Case Study of Terracota Brick Layering Industry

Topics: Strategic management, Innovation, Vertical integration Pages: 3 (536 words) Published: October 14, 2011

The role of accounting in general is to provide useful and relevant key information to assist management in its decision making.

Due to scarce resources, emerging change in quality of life or way of life, threats from competitors in terms of product substitutes and product innovation, demands for sustainable environment and compliance to government regulations, companies need to adapt to these changes and position the company’s activities and resources to maintain its market share and competitive edge.

In every decision, the ultimate objective of every organisation should be focused on creating and managing value for the organisation and its stakeholders in order to gain or attain competitive advantage within the industry they evolve and overcome threats that is posed by the externalities of the organisation.

Strategic management accounting would enhance the quality of decisions of management in relation to the following:

1. Product - should Terracotta enhance the immediate production of its product innovation which is “coal flyash bricks” and what should the company do with the Northvale site.

2. Supply Chain - due to depletion of resources, should the company consider offshoring

3. Infrastructure - should the company upgrade 50% more of the kiln capacity using the Buxton upgrade

4. Financing – how would the company finance the upgrade of the kiln or finance the

5. Resource Allocation – how much fund should be allocated to these project if pursued : coal flyash bricks, Northvale Site, Developing a Corporate Social Responsibility / Sustainability Reporting, Buxton upgrade for the kiln.

II Clay Brick Manufacturing Segment

A. Five Industry Forces

1. Threat of New Entrants - The scale of capital and technological investment required to obtain a substantial market share is high. Transport cost for foreign competitors will not compensate the low value of per ton weight of the product.

Barriers to new...
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