Perelson Weiner LLP Harvard Case Solution & Analysis

Question 1

It is always very important allocating the cost of the product lines that business has to offer. This helps the business to overcome different obstacles and guides a path for the firm to achieve higher profits and also gaining higher growth. Firms need to make sure that they are allocating the cost in a perfect manner and also that their income and growth are gradually increasing and what measures the firm can take to minimize its cost and increase the profit of the company. The profits are not very easy to generate and generating profits is always the main aim of any business. For adjusting and increasing, strategies are needed that need to be followed to achieve the goals of the firm and hence take the firm to the peak of success.

For the achieving the goals and high profits the firms need to allocate their costs to their product lines so that the firm has an idea of how much cost is being incurred and how it can be controlled effectively. Moreover, the better understanding of the incomes and expenses makes it quite easy for the firm to identify its goals and strategies through which it can achieve profits.

In the case of PW, Weiner believed that the services should be differentiated according to their value and there was no focus on allocating the cost according to the product line. According to Weiner the value of the services was very important in analyzing the services, whereas, the cost was allocated all together carelessly with the relation of the product lines. Similarly, the income statement of PW for the year 2003 and 2004 does not indicate anything regarding the allocation of the cost and income. For instance, in 2004, the firm did not allocate the income and expense individually.

In the income statement, the income was presented all together irrespective of the product line. Such that the income was presented all together, which did not have any idea about the revenues generated from each product. Taking actions on behalf of it was very crucial. Similarly, the expenses of each product line should be allocated according to their heads of the expenses. So this may give a proper idea about the position of the product in terms of project (as shown in Exhibit 1).

Whereas, in the product line income statement, all the expenses and revenues are clearly shown (as shown in Exhibit 2). Weiner never believed that ABC model would benefit PW, so this product line income statement clearly shows that the revenues are properly allocated to the product lines. This makes it easy to allocate the revenue generated by each product line and also if it is not. Through this there is a clear picture that which product line is suffering the low productivity and which product line is not.

Likewise, in the product line income statement, the cost is perfectly arranged for each and every product line. This helps the firms to make their goals and strategy more defined and it is a good time for achieving it. The cost is allocated in a way that the cost contribute by audit, tax and others (as shown in the Exhibit 2). The profit being allocated from the product line income statement. It is very important that the allocation of the product line can make it easy to achieve performance and goals.

Question 2

The Balance Scorecard Approach should be implemented by Weiner. This is due to the reason that Perelson Weiner LLP’s (PW) was a firm based on providing the highest level of client services and interaction. It was currently working for providing services to the customers. Its personals were involved in the practices of providing assistance to the clients, giving them value and providing the accounting services to the clients.

PW continued to focus on the approach of business activities such as providing tax services, planning of transferring wealth. Auditing and providing business advisory services to the high net worth individuals and the entrepreneurs. The business strategy of PW was that it only focuses on the relationship of the firms with the clients. It did not advertise its business services. The relationship was strengthened with the clients in a way that the personnel were involved in building long-term and strong relationships with the clients, to whom the business was providing the services........................

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Perelson Weiner LLP, successful accounting firm in New York, is re-evaluating its strategy for promoting, as it makes plans to grow their business. "Hide
Narayandas by Das, Thomas Steenburgh Source: Harvard Business School 27 pages. Publication Date: October 28, 2005. Prod. #: 506006-PDF-ENG

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