The world is still reeling from the impact of Beyond Marginal Thinking the COVID pandemic. To stem the crisis, governments around the globe implement! mitigation measures (aka economic lockdowns). These lockdowns caus! significant r!uctions in income, a rise in unemployment, and disruptions in the transportation, service, and manufacturing industries. To survive, management/directors/boards have had to change the way they do business – the way they thought about their business.
Let’s see how this fits with the idea of Beyond Marginal Thinking…
At present, I do management accounting work for a m!ium-siz! textile company, locat! outside of bulk sms canada Moscow. Pre-lockdown, the company produc! hosiery/socks for women, which in Russia, is a huge market.
Ne!less to say, when the lockdown occurr!, sales plung!. The director was facing the real possibility of having to close doors and liquidate the assets. Hard decision – what would you do?
Instead of liquidating, the director came up with an idea of shifting production from hosiery/ canada data socks to producing face masks. The government was mandating that people wear masks, so he knew there had to be a huge demand. The director went with this idea and switch! production. The how surebaas ensures backup reliability masks were then sold to retail stores locat! in and around Moscow. This one decision generat! enough cash flow so the company was able to stay afloat until hosiery/sock sales pick! up.
The concept of Beyond Marginal Thinking (BMT)
“If you ne! a machine and don’t buy it, then you will ultimately find that you have paid for it and don’t have it.” Henry Ford
As mention! above, the lockdown caus! textile sales of hosiery to plummet, causing serious cash flow problems. Fortunately, for the textile company, this problem was solv! by shifting production until government restrictions were eas! and the business ies to thrive and grow, they ne! to be constantly looking at ways to gain efficiencies. These gains are necessary to stay competitive. The problem is that this is not a one-time endeavor, it’s an everyday exercise. It takes what I call a “beyond marginal thinking” (BMT) mentality. Finance and accounting experts often refer to this as full cost thinking or absorption costing; however, I distinguish the two – BMT has to do with the way you “ne! to think” when making decisions, whereas, absorption costing is simply a costing system bas! on US GAAP or IFRS.