Lecture 24 - Open book accounting Flashcards
(!!!!!!!!!) What is open book accounting / OBA in general?
General:
- Changes to lower cost > Squeeze prices
- Share product, activity & process cost info in relationship
- Seek supply chain improvement
- Number help discussion
- Give transparency
- Foundation for change
- Important for win-win solution
- Numbers as starting point
- Number accuracy not important: Self-regulating mechanism: Dont wanna get caught cheating. Must account for calculation
- Improve cost efficiency of supply chains
- Build trust in customer-supplier relationships
- Collective estimate of feasibility of potential changes
- Reveal other than invoice price
- From reading numbers to constructing & interpreting them
- Make cost improvement possible
- Often small firm giving info
- Key role of IO CM
- Can signal commitment to mutual development
- Costing template, representator of organization control or both
- Multi-goal nature as template
- Element of MCS, but not MCS
- Personal relations as override formal control techniques
- Placed in interpretive quadrant in Hopper & Powel framework
Usages:
- Price negotiations
- Communicate objectives
- Product development
- Keeping suppliers alert
- Setting economic logic agenda
(!!) Describe OBA benefits
General:
- Organize between firms
- Redefine firms themselves
- Dont squeeze suppliers
- Overcome firm distance
- Keep outsourced prod. in sight
- Improve flexibility
- Efficient planning procedures
___________
Contextual factors:
Exogenous environment factors:
- High competition: Reduce cost
- Growth trend
- Cost reduction not urgent
Network-specific factors:
- Mature & hierarchical network
- Functional products
- IO support in cost accounting
- Mutual trust: Not coercive
Endogenous firm-specific factors:
- Large firms: Finance commitment
- Accurate cost data
- Cooperation policy
- Long-term commitment: Trust
(!) Describe reasons for not implementing OBA
General:
- Cost data confidential & sensitive
- Often squeeze supplier prices
- Often unequal cost save share
- Often interrelated
- Debatable
Reasons:
- No win-win solution: Supplier get no extra benefit
- Supplier wanna keep info in house: Perfect market idea
- Dont wanna share inaccurate data. Awareness of weakning & misleading costing
- Suppliers afraid info on cost structure is used against them
- Supplier lack resource or support from main contractor for system
- Disagree on OB implementation: Eg. Position & status in network
- Never trust numbers at face value
Describe Actor network theory / ANT in general
General:
- Analyze knowledge creation
- Human & nonhuman actors
- Not always supplier need change
- Complex to hold together
- People often influenced by stuff outside themselves
- Non-human actors can appear out of the blue
- Answer weakness identified earlier in course
- Both accounting as technique & influence network interaction
- Need AS, transfer prices & system of taxes & duties
- Eg. Computer with performance influence on people
Heterogenous actors:
- Human: People
- Nonhumans: Machines & IS´s
MC as MA technology:
- The network boundary
- Network as stable entity: Not firms. Partners come & go
- MA as active actor: Free focus to prod.
- Third party in IO relationships
- Provide power to network
- Framing device in IO relations
- Trustworthy since calculable
- Durability in network relations
- Directly influence relation: Not mental maps or shared meaning
- Question existing arrangements
- More than the parties
(!) Describe a network in general
General:
- Cooperation > Competition
- Relate independent firms
- Cannot be ruled
- Unstable & fragile: “Always in the making”
- Sharing info & resources: Not goals
- May share risk & costs
- Partners come & go, network enterprise continue
- Partners alert since replaceable
- Useful in uncertain environments
- Extend firm capabilities
- Accounting as actor
- Attractiveness may be due to partners sub networks
- Paradox: Flexible, not-hierarchical & agile, yet conflicts on absence of trust
- Not just about buyer & supplier
- DM unit larger than firms isolated
- Boundary perspective dependent
- Contingency view
- Characterized by access to resources & agility
- Useful when strategi change faster than capabilities develop
- Focus on strategic, learning, competency & structural implications of collaboration
- Socioeconomic > Economic
- Network not fixed set of firms, instead MC arrangements
- Management control technology
- Important trust & knowledge on partners competencies
- Manage conflict between goals & aspirations of network enterprise
- Ideology set rules for behavior
- Problematic to separate market, bureaucratic & relation control: Be in network both bureaucratic control & being part of network
Ideology:
- Cooperation
- Direct interaction: Based on trust & fast communication
System supplier:
- Supplier firm purchase important & unique products from
- Often part of product design
- Interest in managing their costs: Ref. OBA
___________
Open/Focal relationship:
- Interdependent with relations
- Change in one relation affect company & other relations
Closed system:
- Network defined by end-product
- Can be member in more network
- Compete with other end-product networks
- Ref. Kajüter & Kumala
(?) What is the theoretical foundation of OBA?
