Panasonic Limited – Developer and Distributor of Infection Control and Decontamination Products
Panasonics Limited is a developer and distributor of infection control and decontamination products and related technologies. The company has subsidiaries which act as branches. The company does not only medicinal products but also manufactures trophon EPR ultrasound disinfectors and its accessories (Askarany, Yazdifar and Askary 2010). The company is located in Australia though it is located in other countries like North America, Europe, and others. The company’s main activity is production and sale of medical products. The objectives and strategies aiming at achieving the set objectives which have been discussed to shed some light on the nature of operations are there in the company. With such complex business, the company requires the most efficient and effective management and costing system. The report describes activity-based costing system and how it aligns with Nanosnics’ strategies as well as objectives. An alternative model that could be used in place of activity-based costing is also described (Baldvinsdottir, Mitchell and Nørreklit 2010). The report does not fail to address upcoming issues in the implementation of this system. Recommendations on implementation are also described.
Definition
Activity based costing is an approach to the costing and monitoring of activities. The resources consumed are traced, and final outputs are assigned a cost. The activity-based model assigns more overhead costs into direct cost, unlike traditional costing models which assign drivers to attach activity costs to the outputs (Borry, Cornel and Howard 2010). ABC system appreciates the relationship between cost, activities, and products and from this relationship, indirect costs are assigned to products. The method applies best in the manufacturing sector. This is because some costs such as salaries and administrative cost incurred by a company are hard to assign.
Features of activity-based costing system
Activity-based costing has many outstanding features against traditional systems. These features include;
Activity-based costing differentiates cost into the variable cost and fixed cost which is not the case with traditional costing systems. This separation is to provide ample information for construction of cost structure. AB C costing distinguishes between cost behavior patterns (Dale and Plunkett 2017). Cost behaviors patterns are volume related, diversity-related, events related and time-related. The appropriate cost drivers are identified to ensure track on the overhead to a product. The cost drivers determine the cost behavior pattern.
How activity-based costing aligns with corporate strategies and objectives the Company
The main mission of the organization is to improve the safety of patients, clinics, their staff and the environment by transforming the way infection prevention practices are understood and conducted and introducing innovative technologies that deliver improved standards of care. All these are to ensure the world and its population is free from all preventable infections (Drury 2013). The company also wants to add value to its shareholders, business and more importantly to the health care. Bringing in the most effective medical products is the dream of the client organization. Innovation and development of new products and technology are what keeps the company in business. Therefore developing the modest equipment and products is the backbone mission of this company. Environmental conservation is also another mission that this organization is working towards. The company wants to transform our environments into their safest form possible from infections.
Definition of Activity Based Costing System
The company has strived to uphold this mission which made it the winner of environmental solutions award (Elhamma and Zhang 2013). The final company’s mission is to attain sustainability regarding both financial performance and the value added to the environment. The company is striving towards maintaining its achievements and maybe improve more. The shareholders’ value is no left back where shareholder proceeds will increase with improved financial performance. Other basic missions of the company are to fully satisfy their staff as well as the customers.
The main objective of the client organization is to ensure its customers have the best experience. This is achieved by establishing the company’s offerings as new standards of care in the whole universe and provides the customers a convenient, seamless and consistent experience with both and brand. The company also works on the innovation of its products. The management of the company wants to bring out the best innovations of its products regarding quality to address the unmet customers’ demands (Elhamma and Zhang 2013). Creating an ideal operational structure is also the company’s objective. The company wants to employ an operating structure that addresses the numerous company’s activities. The structure should focus mainly on processes and designed to a positive experience for the customers. People engagement is also on the list of objectives. The company wants to be attractive to the best people and retain and empower them to be productive to in fulfilling the company’s objectives. The company also wants to create sustainable value for shareholders. The Company want to create value by delivering high growth returns and make significant contributions to social good.
The need for innovations implies technological transformation. The company has been working on improving their technology by incorporating modern and more efficient ones. With new technology, it will be in a better position to develop and improve the existing products. With the nature of business, innovations and development are the main determinants of success (Fatah 2013). New technology, therefore, will help the company achieve its objective of value creation and quality customer experience. More value to both financial performance and value towards customers will be achieved as a result of more advanced products which satisfy customer’s demand.
The organization management team want to incorporate new and more effective operational model. This model is expected to improve the company’s efficiency in its activities. With this model, the company will be relieved the burden of assigning a cost to this activities and also to the final products. The new system is to provide enough information to help the company work on the quality of the products with the real cost in mind (Garrison et al. 2010). Nanosonics Company will be in a position to make its next step in its operational success. This system will also help the company uphold its mission of ensuring staff satisfaction.
