Kanthal Case Study

Main Issues and Overall Scenario General Scenario: Kanthal is a successful and profitable company, a global market leader with many of its products. Nevertheless, the new president thinks that a new strategy is needed to provide a way to further increase profits without increasing costs. The new president believes that the key to the new strategy is to make it possible to understand the true nature (ie cost) of customers and orders. He believes that if the company can accurately relate costs to customers, the company can focus more on improving profitability.

Cantal needs to take measures to minimize the costs associated with non-stock items. The case did not show any evidence that Kantar tried to cut costs. If the company succeeds in reducing costs, the operating margin associated with inventory items will increase. In addition, Kanthal should focus on sales percentage of profit margin, or actual contribution to the company of each order.

Kanthal President's Carl-Erik Ridderstrale has the power to develop a system to measure customer profitability. "Account management system is necessary to achieve higher growth and profitable strategy.As part of the Kanthal 90 strategy, to enable sales managers to promote high growth by using account management system Ridderstrale thinks that it can eliminate the traditional financial accounting category and divide the cost of most organizations into two categories: order related cost and cost Ridderstrale gives the sales manager a profit margin We are committed to undertaking the responsibility to promote high product to high margin customers.It is implemented as part of the new Kanthal 90 strategy.The overall goal is high growth and high profitability.

In traditional costing systems, Kanthal's management believes that selling and administrative expenses are fixed costs, so we can not change, manipulate or use it to affect growth and profitability. Traditionally, Kantar regards S & E expenditure as a period cost and does not assign it to various product lines and customers, but instead charges it. Under the old system, management did not notice that some customers had high demands on the organization, while other customers did not. Therefore, we did not attempt to assign S & A costs to customers or product lines. Therefore, the costs are evenly distributed and the focus of the salesperson is in the quantity rather than the percentage of profit margin or actual revenue contribution of each order to the company.

The motivation for Kanthal President's Carl-Erik Ridderstrale to develop an account management system is to find a process to determine the profitability of individual customer orders. An accurate account measurement system is required to achieve growth and profitability strategies without having to add significant sales and management resources to deal with anticipated sales increases. To implement this strategy, you need a system that assigns administrative fees to customers and products in different categories. & LT; tag / & gt;