"The Cost of Complexity" Please respond to the following: * Read the article titled, “The Missing Metrics: Managing the Cost of Complexity,” located in Week 4 of the online course shell. You may also view the article at http://www.financepractitioner.com/contentFiles/QF02/g26fs3i7/16/0/the-missing-metrics-managing-the-cost-of-complexity.pdf. Next, in a globalized economy with many business complexities, speculate the major ways that these complexities might impact a business and suggest two (2) actions that a business can take in order to minimize these consequences. * From the previous discussion, recommend one (1) approach that an accountant could take in order to measure the types of complexity you identified for a specific business or industry and determine the insight that the measure will provide in relation to business performance.
Part 1:
There are several major ways that the complexities of a business in a globalized economy might impact that particular business. These complexities can add significant "hidden" costs within a company that generally cannot be seen through the production process, but often come up in the month, quarter, and year end statements. These added costs will generally arise within a company when they are trying to grow their revenue in an already mature market. An example of this is when a company wants to add a new product to sell and expand their share in a specific market. By creating a new product there are significant costs that may only gain a small portion of revenue, hardly growing the company thus creating more cost for only slight benefit. Another example comes from mergers and acquisitions. If one of the two companies already has major complexities that could lead to significant cost problems from the merger. These cost complexities can be detrimental to a business. The good news is that these cost complexities