Features of Activity Based Costing System
The company is planning on allying with distribution outlets. These alliances are aimed at boosting the company’s sales and revenues generated. Merging with other organizations whose main business is distributing medical products will not only widen the market share but will also act as a product promotion initiative. The company dream of creating more and more value to both shareholders and the customers will become a reality (Greiler et al. 2012). With a certain market to supply the products to, the company will have more time and resources to focus more on innovations, development, and production of quality products. Allying is a great advantage to the company in a huge way. This is why this strategy is the more emphasized.
It produces with the motive of making the environment better. This strategy is a huge stride towards achieving goodwill from the society. The company’s environmental solutions award made it more attractive to more investors and made it familiar to new prospective customers. This strategy will also focus on improving the quality to solve the upcoming environmental problems. With more investors investing in company implies huge capital base. This capital base will help the company to fund the development projects. The research will also be more effective due to huge financial backup and availability of relevant resources (Horngren 2009).
In a bid to widen the market share and add value to the company’s shareholders; it is working on more new distribution centers. These new distribution centers aim at increasing the number of sales as well as improve on revenue generation. The distribution centers will also make the products accessible to the customers thus satisfying market demand for products. Opening in new locations will also aid the company to gather a variety of information from varied culture and exposure to more future problems (Kaplan and Norton 2008). This exposure will equip the company with a set of the issue to address hence satisfying consumer’s demands.
With a fully satisfied staff and labor force, the company will company guaranteed better services from the team. This is the reason behind the company’s strategy to improve the work teams working environment and conditions (Kiani et al. 2009). With company relying on its employee’s innovation for its success, more dedicated labor is not an option. As satisfied labor will be more willing to share their opinions or ideas which could translate into huge innovations. The strategy to treat workforce with the same value as they are will greatly boost the company’s performance.
Missions and Objectives of the Company
The Company is a busy company given that its main business lies between two industries, that is, marketing industry as well as production industry. This can only mean that the company’s activities are extremely many. As a result, the company requires a surely effective costing and management system (Kugler and Verhoogen 2011). Activity-based costing is the answer to the company’s needs. With this system, the company can accurately assign a cost to these activities. The cost of producing the medical products is also accurately evaluated. With this data, the company is in a better position to price its products and evaluate the profit.
The technological transformation strategy can be greatly boosted with the incorporation of activity-based costing and management system. The cost that is expected to be in a cure can be predicted using this model (Yang 2008). The real value of this strategy in terms objective achievement and upholding the company’s mission can then be evaluated to assess the importance of this strategy.
The company needs to change the management and costing systems which can cope with the company’s activities. Activity-based costing is the ideal system for this strategically move. Unlike the current systems, activity-based costing system is more effective when it comes to a large number of activities going on in a company (Yang 2008). Therefore with ABC costing, the business operations will be more efficient, accurate and effective.
Activity-based costing is a decision-making tool which makes ideal for financial management. The company has to make decisions on what innovation to make, where to locate new business and so many decisions. With activity-based costing, the company can evaluate each option to identify the most profitable or the one that will accommodate the company’s strategy and performance goals.
Activity-based costing system impact on the company needs to be evaluated to avoid situations of failure of the model. It should evaluate the compatibility of the model with its mission and objectives. The limits of the model and the impacts of this model should be pointed out to employ the best solutions (Kiani et al. 2009). They also need to train their staff and relevant worker on how to use the model before it is incorporated. This will play a great role in avoiding unnecessary losses as a result of mishandling the system. Equipping the staff with skill and the required experience will also ensure efficiency and effectiveness of the system.
New Technological Transformation and Operational Model
Alternative costing system
The Company can also deploy cost of quality technique. Cost of quality is a tool that focuses on the difference between the costs incurred during production, selling and supporting services and the cost if there were no failures. This tool mainly focuses on maintaining a high-cost effective operation in the firm. The company is in the best position to use this tool given the nature of its business (Kiani et al. 2009). This tool will advantage the quality level of amp products which will, on the other hand, increase its customer’s loyalty. With the cost of quality, the company’s management is in no position to make an uninformed decision.
Conclusion
Activity-based costing features are seen to fill in the empty gap in Nanosonics’ management. With the regard, it is in alignment with most company’s strategies and objectives the company should incorporate the system into its management for easy management and profit maximization.
References
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Horngren, C.T., 2009. Cost accounting: A managerial emphasis, 13/e. Pearson Education India.
Kaplan, R.S. and Norton, D.P., 2008. Mastering the management system. Harvard business review, 86(1), p.62.
Kaplan, R.S. and Norton, D.P., 2008. Mastering the management system. Harvard business review, 86(1), p.62.
Kiani, B., Shirouyehzad, H., Khoshsaligheh Bafti, F. and Fouladgar, H., 2009. System dynamics approach to analysing the cost factors effects on cost of quality. International Journal of Quality & Reliability Management, 26(7), pp.685-698.
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Yang, C.C., 2008. Improving the definition and quantification of quality costs. Total Quality Management, 19(3), pp.175-191.
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