Module 1, Video 2 - The Responsibilities of Management

Summary

This video introduces the role of management accounting in supporting decision-making for managers. It explains how timely and relevant information helps managers make strategic and operational decisions. The video outlines the key managerial responsibilities: planning, directing, motivating, and monitoring. Examples like General Motors' plant closures and Costco's rotisserie chicken pricing illustrate the application of these concepts. Ultimately, the video emphasizes that decision-making is central to effective management, with continuous feedback essential for achieving organizational goals.

Takeaways

• 😀 Management accounting provides critical information to managers to help them make strategic and operational decisions.
• 😀 The information in management accounting must be timely (available quickly) and relevant (able to impact decisions).
• 😀 Managers make decisions by analyzing different alternatives and choosing the one that best aligns with company goals.
• 😀 A strategic decision example is General Motors closing its Oshawa manufacturing plant to save $6 billion by 2020.
• 😀 An operational decision example is Costco deciding whether to increase the price of rotisserie chicken and its impact on sales.
• 😀 Decision-making is a complex, future-oriented process that involves risks.
• 😀 Managers are responsible for planning, directing, motivating, and monitoring to ensure company goals are achieved.
• 😀 Planning involves setting company goals and creating a roadmap to achieve them, such as GM's plant closures to meet changing demand.
• 😀 Directing is about implementing plans and getting employees to follow them; an example is Molson Coors’ beer fridge campaign to build customer loyalty.
• 😀 Motivating is key to ensuring employees do their best for the organization, such as Google's innovative side projects like Google Maps.
• 😀 Monitoring (or controlling) involves measuring performance against the plan, allowing adjustments to be made based on feedback, as seen in Molson Coors’ successful beer fridge campaign.

Q & A

What is the primary purpose of management accounting?

Management accounting provides timely and relevant information to managers to help them make strategic and operational decisions.

What does it mean for information to be timely and relevant in management accounting?

Timely information is available quickly when needed, and relevant information has the capacity to affect managerial decisions.

What is the role of decision-making in management?

Decision-making involves analyzing different alternatives and selecting the one that moves the organization toward its goals. It is central to all managerial responsibilities.

Can you provide examples of strategic and operational decisions?

A strategic decision example is General Motors closing plants to save $6 billion USD by 2020. An operational decision example is Costco deciding whether to increase rotisserie chicken prices, considering the impact on other product sales.

What are the four main responsibilities of managers?

Managers are responsible for planning, directing, motivating, and monitoring (controlling) organizational activities to achieve goals.

What is planning and why is it important?

Planning involves setting goals and objectives and creating a roadmap to achieve them. It ensures that an organization has a clear direction and strategy to reach its goals.

How does directing differ from motivating?

Directing is implementing plans and guiding employees to take action, while motivating focuses on encouraging employees to want to perform at their best.

Can you give examples of directing and motivating in practice?

Directing example: Molson Coors placing beer fridges in Europe to build customer loyalty. Motivating example: Google allowing employees to spend 20% of work hours on innovative side projects, fostering creativity and innovation.

What is monitoring in management, and why is it important?

Monitoring involves measuring performance against the original plan and using feedback to adjust plans, directing, or motivating strategies. It ensures that organizational goals are being met effectively.

How do organizations use feedback from monitoring to improve?

Organizations compare outcomes with planned goals. If results are not as expected, they adjust the plan or modify directing and motivating strategies. For example, Molson Coors expanded a successful campaign after monitoring positive results.

Why is decision-making described as complex and future-oriented?

Decision-making is complex because managers must consider multiple alternatives and potential outcomes, often under uncertainty. It is future-oriented because decisions affect the organization’s long-term and short-term goals.