Question-2

Strategic decisions and management accounting. Consider the following series of independent situations in which a firm is about to make a strategic decision.

Decisions

a. A running shoe manufacturer is weighing whether to purchase leather from a cheaper supplier in order to compete with lower priced competitors.

b. An office supply store is considering adding a delivery service that its competitors do not have.

c. A regional retailer is deciding whether to install self-check-out counters. This technology will reduce the number of check-out clerks required in the store.

d. A local florist is considering hiring a horticulture specialist to help customers with gardening questions.

Required:

1. For each decision, state whether the company is following a cost leadership or a product differentiation strategy.

2. For each decision, discuss what information the managerial accountant can provide about the source of competitive advantage for these firms.