Abstract
M.Com. (Business Management)
Large organisations, such as banks, compete through a variety of products, geography and services dimensions (Stenzel & Stenzel, 2004). Firms achieve sustainable competitive advantage if they are able to generate higher economic profits relative to competitors in the long-term. Market economics combined with relative strength in market and cost structure positions enhances the ability of a firm to generate superior economic profits (Besanko et al, 2004). Determining the use and allocation of investment resources is one of core and critical task strategic activity for management in a large firm. Firms use management accounting information to determine product profitability, understand cost drivers and the implication of investment decisions on the overall products and markets performance.
This reports come from the premise that the extent use, accuracy and deeper understanding of management accounting information is crucial for strategic management of the firm. Product cost systems produces the cost side of this management information and thus its use can have a far-reaching implications for the firm.
The study explores the various usage of product costs information and position product costing system in the context strategic management. The main of the study is to determine the key factors that management should consider when selecting a product cost system This was achieved by a comprehensive discussion of each product cost system type and implications of the cost associated with each product. Furthermore, the product cost systems are discussed in terms of the level of sophistication which increases or decrease the level of product cost system design complexity. The theoretical foundation was applied in the South African banking industry to practically illustrate the problem in the real-world, the importance of the study; demonstrate the complexity of product cost system in two-sided markets as well as implication of implementing an incorrect system.
The research questions were tested and answered using quantitative techniques. Data was collected from a sample which represented the big four banks in South Africa primarily using a questionnaire. Purposive sampling technique was used.