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2016/2017 KAN-CCMVV2604U Strategic Cost Management and Corporate Value Creation
| English Title | |
| Strategic Cost Management and Corporate Value Creation |
Course information |
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| Language | English |
| Course ECTS | 7.5 ECTS |
| Type | Elective |
| Level | Full Degree Master |
| Duration | One Semester |
| Start time of the course | Autumn |
| Timetable | Course schedule will be posted at calendar.cbs.dk |
| Max. participants | 60 |
| Study board |
Study Board for MSc in Economics and Business
Administration
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| Last updated on 19-04-2016 | |
| Learning objectives | |||||||||||||||||||||||
To achieve the grade 12, students
should meet the following learning objectives with no or only minor
mistakes or errors:
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| Course prerequisites | |||||||||||||||||||||||
| The course is targeted at second year master students (at CBS) from one of the following specializations: AEF, ASC, FIR, FSM and FIN. The students are expected to be familiar with costing models and discounted cash flow (DCF) firm valuation techniques. Active student participation is expected during classes. | |||||||||||||||||||||||
| Examination | |||||||||||||||||||||||
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| Course content and structure | |||||||||||||||||||||||
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Chief Financial Officers (CFOs) are increasingly expected to act as business partners who take an active part in strategy development alongside executive management. Consequently, the required capabilities of the CFO and the finance and accounting staff are expanding beyond the traditional domains of bookkeeping and cost controlling towards more future-oriented analysis of the business and financial as well as non-financial drivers of shareholder value.
During this course students get to work with cost, profit and value creation tools and techniques which can help provide a fact-based financial foundation for strategic decision making. The pivotal element throughout the course is to establish transparency on the financial impact of the firm’s strategic options in terms of current and future profitability. This is achieved through quantitative analyses of costs, profitability and value creation potential across the firm’s activities and business environment. The firm’s strategic options can hereby be linked to corporate value and the amount of value created to shareholders – a key objective in many commercial enterprises and therefore a key area of interest to many boards of directors. Hence, the course combines the strategic cost management techniques of accounting, with the valuation and value-based management framework.
The course is structured around two main building blocks and the key themes are as follows:
Introduction: The Strategic CFO as a financial business partner to the organization
Strategic Cost Management
Corporate value creation
Wrap-up: What makes a successful financial business partner?
The frameworks, tools and techniques presented and discussed in this course are relevant both to students who envision a career in finance & accounting departments and to students with an ambition of pursuing a career in management consulting.
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| Teaching methods | |||||||||||||||||||||||
| The course is conducted in 3-hour lecture form, albeit with extensive use of cases. Cases are carefully selected to provide students the opportunity to actively work with “number-crunching” for costing, profitability and valuation analyses. Hence, during case discussions there will be an emphasis on understanding how the quantitative elements in terms of revenues, costs and financial value creation potential contribute to inform strategic decisions. The lectures are mainly conducted by academic staff. However, a number of external guest speakers from management consulting and finance/accounting departments have been invited to provide a practice-oriented perspective on the issues discussed in class. | |||||||||||||||||||||||
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| Expected literature | |||||||||||||||||||||||
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The course literature consists of academic articles and cases. Below are a couple of examples of academic articles that will be included. More will be added prior when the course starts. In addition to the academic articles a case pack with the case studies that will be covered in the course will be announced prior to course start as well.
Key academic articles: Shank & Govindarajan (1992): “Strategic Cost Management: The Value Chain Perspective”, Journal of Management Accounting Research
Cooper & Slagmulder (2004): “Interorganizational cost management and relational context”, Accounting, Organizations and Society
Noreen (1991): “Conditions Under Which Activity-Based Cost Systems Provide Relevant Costs”, Journal of Management Accounting Research
Balakrishnan, Labro, and Sivaramakrishnan (2012): “Product Costs as Decision Aids: An Analysis of Alternative Approaches” (Part 1 & 2), Accounting Horizons
Kaplan (1997): “Using ABC to Manage Customer Mix and Relationships”, Harvard Business Press
Slater & Olson (1996): “A Value-Based Management System”, Harvard Business Press
Cooper & Slagmulder (1999): “Integrating activity-based costing and economic value added”, Management Accounting
Burkert & Lueg (2013): “Differences in the sophistication of Value-based Management – the role of top executives”, Management Accounting Research
The following book can be recommended as supplementary reading (not mandatory) to establish a thorough understanding of the Value-Based Management framework:
Copeland, Goedhart & Wessels (2010): “Valuation: Measuring and Managing the Value of Companies”, Fifth Edition, McKinsey & Co. |
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