Accounting for Strategic Management: Key West Lime Pie Company

This assignment provides a comprehensive strategic management analysis of the Key West Lime Pie Company, examining its activities, resources, and personnel. The analysis utilizes Porter's Five Forces model to assess the company's competitive environment, including threats from market participants, new entrants, suppliers, buyers, and substitutes. Furthermore, the assignment explores the company's value chain structure, detailing primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service, as well as support activities like procurement, research and development, human resource management, and firm infrastructure. The document also addresses the company's cost structure (fixed and variable), key success factors, and provides recommendations for improvement, such as debt management, floor allocation, online supply implementation, employee incentives, brand image creation, and marketing strategies. The analysis highlights the financial challenges faced by the company and suggests strategies to improve its performance and profitability.

P22996 Accounting for Strategic Management and Control BAAFM PT12
Name: Wong Qiao Ying
Portsmouth Student id: UP916241
Lecture: Alan Ho
Coursework: Individual Assignment (20%)

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Introduction
Personnel resources and activities (management accounting system)
The Key West lime pie company is situated in West Florida and is jointly owned by
the Jim blush and Alison slot. The couple bought the organisation for $1200 ten years ago.the
main item that the company sell is key lime Pies. The Company though made a turnover of
$1.4 million but it failed to make any profit in the last financial year and during this period it
has made a debt of $130 thousand.
The strategic vision of the company is related with the three matters these are Activities,
Resources and Personnel these are explained below:
Activities
The company is a simple assembler of pies using prefabricated pie crusts and off the
shelf ingredients. In addition to the pies the company occupied major of its retail floor space
(almost 60%) to a wide assortment key lime novelties from third parties all of which has low
margins in the range of 20 to 25 %.
ActivitiesResourcesPersonnel

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The porters five forces model will explain the strategic management of the company
more effectively. The porter’s five forces model contains the following points
 Threat from market participants
 Threat from new entrants
 Bargaining power of supplier
 Bargaining power of buyer
 Threat from substitutes
Threat from market participants
There are several market participants who prepare best quality pie and also at cheap
rate so the threat from the market participants is high for the Key West lime Pie Company.
Threat from new entrants
The initial investment required to enter in the business of pie manufacturing is not not
high and there are no legal barrier also to participate in this business so any new company can
make entry in this industry so the threat from new entrants are also high.
Bargaining power of the suppliers
PORTERSFIVEFORCESthreatfrommarketparticipantsbargainingpowerofsupplier

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As the number of units produced by Key West lime pie during one year is not that
high so it does not require high volume (only 40000 pies annually) of raw materials and for
that reason the bargaining power of the supplier is low for this company.
Bargaining power of the buyers
The bargaining power of the buyers or customers is high as there are several number
of competitors in the market the buyer have more options and they buy pies from that
company which can offer them best quality pie at the lowest price.
Threat from substitutes
The demand of pie is always there in the market so the level of threat from substitutes
is very low.
Resources
The company has two locations. The main one is an attractive retail outlet with a
commercial kitchen in the back. The second one is leased to serve as a shipping centre with a
shop added to help cover overhead. The leased property is a money loser for the company as
it only bringing about 10 to 12 % of its total revenue and it was losing $25 thousand annually.
Personnel
The staffs and the employee of the company is well mannered and very gentle.
However among the two owners Alison is calm in nature while Jim on the other hand has a
bad temper and tough to deal with. The nature of Jim is due to the excess pressure on him as
the condition of the company is falling continuously (Singh Shukla & Mishra
2018).employes with different skills and different aspirations joined a company jopined a
company and applying their skill they try to satisfy the objective of the company. In this case
Tammy serves the company with her multitasking skills like the maintenance of inventory
handling customer complaints. But the company does not pay her as per her requirement but
she is still doing the job as she has to look after her family.
But from the video it can be observed that the company does not fulfil the demand of
the employees and give more emphasis on employee’s welfare. The company should give
right recognition and incentives to its key employees in order to keep them happy and
enthusiastic and to encourage them to work more efficiently.
Value chain structure of the company

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Value chain is the process where the firm identifies its primary and support activity
that benefit to its final product and then analyse these activities to reduce cost or increase
differentiation. The value chain identifies the internal control system of the company when
the organisation transforms its input into outputs (Jaligotet al 2016).
The organisation’s value chain is embedded in a larger stream of activities that can be
considered as the supply chain. The value chain of the company is categorised in to two
broader types primary activities and supportive activities.
Primary activities
The primary activity includes five main activities. These activities are directly related
with the production and selling of the product. The activities cover the process of production
the sales of the product transfer to the buyer and the analysis of customer satisfaction. The
five primary activities are inbound logistics, operations, outbound logistics marketing and
sales and service (Bush, et al 2015).
Inbound logistics of the organisation
The Key West is a producer of pie for which it requires raw material. The company
simply assemble pies using prefabricated piecrust so it has to depend on the supplier of the
piecrusts. The company has a well-organised system of material handling and that ensure that
the raw materials are not wasted unnecessarily. Besides that, the company also made good
relation with the suppliers that enable the company to get easy credit from the suppliers (Kim
Roberts & Brown 2016).

