The economic paradigm in management account research: an empirical study about economic results in different management accounting profiles

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The economic paradigm in management account
research: an empirical study about economic results in
different management accounting profiles


Fábio Frezatti, PhD

University of São Paulo


Abstract

Like any other investment alternative, the effort to provide
management accounting tools for
the entities exerts an impact: it requires money. Considering the traditional investment
decision perspective, the benefits of management accounting artifacts may be less evident
than other alternatives. This may be due to t
he power of the economic paradigm, which is
much more difficult to apply to management accounting tools due to the fact that the entity
knows how much to pay but may not have a clear perspective on the economic benefit. If the
investments require resources

and there are different and competitive alternatives, when the
benefit is harder to identify, in the economic and/or qualitative sense, acceptance is more
complex. Thus, research to provide evidences on the efficiency of this kind of investment is
crucial
. For a long time, discussions about the efficiency level of management instruments
were essentially based on directly obtained results, which is extremely hard to demonstrate
according to the rules of “tangible” perspectives. This study aims to analyze en
tities’
conceptual framework adherence, with different levels of success in obtaining return for the
stockholders. The resulting database allows the researcher to try to associate variables and
suggest some kind of relation between management accounting pr
ofiles and level of return on
equity. In this sense, it was observed that organizations with higher return rates focused more
on tactics and control than on strategic tools.


Keywords: management accounting, management practices, Brazilian companies.


The

authors want to register his gratitude for the support provided by CNPq and FIPECAFI
for the project that originated this paper.


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Introduction

Zimmerman (2001) and Lukka & Mouritsen (2002) developed interesting and distinct points of
view on management a
ccounting. Zimmerman offers the pragmatic view of “
positive
accounting
”, which identifies the utility paradigm based on the economic view. In other words,
information is valuable when it exerts an economic impact. Lukka & Mouritsen, on the other
hand, crit
icized Zimmerman´s approach, the monoparadigm, as an important risk for the
development of management accounting research, due to the fact that Zimmerman proposed the
classification of elements that could not be included in the economic paradigm as outside

the area
of interest, which means they should not be included in studies.

The main point of Lukka &
Mouritsen´s arguments is much more
“how”

entities perform their activities than the approach
focused on
“whether”

events can be verified. The
“how”
approac
h has efficiently been treated,
mainly in case studies. This research considers that the
“how”
approach alone does not stand
without at least a partial solution of the
“whether”

analysis.
It means that the tools (elements)
should only be recommended if the
y “seem” to be useful or to exert an economic impact on
internal agents.
On the other hand, the
“how”

response has to be dealt with when focusing on the
benefit for entity performance.

Consultants insist that they have the solution to the company problems.

Their discourse has to be
strictly pragmatic, seeking consistency and trustworthiness. Otherwise, they would not survive.
Researchers, on the other hand, look sceptically to the news, but they know that agents in their
market expect a dynamic approach, of
fering answers to questions related to instruments’ utility
and efficiency.
As a result, in various cases, no
-
win situations are observed.
This occurs because,
with respect to management accounting methodology, empirical studies are in a stage in which
man
y things still have to be proved according to academic rules that are acceptable in other areas
but not equally applicable in management accounting. Consequently, due to the state of the art of
management accounting, extreme positions are equally useless.
Differently from economy,
finance or financial accounting and as an intrinsic part of its focus of interest, management
accounting has a lot of limitations in terms of population size, internal data reliability and distrust
by internal respondents about th
e usefulness of empirical research, which makes researchers´
lives hard and often frustrating. In an extreme situation, if strictly guided by Zimmerman’s
approach, management accounting research is restricted by the peculiarities and the relative

3


scarcity
of critical mass available. In this sphere, the contribution by Lukka & Mouritsen comes
up and demands an important reflection and chance of wider field research.

