Case Teaching Package
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 8 pages in length and its case teaching package is 8 pages.

Abstract

This case is set in 1983 and deals with dyestuffs for textile manufacturing, a well known example of an American industry that is well past its prime. The subject is product line profitability.

This live (but disguised) case illustrates two key ideas in strategically-based cost analysis and control. The case is part of the effort to adapt the traditional body of knowledge called cost analysis to the rapidly developing body of knowledge on strategy formulation and implementation. The primary rationale for cost analysis has always been decision relevance, as evidenced by the well-worn catch phrase "relevant cost analysis." As thinking evolves about the strategy formulation and implementation process, relevant cost analysis must take strategic analysis more fully into account. This is a new thrust in managerial accounting, but one which is likely to receive increased attention in the future.

In particular, this case illustrates two ideas: (1) the use of cost analysis to identify the differing strategic positions of three products of a large chemicals manufacturer, and (2) the use of differentiated management controls focusing on the differing key success factors for the differentiated strategies for the three products.

Linkages to Textbooks or Journal Articles/Fit Within a Course

We use this case near the end of the Management Accounting course because it considers "management control" issues as well as "cost analysis" issues. We don’t explicitly introduce control topics until the second half of the course. This is a good review case for both cost analysis and management control.

Study Questions

1. Was the Trubrite dyes product line "successful" in 1983? What measure of success do you consider to be most appropriate?
2. Does this product line meet the "Performance Factor" standard set by Monarch?
3. How do you reconcile the use of a performance standard based on return on assets with the strategic objective of this business which is "distribute cash generation"? Can you suggest better "management control measures" for Trubrite dyes?
4. Do you believe that pricing is appropriate for the three dyes as of 1984? Consider each dye separately, as well as the overall pricing strategy. Calculate the expected profit impact of any pricing changes you believe appropriate.
5. Evaluate the overall strategic position of the Trubrite dyes in 1984. What strategic issues seem critical at this time?

The downloadable file for this case is in Microsoft® Word 7.0 for Windows®.

If you do not have Microsoft Word, you can download the free Microsoft® Word Viewer 97 right here:   For Windows 3.x   For Windows 95

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