Reference no: EM132582919

Miss Lailatul is a new management accountant at Happimart Steel Berhad (HSB). HSB is based in Changlun, Kedah and produces a range of industrial products. The external environment in which HSB operate is continually changing. HSB must respond to these changes to remain competitive and continue to meet the needs of its customers. Hence, HSB must consider the customer satisfaction in order to meet the challenge. In addition, HSB as a modern organization is increasingly becoming more complex due to the changes. Globalization, economic liberalization, technological advancements and interconnectivity have made the existence of HSB tougher than ever before. Markets are becoming more international, dynamic and customer-driven because of many foreigners staying in Changlun. In this situation, the management of HSB feels that there is a need to stimulate the organization to respond more innovatively in management accounting. As a consequence, the demand for new management accounting information is rising, where a future oriented, forward looking information to aid strategic planning and decision making is required. The working surroundings and the nature of commercial enterprise operations have turned out to be future and business oriented. Application of information technology (IT) in management accounting has modified the roles, duties and responsibility of management accountant. IT evolution involves automation cost control and efficiency, productivity and end user empowerment to value creation and end-user business effectiveness. Since Miss Lailatul is a new staff in HSB, she is being asking by the management to fully understand the role of management accountant and the effect of the changing environment to the management accounting. HSB is also implementing cost leadership strategy and product differentiation strategy. In applying these strategies, HSB must focus on its activities in order to create value to its customers. Managers at HSB realize that the more HSB creates value to its customers, the more profitable it is likely to be and at the same time, it can built competitive advantage. Mr Qadri, a plant manager, however, was not pleased with the current reported results concerning to the huge investment in modernization HSB production facilities. Mr Qadri argues that, HSB needs to do some proactive marketing in order to cover the investment. Even though HSB adopts Just-In-Time (JIT) system for inventory management and production, customers are still complaining on the late deliveries due to insufficient stock in the warehouse. Mr Qadri decided to take a tour to several of the plants and talk with the plant supervisors. After the tour, he realized that the supervisors did not understand the concept of non-value added costs, and they did not have a good grasp of the concept of JIT system. No efforts made to carefully consider the activity information that had been produced. One typical plant supervisor stated that: "This is too much data. Why should I care about all these detail?

REQUIRED:

Question (a) Analyze FOUR (4) factors that drive changes in HSB.

Question (b) Examine TWO (2) pressures that influencing the change of Miss Lailatul's role as a new management accountant.

Question (c) Based on the information technology (IT) evolution, discuss TWO (2): (i) roles of IT in relation to the IT evolution.  (ii) roles of the management accountant in response to the IT evolution.

Question (d) Explain how value chain creates value to HSB.

Question (e) Advise HSB on: (i) how the company can implement product differentiation strategy and gain competitive advantage for its product; (ii) TWO (2) types of activities that can help HSB to create value to its customers

Question (f) Based on HSB case above, examine TWO (2) potential disadvantages of having no buffer stock under the JIT system.