In some cases, when possible, positive pragmatism can be mixed and adjusted with a certain le
vel
of tolerance, which can allow for future knowledge progress. Stockholders and managers see
investment as necessary to obtain future benefits and the management team has to demonstrate
the corresponding return. Investments in intangible assets such as i
nformation systems, strategic
planning, Balanced Scorecard System, for example, are not easy to discuss from the perspective
of future return. When confronted with other kinds of assets, the idea of usefulness is very
complex and abstract. In some cases, t
he maximum that can be aimed for is the comfort of
perception. Managers know that one element is not sufficient to guarantee success, but they also
know that, without it, many organizations simply cannot be managed. Bhimani (1993) considered
that the organ
ization, to survive and run successfully in the permanently competitive
environment, partially depends on the availability of information to enable managers to act. If
this is true, why should we not try to identify organizations’ economically successful
p
erformance and analyze their
construct

in terms of adherence to the conceptual framework of
management accounting? It is not the first time that this kind of study is prepared and
methodological questions are vital for the credibility and clearness of the
analysis in order to
identify useful associations. It is fair to say that when the authors treat performance, they are not
necessarily considering only several different versions of income, EVA or EPS for example.
They may refer to specific and even non
-
mo
netary elements too. Among others, the following
papers can be mentioned, which tried to associate the utilization of management accounting tools
with performance:



Chenhall and Langfield
-
Smith (1998) found an association between what they called the most
a
dvanced management accounting tools (Activity Based Costs/Management, strategic planning,
benchmarking, etc) and entities’ performance measured by a set of financial and non
-
financial
elements;



Abernethy and Lillis (1995) discussed the use of manufacturing

measures in management
control and their impact on performance, and found they were linked up. For them, performance
is a group of elements, including cost efficiency, flexibility and quality; and



Perera and Poole (1997) went ahead with Abernethy e Lillis
’s research and found no evidence
of any link between metrics and performance.


4




In order to organize and guide the analytical rationale, this paper proposes the following research
question:
Does exist any linkage between the level of conceptual adherence
to management
accounting in medium and large
-
sized companies in Brazil and their different levels of return
?

Level of conceptual adherence intends to capture different potential intensity of the usage of
concepts and elements defined in management account
ing literature. In this study, return will be
measured by the institution’s percentage of Return on Equity, since this ratio connects
stockholders and the entity. Moreover, this is the most popular indicator used nowadays referring
to stockholders, despite

frequent discussions about it effectiveness.

In spite of the research limitations with respect to sample size, as well as due to the fact that the
return of one single year was collected, the conclusions of this analysis can be important not only
for res
earchers, but mainly for stockholders and managers.


Conceptual review

In order to explicit the conceptual approach, Anthony and
Govindarajan

(1998) mentioned that
management control is the way to guarantee that strategies are followed and goals are reach
ed. It
includes activities such as planning, coordination, communication, evaluation, decision and
influence on the persons involved so as to change their behavior.

In order to obtain data about the status of management accounting, some studies must be
ana
lyzed, starting by Ward (1992), who considered that management accounting plays a very
positive role, supporting the financial needs of managers in planning and controlling the business
to the best interest of stockholders and other relevant agents. In add
ition, financial analysis is
required to define the status of the business and to guarantee that the strategy is realistic and
makes sense. In these conditions, Otley (1986:9) mentions that the design of the management
control system continues being more a
rt than science, with organizations learning from their
mistakes and adjusting their systems. This comment allows us to understand how crucial it is for
entities to customize management elements and practices, so as to be able to use them. This idea
is imp
ortant and limiting at the same time, due to the fact that, according to their desires,
organizations can have different profiles and compositions of artifacts and practices at their
disposal. This perception intrigues the author due to the fact that such
customization may involve
availability of the element (some organizations do not have ERP, for example),
comprehensiveness of the elements (some organizations think they have strategic planning

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simply because they defined the company vision, for example) o
r the relative importance
attributed to the element (some organizations can consider the costing system as something
merely bureaucratic, as a part of management accounting while, in others, it is the heart of the
management process, for example).

A reason
able amount of background literature is available for conceptual support, dealing with
perceptions and criticism against the elements, including:



Budgeting elements (WELSCH, 1987), described to support the annual budget process in the
organizations, nowada
ys opposed by the view called Beyond Budgeting (HOPE, 2000),
which criticizes the traditional method and makes people think about managers’ needs,
affecting various decades of accommodation.



The costing process has a long history (
HORNGREN

et al.
, 2000) an
d is significant to the
extent that Activity
-
Based Costing (ABC) has produced important reflections on the
organizations’
modus operandi

(
SHANK; GOVINDARAJAN
, 1997). The behavioral
question impacted by the costing systems is also treated in literature (
HA
NSEN; MOWEN,

1996
).



