Management Accounting

Date: |  08th.Mar. 2016 | CEO: |   Niraj Krishna |

COHORT NAME & Group No: |  6 | Group Members: |  Anjana Sharma, Bhavana Menon, Ashutosh Bhardwaj, Mohd. Aariz Ali, Kasi V. |

Question 1:

How has Schwab’s strategy evolved over the years? How have these changes affected its information needs? Have the different versions of the profitability analysis system (MUSE, MUSE-II, PAS) satisfied these needs?

Answer:

Charles Schwab Corp was founded in 1971 by Charles Schwab. The company used the technological advantage such as phone trading and online trading, which helped it to maintain their dominance in the market. Schwab also introduced OneSource, which offered no-load mutual funds thereby attracting customers who relied on investing in mutual funds in place of individual stocks.

The company decided to go back to its core business of service to individual investors after it saw a downfall in 2000. To achieve this target Schwab accelerated Cost Leadership Initiative to become a competitor in Market. The Company was divided into 3 segments – the Individual Investor, the Institutional Investor and U.S Trust, offering a broad range of services.

The company also added advisory services which added a significant source of company’s revenue. Schwab introduced branches which offered a face-to-face service to the customers.

To meet financial targets, Schwab implemented 3 cost analysis systems which helped them in decision making.

MUSE

It concentrated on products and was used to find which all products were running unprofitable for the company and had to be eliminated/discontinued or had to undergo a pricing and process redesign. It also demonstrated the need for customer segment analysis.

MUSE-II

This system, which applied the concepts of activity-based counting, was more technically advanced than MUSE and impacted managerial decisions. It provided flexibility to the users with the reporting facilities and access to raw data which...