Chapter 1
Managerial Accounting and the Business Environment
Lecture Notes

Chapter theme: This chapter serves four main purposes. First, it explains the differences and similarities between financial and managerial accounting. Second, it describes the role of management accountants in an organization. Third, it explains the basic concepts underlying Lean Production, the Theory of Constraints (TOC), and Six Sigma. Fourth, it discusses the importance of upholding ethical standards.

I. Globalization

A. Import/Export Data

i. Imports into the United States (in billions)

1. The data reveal an enormous increase in import activity from 1990 to 2004. In particular, imports from Canada, Mexico, and China skyrocketed.

ii. Exports from the United States (in billions)

1. The data reveal an increase in exports to Canada and Mexico. Interestingly, the increase in exports to China pales in comparison to the growth rate in imports from China.

iii. Internet Usage

1. The internet fuels globalization by providing companies with greater access to geographically dispersed customers, employees, and suppliers. 2. The number of internet users more than doubled during the first four years of the new millennium. 3. As of 2004, more than 87% of the world’s population was still not connected to the Internet. This suggests the Internet’s impact on business has yet to fully develop.

Strategy

2 Definition

iv. A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.

3 Customer value propositions

v. Companies that adopt a customer intimacy strategy strive to understand and