The Balanced Scorecard, discussed by Kaplan et al (1996) and other authors who, at the time
of publication, possessed information about the American market but knew little about the
European market in terms of BSC usage, presenting a cu
lturally biased view on the issue;



The Management Information System issue has been discussed by various researchers. In his
study, Ouchi (1979) focused on the control perspective and on setting an adequate taxonomy
for distinguishing between the market (w
ith prices as informational demands), burocracy
(with rules as informational demands) and group (with traditions as informational demands).



In view of the criticism and understanding exposed above, at the end, what is included and what
lies outside the c
ost
-
benefit relation? This question is difficult to answer, due to the fact that
organizations are different, not only with respect to activities, but also size, experience,
complexity, competitive environment and collective internal behavior.



Research d
esign: general approach

Carmines and Zeller (1979) studied the validity of research evaluation doing it in a very focused
way, considering three elements: criteria, contents and structure. It is essential for research

6


success to attain the three elements,
mainly as a result of the current stage of management
accounting.The research structure is based on the rationale developed by Henry (1990, p.46),
which joins
study characterization, sample definition, variables of interest, subpopulations
and information
sources
. The following specific objectives were aimed at:



Identifying entities’ success measured by Return on Equity, considering 2001 as a typical
year;



Identifying organizational groups according to Return on Equity profile clusters, specifically
for me
dium and large
-
sized Brazilian companies;



Verify if there exists any linkage between management accounting profiles elements and the
entity’s return in its different levels.


In this sense, the research structure considered the following elements:

a) Study

characterization

This paper is part of an exploratory research, based on primary data collected by the author and
his team;

b) Definition of population layers, sample and information source

Data were collected on the basis of population segments. Original
ly, twenty
-
four layers were
considered, which were then readjusted to seven (Picture 1). The following steps were taken into
account:




The Brazilian Economic and Social Development Bank (BNDES), an official financing
agency, considers a medium
-
sized compan
y as that company whose annual net revenues are
superior to US$18 million. This criterion used in similar researches was adopted for the
research;



In Brazil, the magazine
Melhores e Maiores

was considered an adequate source to obtain the
total population,
including details from different sectors and considering the size of revenues.
In total, 2,281 organizations were identified, whose revenues were equal or superior to US$
18 million, with a total income of US$502 billion;



Economic sector and annual revenu
es were significant variables considered in the study.
Thus, the segmentation of the population considered the seven economic sectors and annual
revenues in US$;


7




The size of each layer was defined according to the probabilistic approach, considering the
fi
nite population, planned for a 10% error (in relation to the average), which corresponds to a
planned sample with 125 entities. At the end of the field research, questionnaires from 119
entities were considered, with a 12.2% statistical error in accordance

with the average
parameter;



During the field research, in those cases in which the respondent refused to answer the
questionnaire, reposition occurred within the layer, considering sector and annual revenues,
according to the same random criterion used fo
r initial selection;



Complementarily, when analyzing the integrity of data on return, the sample was reduced to
76 entities. In summary:


Total population (Brazilian medium and large
-
sized organizations

2,281

Sample with probabilistic definition






125

Returned questionnaires








119

Organizations with consistent data about Return on Equity



76


See Picture 1 about here


c) Research variables

Carmines and Zeller (1979) mentioned that measuring is the process that connects abstract
variables to

empirical signs. In this sense, all variables of interest were captured by the
questionnaire applied to the above mentioned sample. For the sake of better understanding, these
variables of interest were divided in two groups:
return variable

and managemen
t accounting

profile variables
:




Return variable
. The analysis first focused on result variables that could give an adequate
representation of the desired phenomenon. This typically involves quantitative information
available in the form of intervals and t
he following indices were considered: Return on
Equity, EVA and MVA, all of which have strong points and limitations. Return on Equity
was chosen due to the fact that it attends to the following criteria: objectivity, range,
possibility to link up stockhol
ders and managers, as well as the possibility of being verified
by the researcher with a significant level of consistency, since not all sample companies are

8


obliged to make available/publish the basic information for the calculation. Therefore, the
inform
ation used covered the data made available during the field research collection. The
other indices demand a level of sophistication and involvement that could not be verified in
this study. Next, entities were ranked according to the following return perce
ntage intervals in
2001. In this sense, the more successful the company was from the perspective of Return on
Equity, the higher the relative profile that was attributed:




