Case study on bench marking---

16)You have recently been appointed to head the

management accounting department of APL Ltd
which is a small engineering company engaged in the
manufacture of precision parts. The market in which
the company sells its products is small and APL faces
severe competition. Due to the production facilities
available, the company is able to undertake only small-
scale engineering work. Large scale engineering
jobs are turned away as the company does not possess
the manufacturing facilities to undertake them. At
best, it can act only as agent for another contractor to do
the work.
The board of APL is aware that the volume of work which
is being turned away is increasing. This is
particularly frustrating as the company is unable to utilize
its capacity to the fullest extent all the time. APL
has achieved a steady increase in profit over the last few
years. Nevertheless, the board of the company
believes that it could increase profitability still further by
expanding and thus being able to carry out the
larger scale work which is currently being turned away.
Budgetary control and standard costing information has,
for many years, been provided as the sole output
of the management accounting department. The previous
management accountant prided himself on the
Punctuality and comprehensiveness of the reports
produced. Each job is priced by adding a percentage of
its total cost calculated in accordance with the company’s
standard costing procedures. The annual cost
budget is split into monthly parts and flexed to take
account of a particular period’s actual production.
Monthly cost variances, comprising those for direct
materials, direct labour, variable and fixed production
overheads are produced and provided to the relevant
managers. In addition, sales price and volume
Variances are produced by the management accounting
department each period.
The company does not have a marketing department
although new customers are obtained from
advertising within professional engineering journals and by
attendance at trade shows. At one such trade
show, the managing director was introduced to the
concept of benchmarking. He believes that there may be
advantages in APL undertaking benchmarking.
Required:
a. In consideration of the need for the board of APL to be
provided with information which assists its
Strategic decision making, comment critically on the
management accounting reports, currently
provided.
b. State and justify what changes you, as management
accountant, would make in providing information
which facilitates strategic planning in the company. (Within
your answer, describe what financial and
non-financial information you would supply which is
different from that, already provided).
c. Explain the concept of benchmarking and suggest how
it might be applied to information for strategic
Planning in APL.
 Case study on Need –gap analysis

Swizera pharmaceuticals is a 200 crore midcap pharmaceutical

company having presence in gynaecology & obstetrics, surgery,
dentistry, GP & physician segments. The contribution of gynaec range
to the sales turnover is around 58%. The pharmaceutical industry is
growing at an average rate of 15% per annum for last three years. The
company grew by 12% in 2013-14, 9% in 14-15 & 13% in 2015-16. The
company had internal target deliverance of 95% in 2013-14, 85% in 14-
15 & 90% in 15-16. The company launched 10 new products in last two
years but the contribution of the new products to the sales turnover
is only 8%.

The company has a field force of 500 reps, 48 DSMs, 27 RSMs & 5 zonal
managers. The line managers have a higher rate of attrition in last three
years but the field force is fairly stable with the attrition rate of just 3%.
The company has 4 manufacturing centers and their injectable unit is
unable to cater to the market to the fullest extent. The company is
reluctant to have third party manufacturing because they are skeptical
about the quality status of third party manufacturer.

As a result some orders of injectable cannot be supplied in full quantity

and the field staff who sells injectable are at the receiving end at the
level of their customers.

Whatever inputs that are promised to the field by way of samples

cannot be sent uniformly in every month so the customer –sample
planning takesa hit.
The product managers or brand managers do not put long service with
the company. The company had a team of 6 product managers along
with one GPM to handle a portfolio of 150 products. The product
managers have a feeling that the company has me-too products and
lacks uniqueness. Secondly the R& D department also is unable to give
any technological advantage in a product in relation to competition so
they are of the opinion that pure brand management activity is missing
and the brand managers are expected to work only on sales promotion
& trade schemes.

The company also had collaboration with one Swiss company to market
a unique gynace product in domestic market for the treatment of
menopause but Indian Drs have not appreciated the concept and as a
result this product has failed to deliver company’s expectations.

The company believes in calling external coaches & trainers for the
development of employees but it is noticed that the technical & work
skills, creativity, initiative & tendency to take bold decisions is missing
among senior employees in the Head office, factory as well as in the
senior field managers.

The company is financially sound and they get 90% of their payment
from the stockists within 45 days. The company has benchmarked
expiry of 2% but this proportion has exceeded in last 3 years and the
ratio of expiry to sales has gone upto 3.2%

The ORG ranking of the company is 45 and the top management feels
that the ranking should be 25 in next two years. The top management
has hired you as a strategic marketing consultant to do Need –gap
analysis, SWOT analysis & draw up plans for next 2 years.
1) What would be your advice to them after doing SWOT?

2) What would be your advice to them after Need- gap analysis?

3) What type of strategies can help them secure a ranking of 25 in

next two years?