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    Performance measures for evaluating value chain

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    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.

    Deliverable Length: 4-6 paragraphs
    JTI's CEO wants you to implement performance measures for evaluating the performance of each aspect of the value chain. Based on all you know about JTI and its many products, divisions, and operations, what performance recommendations would you make for each aspect of the value chain? What accounting tools and reports would you use?

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    Solution Preview

    Various aspects of the value chain can be evaluating in a different manner. For example, the performance of R&D on the new over the counter tablet can be evaluated by looking at metrics like ranking of the product as compared to benchmark products or market leaders, number of unique product features, etc. Similarly, its already established products, such as luggage, can be evaluated by using metrics such as net revenues per unit, etc. The marketing and advertising efforts of the company can be evaluated by using metrics such as return on advertising investments, promotion cost as percentage of sales, results of customer survey regarding product ...

    Solution Summary

    Performance measures for evaluating value chain