Lower than 0 %






profile 0



Equal or higher than 0 and lower than 10%


profile 1



E
qual or higher than 10 and lower than 20%


profile 2



Equal or higher than 20 and lower than 30%


profile 3



Equal or higher than 30 and lower than 40%


profile 4



Equal or higher than 40%





profile 5




Management accounting profile variables.
They are

the v
ariables that indicate

companies´
stage of development according to the conceptual framework of the International
Management Accounting Practice 1 (IMAP 1), which was published in March 1998 by The
International Federation of Accountants (IFA) and adapted
according to the contributions of
authors who researched on the issue. All variables were treated in an ordinal scale from 1 to
5. The considered elements were:



Structured and formalized costing system

Identified to the extent that it allows the organizati
on to calculate cost per type,
product line and group. From a qualitative perspective, a higher frequency of standard
cost, as opposed to historical cost, would be expected. With respect to costing
methods such as absorption, variable and direct, these alt
ernatives were identified in
the different sectors. Relevant elements to distinguish between organizations are:
standard cost and costing methods, the latter of which is subdivided into absorption,
variable, direct and ABC (Activity Based Cost).



Strategic
plan and budget

Although it is not a tool developed by management accounting, the linkage is strong
and the area made a strong contribution to that. Due to the relationship with the
budgetary process, strategic planning was included in the research. The ke
y point was

9


the objective to capture the extention of the process formalization, which was obtained
through the following elements: vision, mission, long
-
term goals, long
-
term strategies
and operational plans. With respect to annual budget, relevant elemen
ts for distinction
were: assumptions, marketing plan, production + supplies + storage plan, human
resource plan, capital budget and projected financial statements.



Management reports

Performance analysis is based on the information system, which provides v
arious and
different reports. These allow management team to understand the process according
to entity, business unit, products, cost center, etc. Relevant elements for distinction
are: forecasted x realized data from income statement, balance sheet and c
ash flow per
area, business unit, cost center, investment center, projects, etc.



Waste reduction program

Refers to a generic concern in terms of waste reduction, including various possible
resources tangible or not. Relevant elements for distinction are: f
ormal program, areas
involved and impact on evaluation.



Value management system

This item is relatively open due to the large range of possible answers. A lot of
questions were formulated and applied in the interview, which may be specific for
public compa
nies, for example. Distinguishing elements are: Balanced Scorecard,
Activity Based Management, Return on Equity, Economic Value Added and Market
Value Added.


Management accounting profile variables were discussed in view of the following
criteria:



Taking
into account the need to identify different element relevance levels, the
Analytic Hierarchy Process (Saaty, 1996) technique was applied. A score was attributed
to each element in an interval from 1 to 5, considering the following options:




From the relat
ively more
basic

to the more
complex/complete

(in concept, resource,
or actual sense);



From
natural precedence

to the
last one to be obtained

(in concept); or


10




From the
least

required to the
most desirable

from a conceptual perspective.


The first two optio
ns were preferential, while the third one was only used when the
former were not possible.
Adding up the scores for each element serves to obtain the total
score possible (SP), within a hierarchical perspective. Dividing the sum of grades obtained in each

organization (SO) by the score possible for the element (SP), we obtain the adherence percentage.
The higher the percentage for a given element, the greater the adherence in relation to the
theoretical framework.


d)
Statistical test structure

Before usin
g the collected data, Cronbach’s Alpha, the most frequently used reliability measure
(Hair et al. 1995) was computed. A standardized coefficient of 74.0% was obtained, which means
that 74.0% of the universe’s possible impact, based on the same number of it
ems, would agree in
74.0% of the cases. The indicator is excellent and allows us to continue the analysis.


e)
Data collection

The questionnaire was chosen as the instrument for data collection and its use was preceded by
the pre
-
test applied on a little p
art of the sample. It was constructed on the basis of: variable of
interest, research elements, characteristics that could affect the questions, consistency among
questions, sequence and jumps, as well as some verification items, all of which were
strength
ened or adjusted in the pre
-
test. All questionnaires were sent by e
-
mail and, on their
return, a personal interview, was scheduled with about 30% of the respondents. The interview
process was very rich and let the respondents and the researcher team to imp
rove the background
about the issues. In some cases, during the interview, the respondents changed prior answers. The
field study was carried out from April to November 2002.


