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value chain functions

Scenario:

You have been hired as a consultant for JetSet Travel, Inc. (JTI), a company which develops, manufactures, and sells a wide range of travel-related equipment and products.

The company expanded its luggage production this year and invested much of its manufacturing funds into the initial manufacture of a lightweight, yet durable line of luggage. JetSet Travel put many of its research, development, and marketing dollars this year into a breakthrough over- the-counter tablet which prevents jet lag for 98% of adult users.

You were hired to provide the analysis and advice which will help the upper level management make critical decisions to reduce costs and increase profit. In the following months, you will use your accounting skills to assist company leaders by projecting profits, focusing product lines, providing capital budgeting analysis, and making recommendations for containing costs.

PROBLEM:

JetSet Travel, Inc. (JTI) has been hugely successful in the distribution of stylish, comfortable shoes for travel. JTI sells its products to approximately 4000 retail accounts in the United States and a mix of independent distributors, licenses, and subsidiaries in 35 countries around the world. Most footwear products are produced outside the United States.

Identify one decision that JTI managers must make in each of the six value chain functions for this product. For each decision, identify one piece of accounting information that would aid the manager's decision. Next, write 5 questions that can be answered by accounting information. For example, "How many shoe styles should JTI produce for next year?" or "Where are the sales trends declining?"

**PLEASE LIST REFERENCES FROM ANY OUTSIDE SOURCES ALONG WITH WEBSITES WHERE INFORMATION WAS FOUND FOR PROPER CITATION**

Thank you

Solution Preview

Identify one decision that JTI managers make in each of the six value chain functions.

For each decision in requirement 1, identify one piece of accounting information that would aid the manager's decision.

The six value chain functions are:

1) R&D

It is the process that is conducted to generate and experiment with ideas related to new products, services, or processes. R&D department can look at information regarding operating expenses to identify weaknesses and errors in terms of processes, operations,etc. and can improve those processes for increasing bottom line profits. Similarly, trends in sales revenue also guide the R&D department to continuously seek improvement in existing products as well as develop new products. For example, if sales in a particular product line of JTI is decreasing, R&D managers of JTI can look for factors that can improve the sales.

2) Design: It is the detailed planning and engineering of products, services, or processes.

Design is particularly interested in accounting information related to sales, operations, processes and systems and look for figures presented in the profit and loss statement to capture trends regarding productivity, efficiency, etc.If the sales are decreasing, they will bring the desired changes in products or services to enhance revenues. If the operating expenses are increasing, design evaluate alternatives to improve efficiency of operations. Some of the other aspects which design looks are in accounting figures are those related to procurement or purchasing costs,costs of raw materials,etc. For example, if input costs or cost of operations are rising, JTI managers in charge of the design process can look for improvement in supply chain processes and other operations.

3) Production: It is the acquisition, coordination, and assembly of ...

Solution Summary

Identify one decision that JTI managers must make in each of the six value chain functions for this product.

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