BFA612 Petrocal Limited Analysis Assignment Sample

Management and Cost Accounting

Part 1: Individual Task

This statement is false. Customer profitability analysis is the technique that indicates the managers of the company the diversified contribution of each customer to the entire profitability of the business. The result of the analysis creates a profitability profile of each customer. This further aids the managers to identify the highly profitable customers so that they may see that whether these customers get accurate consideration of the company. A customer profitability profile highlights the variances in the profitability across clients in the present period. There is a possibility that a customer, who is not profitable in the current time, might be extremely profitable in the upcoming period for the business. Therefore, dropping the customer is not to be done by the business, and is considered to be the last option. In addition, the costs allocated to each client may not be virtuously inconstant as compared with the elimination of sales to those clients in a short time.

Part 2: Group Work

1. Petrocal’s strategy is to focus on the 60% of the service-oriented customers is wrong as the remaining 40% can also be its profitable customers when dealing them strategically. This can be done by Petrocal with the help of its employees in making novel quality products suitable for 40% of the price shoppers. In the balanced scorecard of company, there must be measures of the employee satisfaction and the employee training in the learning and growth perspective as this perspective enables the company to focus on the employee training, process improvement, newer products with the help of suggestions from its employees. These objectives are critical to the company to a greater extent as they can bring profitability and efficiency for the company in an innovative manner. Therefore, these measures should be added to the balanced scorecard of the company

2. Internal business perspective of balanced scorecard includes measures like defects, the efficiency of operation, quality and more. These operations must be evaluated by the company to ensure they fulfil the strategic aims of the company. In the balanced scorecard of Petrocal, the internal business measures are improving petrol quality, refinery performance, and petrol availability in which the company performed better than the target. Customer perspective in balanced scorecard includes measures like client satisfaction, market share, retained customers, and more. In Petrocal’s balanced scorecard, the customer perspective entails market share in which it does not perform better than the target. The cause and effect relationship between both approaches is that the effect of the internal business perspective leads to cause higher market share. The company must involve some more measures in the customer perspective lie customer satisfaction and number of repeated customers to see its efficiency in processes. The internal business perspective need not be changed as it has sufficient measures.

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