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Company XYZ operates a chain of bakeries in Canberra thatspecialises in supplying a range of cakes
to restaurants and coffee shops. Major products include lamingtons,scones, and custard tarts. Until
last year, sales levels fairly stable. However, sales have beendecreasing for the last 18 months. John
Brown, the marketing manager of Company XYZ, is worried, and hasvisited major customers to find
out the reasons for their decreasing sales orders. The comments ofthe owner of one of the most
popular Canberra Coffee shops sum up the general response: ‘John,your style of cakes is oldfashioned.
They are not what people want any more. Our customers preferlighter, tastier food. They
want variety and are willing to pay more for high qualityinnovative creations’.
At a recent meeting, Brown stated that the company should expandits product offerings, or there
may be no future for the company. Specifically, he believes thatthere are untapped markets for
gourmet pies. The managing director is uncertain; he states: ‘Ireally don’t think that we can afford
to invest time and money into fads. We sell cakes, we are not agourmet caterer!’ Brown points out
that it is these new items that customers are asking for, so itmakes sense from a strategic point of
view to develop these products. However, the managing director istill uncertain: ‘I have no idea
whether we are going to make a profit this year, and cash is alwaystight. We don’t need strategies, I
prefer to just sell good products’.
Slick understands why the managing director is resisting his pleato be more innovative with
products-the bakery has been producing the same line of cakes for30 years. Brown also knows that
there has never been any formal planning undertaken within thecompany, or consideration of
objective or strategies.
Required:
1. John Brown has asked for your help. As the new managementaccountant, prepare a report
for the managing director outlining the advantages of implementingprocess to determine
organisational objectives, strategies and planning systems.
2. What types of information do you think may be of interest toBrown and the managing
director? Consider both financial and non-financial