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Learning and Spillovers
The cost of a value activity can decline over time due to learning that increases its efficiency. The methods by which learning can lower cost over time are many, and comprise such factors as layout changes, enhanced scheduling, labor efficiency enhancement, product design modifications that facilitate manufacturing, yield improvements, procedures that increase the utilization of assets, and better tailoring of raw materials to the process. Learning can also decrease the cost of retail outlets, constructing plants, or other facilities. Therefore the possibilities for learning in an activity are wider than learning by personnel to execute their functions more proficiently. The rate of learning varies broadly among value activities since each offers varying possibilities for learning enhancements. Learning is often the cumulation of many small improvements rather than major breakthroughs. The rate of learning might rise during slack periods whenever attention is focused on decreasing costs instead of meeting demand. Furthermore, learning tends to differ with the quantity of management attention dedicated to capturing it.
Learning can spill over from one firm in an industry to another, via mechanisms like consultants, suppliers, ex-employees, and reverse engineering of products. Where spillover of learning among firms is high in a value activity, the rate of learning might stem more from net industry learning than from the learning of one firm.
Product life cycle Every product has a life cycle. The life cycle of a product vary from months to various years. For example in the case of cameras photocopying machines etc.
Disadvantages of ratio analysis 1) False results: ratios are based upon the financial statement. In case financial ratio is incorrect or the data upon which ratios are based
Transfer Pricing Transfer pricing can contribute directly to the process of departmental performance measurement and indirectly to the measurement of product performance. A
ADVANTAGES OF "ABC ANALYSIS" The advantages derived from this analysis and its consequent follow up are summarized below: 1) Facilities selective control and thereby save va
useroffinancialstatement
Analysis of Financial Ratios: Ratios are computed to find out the customer's liquidity position and capability to repay debts. The computed ratios must be compared along with the
importance of ratio analysis
Stock turnover ratio Meaning: this ratio establishes a relation ship between costs of goods sold and average inventory. Objective: the objective of component of this r
bases of classifying budgets
Scenario - Ahi Corporation is one of your clients in Hawaii. The company had a good year last year and owes the IRS $100,000,000, due on March 15. There are no penalties or interes
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