Data analysis

The examination of the possible linkage between management account
ing and returns started
with the analysis of entity distribution per economic sector. The seven different sectors (Table 1)
allowed us to observe that sector 2 entities (industrial) are responsible for 46% of the total
number of respondents. Sector 7 (othe
r activities), on the other hand, only includes one entity.

11


Looking at the return profiles previously defined,
groups 0 and 1

attracted attention due to the
large quantity of entities with negative and low rates of return.


See Table 1 about here


Financia
l results were ranked on the basis of the Return on Equity percentage. This indicator is
consistent with other income data, such as gross margin, operational expenses and net profit
(Table 2), varying in accordance with the trend of other indicators. The d
ispersion in financial
results is greater to the extent that the Return on Equity decreases.


See Table 2 about here


Considering the previous definition on management accounting cluster variables, each topic of
the conceptual framework was analyzed. The t
ables with result data (Tables 3
-
11) consider two
steps: the scores by themselves and the adherence level obtained by dividing the score, per item,
by the maximum theoretical score of the element.

With respect to the cost system (Table 3), it is observed t
hat standard cost, although it is not so
popular as expected, obtained the highest score in profile 5. The same trend is true for absorption
and direct costing too. On the other hand, it was observed the fact that ABC is only found in
profiles with less po
sitive results, as profiles 0 and 1. One important reason is that the industrial
sector is high represented in both profiles.


See Table 3 about here


Entities with the best performance levels seem to demonstrate the lowest adherence in terms of
vision, m
ission and external scenarios (Table 4). However, it should be mentioned that, in the
total sample, on the average, long
-
term goals were the items that most stood out, obtaining the
highest average adherence level of the entire research (84%). This fact is

important as a drive for
the long
-
term vision; nevertheless, it is insufficient to be comprehensive and useful for the
management process.

See Table 4 about here


As to the budget process, profile 5 stands out with very high adherence to all elements. The

next
profile in the decreasing return rate sequence, which is profile 4, includes two financial
institutions among a small number of entities and remarkably displays the lowest adherence

12


levels of the entire sample (Table 5). It should be observed that fi
nancial statement projection
displayed one of the highest average adherence levels, which indicates that entities give it a lot of
attention, even if this does not occur consistently as a result of the elements that can offer an
adequate rationale for the
projection.


See Table 5 about here


Table 6 shows that profiles 5 and 3 stand out in terms of adherence, while profile 4 diverges. It is
observed that traditional elements are privileged by the entities: profit analysis reached a 84%
average adherence sco
re for the sample, while recently developed elements are the least used
ones (EVA, Market value, etc).


See Table 6 about here


Taking into consideration all concepts available to develop management reports per area, cost
centers obtain the highest level o
f adherence, with an average score of 84%. Result/profit centers,
in turn, obtain the lowest average. Except in profile 4, the one with the financial institutions,
profile 5 presents the lowest adherence levels (20%) for this element (Table 7).


See Table
7 about here


Management information
per information element

receives greater emphasis in the profiles
with higher return rates (profiles 5, 4 and 3), except for market and projects. In addition,
management reports in this sample obtain higher average adhe
rence
per business area
(80%
maximum adherence in profile 5) than market and projects, which discloses the adoption of a
control perspective.

See Table 8 about here


On the basis of the information integration system in the entities, it can be observed tha
t those
profiles with the least positive returns still have partially integrated systems, that is, they have not
implemented ERP or are currently implementing it (Table 9), which could explain the low usage
level of the tools previously described.


13


See Tabl
e 9 about here


Table 10 demonstrates relatively high adherence to waste reduction programs, which receive
quite a lot of emphasis in profile 5.


See Table 10 about here


It is remarkable that the lowest level of adherence to Return on Equity was found in
the profile
with the best performance (Table 11). Although subject to a lot of criticism, among different
value management indicators, it receives the highest adherence of the entire research (63%). The
lack of valorization of return perspective indicates
the environment’s maturity for the fourth step
defined by the IFA. Balanced Scorecard, for example, simply has no case of application.


