Chapter 1 Lecture Notes Chapter theme: This chapter describes the larger business environment within which management accounting operates. It is divided into nine sections: (1) globalization, (2) strategy, (3) organizational structure, (4) process management, (5) the importance of ethics in business, (6) corporate governance, (7) enterprise risk management, (8) corporate social responsibility, and (9) the Certified Management Accountant. I. Globalization

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A. Import/Export Data i. 2 Imports into the United States (in billions) 1. The data reveal an enormous increase in import activity from 1995 to 2007. 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. 4 Internet Usage 1. The internet fuels globalization by providing companies with greater access to
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geographically dispersed customers, employees, and suppliers. 2. While the number of internet users continues to grow, as of 2008, more than 78% 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. II. Strategy

A. Definition 5 i. A strategy is a ―game plan‖ that enables a company to attract customers by distinguishing itself from competitors.

B. Customer value propositions i. Companies that adopt a customer intimacy strategy strive to understand and respond to individual customer needs better than competitors. Examples of companies that pursue this strategy include: 1. Ritz-Carlton, Nordstrom, and Starbucks. 6 ii. Companies that adopt an operational excellence strategy strive to deliver products and services faster, more conveniently, and at a lower price than