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Operations
The company is engaged in the production of food products so it is essential for the
company to ensure hygiene factors. The company has maintained high level of hygiene in the
operation process. The company has good number of skilled employees who can produce
high quality of pie. The entire process of production is very systematic from machining to
packaging and quality testing in every step of operation the company maintain high standard
of technology and ensure that the best product come out from the operation process (Harris
2017).
Outbound logistics
After the pies are produced, it is required to make a proper packing of the same. The
food products require high quality of packaging so the company maintains the standard. The
activities that are associated with outbound logistics are collecting storing and physical
distribution of the product to buyers. The company also follow these steps and supply the pies
to its buyers in such a package that ensure both the hygienic as well as the safety of the pies
(Gereffi& Lee 2016).
Marketing and sales
As the company is not a big organisation, it cannot invest much in the marketing
strategies. The marketing strategy of the company is not effective and that hampers its
revenue generating capacity. The company produce high quality of pie and that is there only
marketing strategy as the quality of the product will do the marketing of their company. The
poor marketing strategy of the company is considered to be one of the reasons why the
company is going through the problem of poor sales volume. The marketing strategy is an
essential tool to raise the sales volume of an organisation (Glover 2016).
Service
In the food industry, service has also taken a vital role on the progress of the
company. The customers want to get prompt and accurate delivery of foods. In this area, also
the company fails to create a good impression in the market. The company does not have a
good system of delivering the pies to the customers this lead to the fall of the reputation of
the organisation (van Ruth Huisman&Luning 2017).

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Support activities
The secondary activity is the support activity. The support activities are linked with
the primary activities and aim to support and coordinate their functions as best as possible
with each other by providing purchased inputs technology human resource and various firm
wide managing functions. The support activities can be categorised into following points
 Procurement
 Research and development
 Human resource development and
 Firm infrastructure
Procurement
Procurement refers to the function of the purchasing inputs that are used in the firm’s
value chain and not the purchased inputs themselves. Purchased inputs include raw materials
supplies and other consumable items as well as machinery laboratory equipment, office
equipment and building. Procurement is therefore needed to assist multiple value chain
activities, not just inbound logistics. The Key West lime pie company has all these
procurement items and these help the company to carry on the business efficiently (Porter &
Kramer 2019).
Research and development
The research and development team of the food industry should be very active and
efficient, as the food industry requires continuous innovation in their items. The consumers
always desire new items of pie for which the company also have an efficient research and
development team, which is engaged in the innovation of new food items to attract more
customers.
Human resource management
The human resource is the main resource for the food industry as the production
process is largely depends on them. The Key West lime pie company has an efficient human
resource team that look after the production of pie. The company has the reputation of
producing high quality of pie to satisfy their customer. The partners, that is Jim and Alison
look after all the production process to ensure that the human resource are utilised efficiently
and to bring out the best from them.

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Firm infrastructure
The infrastructure of the company is not that updated to compete with the other
companies. The Key West lime pie overhead cost is very high and due to lack of efficient
management structure and accounting procedure, they do not have any strategy to control the
increasing trend of the overhead cost. The company is paying huge amount of lease for the
unproductive unit that they have and the debt burden of the company is increasing that effect
the production process (Schuster &Maertens 2015).
Fixed or variable cost structure
The fixed cost of the company is very high as the company’s lease payment is high.
Due to the high fixed cost structure, the company failed to generate high profit margin even
though the turnover of the company is impressive. The company’s variable cost is only the
raw material cost, which is available at cheap rate and the labour cost for shipping and the
staffs that prepare the pies (Michaet al 2017).
Measure or key success factors that are to be considered to evaluate the performance of
the company
The company has high amount of debt, which is required to be settled off by bringing
new investor or a new partner to whom at least 49 percent of shares can be sold. Beside that
the company has to renovate the floor allocation to reflect the business model. It is required
to implement online mode of supply of pies that will bring more customers (Manach, et al
2017).
The company should give priority to the demand of the efficient staffs like Forbes on whom
the production process is depended. The company should handle the human resource with
efficiency and should respect the demand of the employees as they take the active role in the
production process. Jim should not show his temper with the staffs and should behave
professionally with the staffs.
In addition to these strategies, the company has to create a brand image, which it can
do by taking aggressive marketing strategies. The low margin merchandise is to be
dampened. The number of useless merchandise increases the fixed cost and that results in the
fall of the margin of profit. In the modern days, it is very essential to create a brand image
that will enable the business to attract the customer base and to improve its turnover ratios.

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The Key West lime pie has to start baking pies from scratch with natural ingredients
and not with fabricated raw materials. This will improve the quality of their products and will
also reduce the cost of production.
Risk factors associated with Key West lime Pie Company
There are several kind of risks associated with the company some of thse are discussed
below
Strategic risk
If the partners give 49 percent of the shares to any third party then in that case the
third party will interfere in the business affairs and that may raise conflict among the old
partners and the new financier.
Financial risk
The company if not take any initiative quickly regarding the unproductive units then
in the case the company may become insolvent as the amount of debt is rising and the
company does not have any alternative source to pay the debt burden.
Regulatory risk
Thre are no regulatory risk observed for the Key West lime pie company as the
government does not make any strict regulatory norms against the company. But as the
company is in the industry of food production it has to maintain certain regulatory guidelines
that are issued by government in order to protect public interest.
Operational risk
The company is operating with loss and there are some unnecessary units that are
responsible for the loss. The company should take necessary step to prevent the operational
risk in order to sustain in the market.

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