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Introduction to Cost and Management
C H A P T E R
L E A R N I N G O B J E C T I V E S
After completing this chapter, you should be able to answer the following questions:
1
How do financial and management accounting relate to each other?
2
How does cost accounting relate to financial and management accounting?
3
What is the role of a code of ethics in guiding the behaviors of an organization’s global workforce?
4
What factors have influenced the globalization of businesses and why have these factors been significant?
5
What are the primary factors and constraints that influence
organization’s strategy and why are these factors important?
6
How does an organization’s competitive environment impact its
strategy and how might an organization respond to competition?
7
How does the accounting function impact an organization’s ability
to successfully achieve its strategic goals and objectives?
8
Why is a company segment’s mission affected by product life cycle?
9
What is the value chain and why is it important in managing a business?
A B N A M R O
INTRODUCING B a n k
he Netherlands-based bank, ABN AMRO, was
formed in 1990 when Algemene Bank Nederland
merged with Amsterdam-Rotterdam Bank. Following the
merger, ABN AMRO has established itself as a global bank
with operations in 76 countries and territories including
the United States, where the bank has a 16% share of the
Midwest market. ABN AMRO’s global expansion was driven
initially by mergers but more recently by innovative webbased
delivery of products and services.
By traditional measures (such as its $505 billion in assets
and its capital position), ABN AMRO is the largest
bank in Holland, the fourth largest in Europe, and the
eighth largest in the world. ABN AMRO’s core lending
business is solid. Over half of ABN AMRO’s revenues
come from Dutch clients—a very stable source of business
that includes such companies as Royal Dutch Shell, Philips
Electronics, and Unilever.
ABN AMRO formulated an identity statement in 1992
to reflect its corporate aspirations: “ABN AMRO Bank is a
long-established, solid, multi-faceted bank of international
reputation and standing. We will strive to fulfill the bank’s
ambition in being a frontrunner in value-added banking,
both on a local and worldwide level. . . .” The corporate
values statement was formalized in 1997, although the
values have been important priorities since the bank was
established in the 1800s. The four values forming the basis
of the bank’s activities are integrity, teamwork, respect,
and professionalism. Bank managers believe that the values
need to be formalized even though they are and should
be self-evident. The formalization provides external parties
criteria by which the bank can be assessed. ABN AMRO
perceives its corporate identity and values as the underlying
tenets of the organization.
ABN AMRO is successfully pursuing a corporate identity as a “bank of international
reputation and standing.” ABN AMRO was ranked as the fifth largest commercial
and savings bank and the seventy-third largest corporation in the 1999 Fortune
Global 500. The corporation (with its foreign subsidiaries and affiliates) is comprised
of over 3,500 branches and offices in 76 countries and territories across five
continents. Although international trade was once confined to extremely large corporations
such as ABN AMRO, the explosion of World Wide Web usage has enabled
any business with the right infrastructure capabilities and the necessary funds
for Web site development to market its products and services around the world.
Organizations operating globally face three primary challenges. First, managers
must understand factors influencing international business markets so they can identify
locations in which the company has the strengths and desire to compete. Second,
managers must devise a long-term plan to achieve organizational goals. Third,
the company must devise information systems that keep operations consistent with
its plans and goals.
This chapter introduces cost accounting and describes the global environment of
business, international market structures, trade agreements, e-commerce, and legal and
ethical considerations. It addresses the importance of strategic planning and links
strategy creation and implementation to the accounting information system. The
chapter discussion applies equally well to large and small profit-seeking businesses,
and most discussion is appropriate for not-for-profit and governmental entities.
SOURCE: www.abnamro.com/profile; Chris Costanzo, “ABN AMRO Says Web Will Anchor Its Expansion,” American Banker (December 9, 1999), p. 16.
INTRODUCTION TO COST ACCOUNTING
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