See Table 11 about here



Final comments

This research aimed to carry out a deep analysis of the relation between obtain
ed return and
conceptual adherence in the usage of management accounting tools (called elements here) in the
Brazilian business environment. The main idea was to provide a proper analysis and
understanding about the possible association between availabilit
y of elements established in the
conceptual framework and levels of return.
Although there is no intention of considering the
conclusions apt for generalization, some comments are offered:



Levels of adherence to the conceptual framework vary within the dif
ferent return profiles, so
that the profile with the highest Return on Equity cannot simply be associated with the greatest
conceptual adherence of management accounting, which means saying that variables not
included in this research may be responsible fo
r this link.



Most entities belong to the profiles characterized by lower return levels (profile 1 represents
the interval between > 0 and < 10%, while profile 0 only contains those organizations whose
return is lower than 0%). About 50 of a total of 76 ent
ities are located in the interval covered by
profile 0 and 1, which may attract attention to organizations with relative low performance
levels.


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It can be observed that adherence is lower for the most recent contributions (ABC/ABM,
BSC, EVA etc.) than for
the more traditional ones, which displays a low degree of mobility in
terms of accepting and implementing new techniques;



The elements identified by the IFA can be divided into two groups of result analysis:

1.

Confirmed expected results:



In relation to
budg
et
, it is perceived that adherence levels for profile 5 (except
in the financial statement element of profile 1) are all higher than the
corresponding levels for profile 0 and 1.



In terms of follow
-
up through
management reports

“per result indicator”,
prof
ile 5´s adherence levels for all elements are higher than in profile 0 and 1.



With respect to follow
-
up through
management reports

“per information
element”, in turn, adherence levels for product group, business area and clients
are higher in profile 5 tha
n in profile 0 and 1.



Referring to the
integration of information systems
, profiles 1 and 0 clearly
present lower adherence levels than profile 5, which may be an important sign
to explain the result.



Adherence levels in terms of
waste reduction programs

a
re higher for profile
5 than for profile 0 and 1.


2.

Unexpected results:



In relation to the
cost system
, in comparison with profile 5, profile 0 and 1
display the lowest adherence levels in terms of standard, absorption and direct
costing. Strangely enough,

ABC stands out in these profiles, probably because
these organizations are looking for different instruments that can allow for
performance improvement, which indicates their use as an important
characteristic in more successful companies.



With respect to

strategic planning
, except for the long
-
term operational plan
element (by a small percentage), all other elements display higher adherence
levels in profile 0 and 1 than in profile 5.



In relation to
management reports

“per area”, adherence by the element
s
varies, so that no predominant tendency could be extracted.


15




Value management system

indicators display higher adherence levels for
Return on Equity in profile 0 and 1 than in profile 5. However, both EVA and
MVA present higher adherence levels in profile

5 than in 0 and 1.


Essentially this paper did not demonstrate association between generic management accounting
profiles and economic results but found a descriptive vision that indicated that the entities used
specific kits of elements that may, in the
short or long terms, be related to performance. In other
words, the dichotomic position of Zimmerman versus Lukka & Mouritsen is still (and will
probably continue being in the future) open but, the more frequent and comprehensive the
discussions become, th
e more it seems that common sense should drive the pendulum that
oscillates between the two extreme perceptions of usefulness of the research. Analysing the
elements that cannot be included in the economic paradigm at this moment may entail a chance to
ide
ntify opportunities that, tomorrow, will be treated as they should.


