International Marketing Management 101 – Economic Value Added – Information for Decision Making
Isaac Newton Fuasi
Standardized & Localized Marketing Strategies, Cultural Pattern and Market Research
International Marketing Management 101
SMC-IMM101
Assignment Number 2
Dr. Daniel R. Coleman
February 19, 2012
Information for Decision Making
Information has become the vital commodity sort after by all for decision making. All over the world managers spend a great deal of their time making decisions regarding various aspect of their work. This section of the paper aims at exploring the types of information executives require for decision making and the tools that are currently available for generating the needed information, Drucker 1995.
Corporate entities basically exist to create wealth or values by the use of all factors of production. Proper utilization of these resources require another vital resource called information, and this information, in its right form, is what executive need in other to control costs and also price the products the firm produces. Costing information has been done in the past by the use of conventional cost accounting system which is based on the assumption that total manufacturing cost is the sum of individual operations. Unlike this costing information system, activity based cost accounting system is based on the premise that the total costs of the entire process is what matters and thus measures, not only the cost of undertaking a task, but also the costs of not carrying out the tasks. It integrates all activities of an entire operation such as value analysis, process analysis, quality management and costing. With Activity based costing system, management is better able to control cost and output. Management can lower costs substantially given the output from activity based cost accounting system. ABC system is more useful in service oriented organization in the sense that in service organizations, there is only one cost, which is the total cost and this cost is fixed over a given period.
With the advent of price led costing, knowing the cost of operation of an individual company or section of the organization is not good enough. Management need to know the cost of what Drucker 1995 called the ‘economic chain”- the costs of the entire chain of activities that lead to the delivery of the final products to the consumers. It has been shown that companies are able to secure the upper hand in the increasingly competitive global market if they manage the cost of the entire chain successfully. Unlike cost led pricing, the starting point for price led costing is the price the final