The senior managers at EvercrestCorp have approached your project team and have asked for advice on the current situation and the future direction of the company. You are expected conduct research and analysis to prepare a report for the next executive management meeting which addresses the requirements below:
1. Your project team is required to present to EvercrestCorp’s senior management a recommendation of the best strategy you believe that the Company should adopt in order to be competitive. In order to achieve this, your team should conduct research into the fundamental ways in which companies can achieve a sustainable competitive advantage. Specifically your team is required to:
(i) Discuss in detail at two of these strategies, and for each one, identify and discuss in detail two Australian or US, publicly listed companies (include the company code of each) that have succeeded in using the particular strategy, the reason why the strategy was chosen and implemented by the company, and how this has been effective for each company.
(ii) Using your research from Requirement 1(i), present the senior management team with a recommendation of the best strategy you believe EvercrestCorp could adopt in order to be competitive and why this is the best one. Your discussion should include and justify what you believe to be the critical success factors in achieving this strategy. Explain also why the other strategy, as identified by your research above, may not be as effective for EvercrestCorp as the one recommended.
2. EvercrestCorp’s management team have agreed that the company needs to become more customer focused and have asked your project team to research this further with respect to customer profitability analysis. Discuss in detail how customer profitability analysis can be used by companies in increasing customer focus. You should also identify and discuss in detail two Australian or US, publicly listed companies (include the company code of each) which have implemented customer profitability analysis highlighting how these companies have used this approach to become more customer focused and discuss what the overall outcome has been for each company.
3. (i) Design a customer profitability system based on Activity Based Costing (ABC) for EvercrestCorp. Include the activity cost driver rates; the customer related activity cost pools and indicate the profitability of each of the three customer groups.
(ii) List and briefly justify two other potential activity cost pools and cost drivers from the case (in addition to those listed in Table 5), that may be used for selling, distribution and administration costs.
4. Discuss in detail your customer profitability results for EvercrestCorp with an emphasis on analysing the customer related activity costs.
5. Based on your project team’s research and also on your customer profitability analysis for EvercrestCorp, identify and discuss in detail two main strategic issues that may arise for the company.