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17


Picture 1. Population segmentation per sector

Resumed codes
per sector

Original codes per
sector

Title

1

2

Wholesalers and foreign trade

5

Retailers






2

1

Food

3

Automobile

4

Beer and beverages

6

Textile and confection

7

Civi
l construction

8

Electric
-
electronic

9

Pharmaceutical

10

Hygiene, cleaning and cosmetics

12

Civil construction material

13

Mechanic

14

Mining

15

Paper and cellulose

16

Plastic and rubber

17

Chemical and petrochemical substance

21

Iron e
xtraction and metallurgy

22

Technology and informatics

3

11

Financial institutions

4

23

Telecommunications

5

19

Public services



6

18

Services


others

20

Transport

24

Communication

7

25

Various others



Table 1. Sectors x return groups

Description
Return profiles
5
4
3
2
1
0
Total
Entities
Sector 1 - Wholesalers, retailers, foreign trade
0
1
2
0
3
3
9
Sector 2 -Industries -all
3
0
8
3
11
10
35
Sector 3 -Financial Institutions
0
2
1
1
1
1
6
Sector 4 -Telecommunications
0
0
0
0
1
3
4
Sector 5 -Public services
1
1
0
0
1
5
8
Sector 6 -Services
1
0
0
2
7
3
13
Sector 7 -Other sectors
0
0
0
0
0
1
1
Total
5
4
11
6
24
26
76
% s/total
Sector 1 - Wholesalers, retailers, foreign trade
0%
25%
18%
0%
13%
12%
12%
Sector 2 -Industries -all
60%
0%
73%
50%
46%
38%
46%
Sector 3 -Financial Institutions
0%
50%
9%
17%
4%
4%
8%
Sector 4 -Telecommunications
0%
0%
0%
0%
4%
12%
5%
Sector 5 -Public services
20%
25%
0%
0%
4%
19%
11%
Sector 6 -Services
20%
0%
0%
33%
29%
12%
17%
Sector 7 -Other sectors
0%
0%
0%
0%
0%
4%
1%
Total
100%
100%
100%
100%
100%
100%
100%


Table 2. Financial results per cluster

Description
Return profiles
5
4
3
2
1
0
Total
Gross margin
50%
30%
29%
40%
31%
19%
33%
Operational expenses
37%
35%
52%
35%
29%
37%
38%
Operational Result
23%
12%
14%
15%
7%
-9%
10%
Net Profit
19%
11%
13%
13%
6%
-19%
7%
Return on Equity (ROE)
49%
34%
24%
14%
5%
-71%
9%







18


Table 3. Cost system



Table 4. Strategic planning



Table 5. Budget








Description %
Return profiles
5
4
3
2
1
0
Total
Score
Standard costing
0,8


0,5


0,5


0,7


0,8


0,5


0,6


Absorption costing
0,6


0,5


0,6


0,2


0,4


0,5


0,5


Absorption costing - ABC
-


-


-


0,2


0,1


0,1


0,1


Direct costing
0,4


0,3


0,2


0,5


0,1


0,2


0,3


Variable costing
-


0,3


0,2


0,2


0,1


0,1


0,1


Adherence to
conceptual approach %
Standard costing
40%
25%
27%
33%
38%
23%
31%
Absorption costing
60%
50%
64%
17%
42%
54%
48%
Absorption costing - ABC
0%
0%
0%
17%
8%
12%
6%
Direct costing
40%
25%
18%
50%
13%
23%
28%
Variable costing
0%
25%
18%
17%
13%
12%
14%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Vision
0,4


0,5


1,0


0,7


0,6


0,7


0,6


Mission
0,4


1,0


1,6


1,3


0,9


1,0


1,0


Long-term aim
3,2


3,0


4,0


3,3


3,3


3,4


3,4


Long-term operational plans
3,0


3,8


4,1


4,2


2,9


2,9


3,5


External scenario development
1,2


0,8


2,5


1,5


1,8


1,6


1,5


Adherence to
conceptual framework %
Vision
40%
50%
100%
67%
63%
69%
65%
Mission
20%
50%
82%
67%
46%
50%
52%
Long-term aim
80%
75%
100%
83%
83%
85%
84%
Long-term operational plans
60%
75%
82%
83%
58%
58%
69%
External scenario development
40%
25%
82%
50%
58%
54%
51%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Assumptions
0,8


0,3


0,8


0,7


0,7


0,7


0,6


Mkt Plan
2,0


0,5


1,6


1,0


1,0


1,5


1,3


Prod./Serv. and Logistics Plan
2,0


0,5


1,8


1,7


1,3


1,5


1,5


Human Resource Plan
2,0


0,5


1,5


1,3


1,2


1,2


1,3


Permanent Investment Plan
2,0


0,5


1,8


1,3


1,6


1,5


1,4


Proj. financial statements
2,4


2,3


2,5


2,5


1,9


2,5


2,3


Adherence to
conceptual framework %
Assumptions
80%
25%
82%
67%
71%
65%
65%
Mkt Plan
100%
25%
82%
50%
50%
73%
63%
Prod./Serv. and Logistics Plan
100%
25%
91%
83%
63%
77%
73%
Human Resource Plan
100%
25%
73%
33%
42%
38%
36%
Permanent Investment Plan
100%
25%
91%
67%
79%
73%
72%
Proj. financial statements
80%
75%
82%
83%
63%
85%
78%

