This book is the first in the management accounting framework literature to provide readers with insights on how to manage revenue and profit models by developing relationships with customers. The Principal Editor, Professor Kenichi Suzuki, is the founding father of Fixed Revenue Accounting (FRA) and his inputs offer invaluable insights on how businesses can increase revenue and adopt preventative measures to deal with the fluctuations in the economy.
FRA is a new management accounting tool that evaluates and manages the impacts of fixed customers on a company's financial health. 'Fixed customers' refer to frequent or regular customers who are expected to repeat their purchases. Their repeated purchases produce stability of revenue which in turn creates a stable profit environment and certainty. The profitability and stability generated by fixed customers can be utilized for strategic management, planning, and decision making to encourage investment for future growth.
This book provides a deep understanding of the usefulness of the new management accounting tool, and covers both the introduction of the concept of FRA and accompanying case studies in the contexts of Japanese manufacturing and service companies adopting the FRA model by examining profitability, stability, and growth analysis.
Author(s): Kenichi Suzuki, Bruce Gurd
Series: Japanese Management and International Studies, 15
Publisher: World Scientific Publishing Company
Year: 2018
Language: English
Pages: 200
City: Singapore
Contents
Japan Society of Organization and Accounting (JSOA)
Japanese Management and International Studies (JMIS)
Preface
About the Editors
List of Contributors
Part 1 Profitability Analysis
Chapter 1 Profitability of Fixed Customers: A Case of a Japanese Department Store
1. Introduction
2. Three Requirements for Fixed Revenue Accounting
2.1 Customer segments categorized by the strength of repeat purchases of each customer
2.2 The strength measured by transaction data
2.3 The transaction data recorded for each customer
2.4 Profit and loss framework in fixed revenue accounting
3. The Department Store’s Case Study
3.1 The department store’s motivation of using the profit and loss concept
3.2 The department store’s customer segments and profit and loss statements
3.3 The department store’s findings and decisions
3.4 Future scope of FRA study
3.4.1 Bathtub Model
3.4.2 Variance analysis framework in FRA: VAF
4. Conclusion
References
Chapter 2 Redesign and Management of Marketing Strategies Using FRA Profitability Analysis: A Case of a Mail-Order Company under Turnaround Process
1. Introduction
1.1 The purpose and significance of this study
2. Research Design
2.1 Research method
2.2 Description of research site (company A)
2.3 Why company A introduced FRA
3. Application of FRA
3.1 Procedure to build a profit and loss framework in FRA
3.2 Classifying four customer segments
3.3 Profit and loss statement by customer segments
3.3.1 Procedure of building profit and loss statement by customer segments
3.3.2 Classify cost items
3.3.3 Build profit and loss statement
4. Profitability Analysis
4.1 Marginal profit variance analysis
4.2 Contribution margin difference analysis
4.3 Summary of profitability analysis findings
5. Implications for Marketing Strategies
6. The Limits of this Paper and Future Research Topics
References
Chapter 3 Identifying the Determinant Factors Satisfying Each Customer Segment: Case of a Japanese Hotel Chain
1. Introduction
2. Prior Research
3. Research Design
3.1 Analytical model
3.2 Research site
3.3 Setting the customer segments
3.4 The data and the analytical method
4. Results of the Analysis and Considerations
5. Conclusion
References
Part 2 Stability Analysis
Chapter 4 Measuring and Managing Customer Profit Stability: A Japanese Hotel Chain Case Study
1. Introduction
2. Hypothesis
2.1 Marginal profit stability by customer type
2.2 Relationship between profit stability with fixed customer classification in fixed revenue accounting
3. Research Design
3.1 Research site
3.2 Data and sample selection
3.3 Analysis method
3.3.1 Classification of customer segments at Company A
3.3.2 Analysis model and variables
4. Results and Discussion
5. Conclusion
References
Part 3 Growth Analysis
Chapter 5 Variance Analysis in Fixed Revenue Accounting
1. Introduction
2. The Bathtub Model
3. Change Rates
4 Sales Growth
5. Variance
6. Discussion
6.1 Calculation of variance
6.2 Breakdown of variance
7. Summary and Future Research
Acknowledgment
References
Chapter 6 Bathtub Model Variance Analysis at a Japanese Hotel Chain
1. Introduction
2. Bathtub Model Variance Analysis
2.1 Change rates and variance analysis
2.2 Difference from traditional variance analysis
3. Research Design
3.1 Research site
3.2 Data
3.3 Customer segments
3.4 Estimate of change rates and sales per customer
3.5 Customer quantity flexible budget
3.6 Sales from defectors
4. Results
4.1 Results of traditional variance analysis
4.2 Results of the BMVA
4.3 Company A’s reactions
5. Discussion
6. Conclusion
Appendix
Acknowledgment
References
Chapter 7 Promoting and Hindering Factors in the Introduction of Fixed Revenue Accounting: A Case Study in a B2B Company Based on Management Accounting Change
1. Introduction
2. Factors that Promote or Hinder Changes in Management Accounting
3. Research Design
3.1 Research method
3.2 Research site
4. Results
4.1 Motivators
4.2 Catalysts
4.3 Facilitators
4.4 Leadership
4.5 Momentum for change
4.6 Barriers to change
5. Discussion
6. Conclusion
References
Part 4 Related Topics in Management Accounting
Chapter 8 Goal Congruence between Top Management and Divisional Managers
1. Introduction
2. Management Based on Shareholders’ Value
3. Investment Activities of Divisional Managers
4. Managerial Activities of Divisional Managers
5. Viewpoints of Sustainability and Moral Economy
6. Conclusions
References
Chapter 9 Budgeting and Vertical/Horizontal Interaction in New Product Development — A Case Study in Car Navigation System Development
1. Introduction
1.1 Background
1.2 The purpose of this research
1.3 Research method
1.4 Structure of this research
2. Literature Review
2.1 Promotion of vertical interaction
2.2 Promotion of horizontal interaction
2.3 Mutual relationship of vertical and horizontal interaction
3. The Case Study
3.1 Reason for selection as a research site — A development organization structure in company A
3.2 Product development process in research site A
3.3 Development cost budgeting in research site A
3.3.1 Establishment of development cost budget for individual product development project
3.3.2 Budget formulation
3.3.3 Budget execution and control
3.3.3.1 Weekly performance evaluation in project team
3.3.3.2 Monthly performance reporting to program manager by project manager
3.3.3.3 Monthly performance reporting to the head of department by customer by program manager
4. Discussion
5. Conclusion
References
Chapter 10 Empirical Study of Mechanism of Budgetary Control and Hoshin Kanri to Stimulate Autonomous Behavior Based on Theory of Ba
1. Introduction
2. Hypotheses Development
2.1. Communication in MCS and informative interaction in Ba
2.2. Customer orientation and informative interaction in Ba
2.3. Conditions to stimulate informative interaction in Ba
2.4. Informative interaction in Ba and mutual understanding and psychological resonance
2.5. Mutual understanding, psychological resonance, and autonomous behavior
3. Methodology
3.1. Research site
3.2. Data
3.3. Model
3.4. Variables
3.5. Confirmatory factor analysis
4. Results and Discussion
5. Conclusion
5.1. Contribution
5.2. Future research
References
Index