Early contribution:
- Transaction cost economics: Used to explain how to organize
- Contingency Theory: Trust vs. control
Later contributions:
- Theories placed in interpretive or critical paradigm
- Focus on OBA-process & its impact on parties cooperation
Describe the inter-organizational & intra-organizational effects
General:
- Objects for control
- Awareness of non-human actors highlight poss. change
- Maybe new engineers fit better
- Engaging w. others change us
- Important questions about centres, peripheries & who was able to act on others
Inter-organizational effects:
- Translating outsourced process into productivity
- OB & functional analysis as obligatory passage points
- Allow evaluation & control
Intra-organizational effects:
- Unexpected
- Translate firms strategy, competence, tech. & product
- Discuss how things are done
- Highlight internally aligning & organizing company to IO flows
- Both effect & affect of change
- Firm must adapt to choices
(?) Describe motives for IOCM
General:
- From short to long term benefit
- Highlight multi-goal nature of OBA as template
Motives:
- Reduce ST component cost
- Revise price of supplier portfolio
- Finetune operating policies related to supplier-customer relationships: E.g. delivery rate
- Agree on cost objective
- Demonstrate mutual commitment: OBA as a collaborative exercise
Describe different IO MCS
- Open book accounting
- Functional analysis: Element of target cost management
- Lean enterprises
(!) What is contingency costs?
- Ensure funding projects unknowns
- Due to uncertainty
(!!) Describe the two management technologies in MA as active actor
General:
- Technologies for MC
- Act as C in A-B interaction
Orchestration mechanisms:
General:
- Framework for work
- Network with common objective
- Boundary & rules for interaction
- Map who does what
- Often annual
- Who we want part of network
- Partners may not benefit equal
- Transform & recreate network
- Money & investment addressed
- Risk conflict since not trust
- Manage knowledge
- Enhance network relation
- Rethink what relation is about
- Keep ask questions: Relation, world, customers & network users
- Network more than partner firms
- Narrow handled in time & space
- Require network enterprise management entity to describe, segment, evaluate & direct resources
- The “Game”
Effect:
- Enable strategizing, change & boundary spanning
- May be in conflict since aware of individual collective interests
Problem:
- Lack developing new complementarity relations
Examples:
- Play Ludo since rules agreed on
- Competency management: Map
- Test for partner screening
- Technology mapping
- Segmentation of partner firms to eliminate internal competition
- Fairs to find partner resources
- Make self-regulating mechanism
____________
Self-regulating mechanisms:
General:
- How we work
- “Frictionless” network interaction
- Allow unhindered interaction
- Stabilize flow of interactions
- Sharing > Exchange
- Auto. flow of financial & distributional effect of network
- Financial effects of cooperation decided in advance
- Typical yearly meeting to debate
- Put price on knowledge resources: Price, fee or tax
- Facilitate asking for help
- Produce kind of trust in system
- Knowledge & competencies > Financial relation
- The “Play”
Effect:
- Enable interaction to commence & to develop projects
- Reduce conflict, free riding, competition & install incentives
- Provide transparency & predictability in financial flows
Problem:
- Lack aid & facilitate use of already identified complements
- Lack to avoid concerns on distribution of financial funds
Examples:
- Transfer prices: Pay if helped
- Segments of preferred partners
- Fee to network centre: Eg. Use of software
- Taxes
Describe implications for MA
Implications for MA:
- MA as media for negotiation: Boundary between parties
- Info from negotiations not brought into firm at face value
- Info challenged & interpreted before use in further process
- Accountant must be active part of negotiation, not just number
- Presence & structures of MA not sufficient alone
(!) Describe the CALC of OBA
- CALC: Range must be narrowed
- CALC: Poss. substitutes on workers
- CALC: Maybe let customer carry risk
(!) Describe the business logic dialogue
Business logic dialogue:
- Partner do not act like we want
- Important “fire back” to partner: Eg. numbers
- Communicate “trouble costs”: Cost if 2 prints instead of 1
- No discussion possible without
- Risk lose power without debate
- Accountant job to fight with numbers & arguments
- Construct relation of parties
- Important to constantly respond to reactions
