...Siemens Electric Motor Works Ten years ago our electric motor business was in real trouble. Low labor rates allowed the Eastern Bloc countries to sell standard motors at prices we were unable to match. We had become the high-cost producer in the industry. Consequently, we decided to change our strategy and become a specialty motor producer. Once we adopted our new strategy, we discovered that while our existing cost system was adequate for costing standard motors, it was giving us inaccurate information when we used it to cost specialty motors. Mr. Karl-Heinz Lottes—Director of Business Operations, EMW SIEMENS CORPORATION Headquartered in Munich, Siemens AG, a producer of electrical and electronic products, was one of the world’s largest corporations. Revenues totaled 51 billion deutschmarks (DM) in 1987, with roughly half this amount representing sales outside of the Federal Republic of Germany. The Siemens organization was split into seven major groups and five corporate divisions. The largest group, Energy and Automation, accounted for 24 percent of total revenues. Low wattage alternating current (A/C) motors were produced at the Electric Motor Works (EMW), which was part of the Manufacturing Industries Division of the Energy and Automation Group. High wattage motors were produced at another facility. THE ELECTRIC MOTOR WORKS Located in the small town of Bad Neustadt, the original Siemens EMW plant was built in 1939 to manufacture refrigerator...
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...Background of Siemens Corporation, focused on EMW Siemens Corporation, one of the world largest corporations, specializes in electrical and electronic products. Electronic Motor Works (EMW) is a part of Energy and Automation group, which is one of 7 major groups of Siemens Corporation. It had a wide range of production which contained 200 different types of motors and produced approximately 230,000 motors annually. The standard A/C motors took 80% volume of sale and the rest 20% was from customized motors. Due to an intense competition with a relatively lower price for the standard A/C motors from eastern countries, EMW was losing the advantages. The reason for this situation was high labor rates and inefficient costing system. EMW used to applies the traditional costing system; it functioned very efficiently till the management changed the strategy and moved the core products to customized A/C motors. After changing strategy, for the purpose of enhancing production efficiency, EMW’s production process was upgraded to highly automated equipment with controlled machines, flexible machining centers and robotically fed production processes. Problems and issues identified Main problem caused by changing strategy because of less competitive is that the traditional cost system is unable to illustrate the relationship between the support related overhead costs (non-manufacturing costs) and the change in product mix. Since EMW moved the focus from common A/C motors to customized A/C...
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...Source: http://www.allbusiness.com/accounting-reporting/methods-standards-cost-accounting/498244-1.html#ixzz1nMWBS5qI By Juras, Paul E. ABSTRACT Descriptions of activity-based-costing (ABC) systems have become a standard part of managerial accounting texts. While ABC implementation issues are the focus of a number of articles, these issues are often not addressed in a typical textbook. This case is designed to familiarize you with the behavioral and technical variables that can aid or impede successful ABC implementation. Anderson's (1995) factor-stage model provides a template to organize the discussion of ABC success factors. In this case, you will be cast in the role of a business consultant. You are asked to synthesize the case study's key "change management" insights into a report that could be shared with co-workers in an intranet-based knowledge management system. In addition, you may be expected to prepare a formal presentation of the report for your peers. Implementing change in an organization is about ninety percent cultural and ten percent technical. This is because the organization dynamics, politics, and search for a champion that go on are the real issues that make or break the project. One of the reasons we were able to implement ABC successfully was because the right people became champions. Chris Richards, Director of MIS, Global Electronics, Inc. BACKGROUND Global Electronics, Inc. (GEI), headquartered in Sarasota, Florida, designs, manufactures...
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