(c) Critically discuss the adoption of activity－based management (ABM) in companies such a

Question

(c) Critically discuss the adoption of activity-based management (ABM) in companies such as TOC. (6 marks)

Answer 1

正确答案：
(c) Activity-based management (ABM) is a method of identifying and evaluating activities that a business performs using
activity-based costing to carry out a value chain analysis or a re-engineering initiative to improve strategic and operational
decisions in an organisation. Activity-based costing establishes relationships between overhead costs and activities so that
overhead costs can be more precisely allocated to products, services, or customer segments. Activity-based management
focuses on managing activities to reduce costs and improve customer value.
Kaplan and Cooper (1998) divide ABM into operational ABM and strategic ABM:
Operational ABM is about ‘doing things right’, using ABC information to improve efficiency. Those activities which add value
to the product can be identified and improved. Activities that don’t add value are the ones that need to be reduced to cut costs
without reducing product value.
Strategic ABM is about ‘doing the right things’, using ABC information to decide which products to develop and which
activities to use. This can also be used for customer profitability analysis, identifying which customers are the most profitable
and focusing on them more.
A risk with ABM is that some activities have an implicit value, not necessarily reflected in a financial value added to any
product. For instance a particularly pleasant workplace can help attract and retain the best staff, but may not be identified as
adding value in operational ABM. A customer that represents a loss based on committed activities, but that opens up leads
in a new market, may be identified as a low value customer by a strategic ABM process.
ABM can give middle managers an understanding of costs to other teams to help them make decisions that benefit the whole
organisation, not just their activities’ bottom line.