp.330-340.