Strategic Profitability Analysis and Pricing

BUS401E Strategic Profitability Analysis and Pricing

Autumn 2021

  • Topics

    The focus of this course is on how to use accounting information to improve profitability through managerial decision-making. The course adopts a data-driven approach where data relevance and appropriate analyses are contingent on the decision at hand. The course begins with frameworks for assessing a company's profitability in the setting of the industry, the relevant markets, and the company's competitive position. Then, the course goes in-depth into methods for costing and pricing. This involves calculating the profitability of products, activities, customers, and product attributes. The design and use of activity-based costing (ABC) is central, as well as the handling of capacity and capital costs. Another key element is to interpret, understand, and use pricing and cost data. The course also considers "the human factor" in managerial decision-making and provides insights into psychological factors that affect the decision-making process. Furthermore, the course links theories and insights to practice by discussing cases and inviting businesses to give their perspectives. 

  • Learning outcome

    After completing the course, students will: 

    Knowledge

    • Understand what frameworks and analyses are appropriate for different purposes and assess to what extent they give a correct picture of profitability
    • Understand how theories of information, cost estimation, and pricing relate to management accounting
    • Know how different accounting analyses can be used in different managerial decision-making settings
    • Obtain knowledge to interpret, understand, and use pricing and cost data
    • Have insight into psychological factors that affect the decision-making process in organizations.

    Skills

    • Be able to prepare calculations for different purposes and assess to what extent they give a correct picture of profitability. 
    • Be able to analyze the profitability of various activities, products, product characteristics, customers, and market segments.
    • Be able to apply methods for setting or adjusting prices based on the inverse elasticity rule and regression analysis of attributes.
    • Be able to use econometric insight into discussions of data analysis.

  • Teaching

    The course consists of a combination of theory lectures and group-discussions—offered both digitally and physically. Pre-recorded short-videos accompany highly technical topics.

  • Credit reduction due to overlap

    The course cannot be combined with the course BUS401N.

  • Requirements for course approval

    One approved individual assignment and one approved group assignment. The group assignment consists of a written submission and an evaluation of another group's submission.

    Course approval in BUS401 (expired) and BUS401N is valid for BUS401E.

  • Assessment

    Final exam consisting of a 5-hour written digital home exam.

    Course approval in BUS401N is valid for BUS401E.

  • Grading Scale

    A-F

  • Computer tools

    Some use of standard computer tools (Excel and Stata/R).

  • Literature

    A collection of academic articles and book chapters—an overview is provided in Leganto, which can be found on the course’s Canvas page.

Overview

ECTS Credits
7.5
Teaching language
English
Semester

Offered autumn 2021

Course responsible

Joel W. Berge, Assistant Professor, Department of Accounting, Auditing, and Law, NHH