19



Table 6. Analysis segmentation


per type of result indicator



Table 7. Analysis

segmentation


per area



Table 8. Analysis segmentation
-

per information element





Description
Return profiles
5
4
3
2
1
0
Total
Score
Revenues
1,0


0,8


0,9


0,5


0,8


0,8


0,8


Costs and expenses
2,0


1,5


1,8


1,3


1,8


1,6


1,7


Result (profit or loss)
3,0


2,3


2,7


2,0


2,6


2,5


2,5


Return on Net Equity
2,4


3,0


2,9


2,7


1,7


1,7


2,4


Cash flow
3,0


0,8


2,2


1,5


2,3


2,3


2,0


EVA
2,0


1,3


2,3


0,8


1,0


1,9


1,6


Company value
2,4


-


2,7


1,0


0,8


0,9


1,3


Adherence to
conceptual framework %
Revenues
100%
75%
91%
50%
83%
77%
79%
Costs and expenses
100%
75%
91%
67%
88%
81%
83%
Result (profit or loss)
100%
75%
91%
67%
88%
85%
84%
Return on Net Equity
60%
75%
73%
67%
42%
42%
60%
Cash flow
100%
25%
73%
50%
75%
77%
67%
EVA
40%
25%
45%
17%
21%
38%
31%
Company value
40%
0%
45%
17%
13%
15%
22%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Cost centers
0,8


1,0


0,9


0,7


0,8


0,9


0,8


Result/profit centers
0,4


1,5


0,9


0,7


0,7


0,6


0,8


Investment centers/Business Units
1,8


2,3


2,2


2,0


1,9


1,2


1,9


Adherence to
conceptual framework %
Cost centers
80%
100%
91%
67%
75%
92%
84%
Result/profit centers
20%
75%
45%
33%
33%
31%
40%
Investment centers/Business Units
60%
75%
73%
67%
63%
38%
63%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Product group
0.6
0.75
0.909090909090909
0.17
0,5


0.54
0.58
Business area
1.6
2.0
1.45
0.67
1,3


1.15
1.4
Market
0.6
2.25
2.18
1,0


1.5
1.15
1.45
Clients (or types)
2.4
2.0
1.81
2,0


1.0
1.23
1.74
Projects
1.0
3.75
2.73
1,7


2.08
1.92
2.2
Aderência à
abordagem conceitual %
Product group
60%
75%
91%
17%
50%
54%
58%
Business area
80%
100%
73%
33%
63%
58%
68%
Market
20%
75%
73%
33%
50%
38%
48%
Clients (or types)
60%
50%
45%
50%
25%
31%
44%
Projects
20%
75%
55%
33%
42%
38%
44%

20


Table 9. ERP profile


Table 10. Waste reduction programs


Table 11. Value management system



Description
Return profiles
5
4
3
2
1
0
Total
Score
ERP fully implemented
1,2


1,5


1,1


2,5


1,1


0,8


1,4


ERP partially implemented
1,2


0,5


0,5


-


0,6


1,0


0,6


Partially integrated systems
-


-


0,5


0,2


0,3


0,3


0,2


Adherence to
conceptual framework %
ERP fully implemented
40%
50%
36%
83%
38%
27%
46%
ERP partially implemented
60%
25%
27%
0%
29%
50%
32%
Partially integrated systems
0%
0%
45%
17%
29%
27%
20%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Waste reduction project
0,8


0,5


0,5


0,7


0,3


0,5


0,5


Adherence to
conceptual framework %
Waste reduction project
80%
50%
45%
67%
25%
54%
53%
Description
Return profiles
5
4
3
2
1
0
Total
Score
Return on Net Equity
0,4


0,8


0,8


0,7


0,6


0,5


0,6


EVA
0,8


0,5


0,2


1,3


0,4


0,5


0,6


MVA
1,2


-


0,8


2,0


0,1


0,3


0,7


Balanced scorecard
-


1,0


0,7


2,0


0,2


0,6


0,8


Adherence to
conceptual framework %
Return on Net Equity
40%
75%
82%
67%
58%
54%
63%
EVA
40%
25%
9%
67%
21%
27%
31%
MVA
40%
0%
27%
67%
4%
12%
25%
Balanced scorecard
0%
25%
18%
50%
4%
15%
19%