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Case Study Robust Laptops

Robust Laptops Co (RL) makes rugged laptops for dangerous environments like the oil and military industries. A new CEO and CFO were appointed due to declining productivity. The CEO wants to update RL's financial management systems to better understand profit issues. An analysis found that overhead costs like contract negotiations and sales requests were inefficient. Management should review these areas or accept directives to improve. A price increase also needs to assess customer and competitive impacts before being implemented. Switching to an ABC costing method could provide useful additional data to improve profitability but requires time and infrastructure to set up properly.

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Umar Khattak
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76 views2 pages

Case Study Robust Laptops

Robust Laptops Co (RL) makes rugged laptops for dangerous environments like the oil and military industries. A new CEO and CFO were appointed due to declining productivity. The CEO wants to update RL's financial management systems to better understand profit issues. An analysis found that overhead costs like contract negotiations and sales requests were inefficient. Management should review these areas or accept directives to improve. A price increase also needs to assess customer and competitive impacts before being implemented. Switching to an ABC costing method could provide useful additional data to improve profitability but requires time and infrastructure to set up properly.

Uploaded by

Umar Khattak
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BUHAAT TEZZ HOGAY HO

CASE STUDY
ROBUST LAPTOPS

CASE HISTORY:
Robust Laptops Co (RL) makes laptop computers for use in dangerous environments. The company's
main customers are organisations like oil companies and the military that require a laptop that can
survive rough handling in transport to a site and can be made to their unique requirements. The
company started as a basic laptop manufacturer but its competitors grew much larger and RL had to find
a niche market where its small size would not hinder its ability to compete. It is now considered one of
the best quality producers in this sector.

ISSUES AT HAND:
For several years, RL had the same finance director who favoured organically designing his
programs. A new Chef (CEO) and a new Chief Financial Officer ( CFO) were nevertheless named
owing to a decline in productivity.
In order to gain clearer details on the benefit problem, the CEO needs to update RL's financial
management systems.
FACTS AND FIGURES:

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BUHAAT TEZZ HOGAY HO

This difference in costs shows that the order is currently substantially below the price. The key
components of the overhead were the time spent arguing about the contract and the amount
of sales requests to be raised. These two areas of operation should be checked by RL 's
management to figure out whether they are more effective. If not, management should accept
reproofing directives like this.
However, before price increase, the management of RL must assess the impact on customers
and the competitive position of RL of any price rise. It may be doubtful that consumers would
consider a price spike of 25%, as the figures indicate.
A move to an ABC method could be assured because an ABC system , especially on the cost of
goods and pricing that could assist profitableness, would offer useful additional cost data. ABC
systems will also require time to obtain the required data volumes and the correct
infrastructure to facilitate this method. A cost-benefit comparison between the added expense
of installing this program and the additional value of the data generated will then have to be
carried out.
ALTERNATIVES:
The alternative of an company are the organizational priorities to be accomplished. For
example, RL may set a financial goal to increase operating profit by five percent in the coming
year, or it can set an objective to ensure its market share remains constant during the coming
year.
Similarly, one of RL 's alternative may be to insure that technical advances are preserved and
integrated in its laptops and that it retains its credibility for efficiency.
RECOMMENDATIONS:
RL 's output should normally be assessed by its financial statements and financial performance
metrics should generally assess progress rather than aid. In the opposite, many of the
considerations that guarantee performance (CSFs), such as consistency or durability, are non-
financial. When such factors are critical elements in RL 's effective accomplishment of its plan ,
the organization can therefore calculate its plan. In comparison to them, results.
While the Chairman of the Executive Committee didn't directly discuss the possibility of
implementing a multi-dimensional performance assessment method, such a framework would
illustrate the interaction between non-financial and financial results in the manner he suggests.

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