Roost Home Care is a well-established one-stop shop for all home services. Some services provided by Roost Home Care are home cleaning, gardening, pest control, carpentry, plumbing, waste management, furniture assembling, appliances repairs and maintenance, appliances installation and home relocation. The company is well-known for providing services at short notice and providing 24/7 customer service. The customers of Roost Home Care can book an appointment by dialling a freephone number. Roost Home Care has three groups of customer care executives to take appointments via phone calls. The three groups work in three different shifts. These executives take bookings from customers and coordinate with the concerned department based on the service requested by the customers. The executives also keep track of the status of the booking and make sure that the customers have received the service. The customer care executives also make sure that customers' payments have been received and invoices have been generated and sent to customers. Finally, the executives send a copy of the invoices to the accounting department for it to record the transaction in the accounting books.
The customer care executives are overworked and are not happy. The number of calls received by the company is quite high during weekends, and the executives have started missing some calls. However, the company has sufficient employees to provide all of its services, even when there is high demand. Roost Home Care has been thinking of ways to reduce the workload of its customer care executives. The senior management of the company is planning to hire more customer care executives to reduce the burden on its current employees. The company also feels that missing customer calls will hamper the image of the company in the long run. The company has consulted an external advisor regarding the cost implications of hiring new employees. The external advisor feels that hiring new employees is not cost effective. He has suggested that Roost Home Care outsources some of its activities to an external company to reduce the burden on its customer care executives. However, senior management is sceptical about outsourcing. It does not want to share the accounting details of the business with an external organization. The external advisor has also suggested that Roost Home Care launches mobile application to take appointments from customers. According to the external advisor, the company can take more appointments through the mobile application. The reach of the company will also increase using this approach. Roost Home Care had previously developed and launched a mobile application. However, it had failed because of a lack of proper maintenance. Roost Home Care recently acquired Gourmet Feasters Ltd, an online food delivery company. Gourmet Feasters allows customers to order food from various restaurants. Gourmet Feasters has partnered with various restaurants to deliver food on time to its customers. Roost Home Care was not previously involved with food delivery, and this acquisition has helped it enter a new line of business. Gourmet Feasters takes its orders via its website and mobile application. The mobile application of Gourmet Feasters has been successful. This mobile application was developed by and is managed by a software development company. Roost Home Care is thinking of outsourcing its mobile application development to the same software company. Roost Home Care is convinced that the launch of the mobile application will help in reducing the workload of its customer care executives.

Required

1. Identify the constraints faced by Roost Home Care.

2. Roost Home Care owns more than one step in its value chain.Which policy is Roost Home Care following?

3. The mobile application developed by Roost Home Care has failed due to improper maintenance. Launching a mobile application will enable the company to take more customer orders, which will in turn increase the profits of the company. What should Roost Home Care do according to the strategic approach to make-or-buy?

4. Mention two advantages of outsourcing some activities that are currently performed by the customer care executives of Roost Home Care.

5. Mention two activities that will help Roost Home Care in avoiding the quality problems that might arise in the newly acquired online food delivery business.

6. Mention two activities undertaken by the customer care executives of Roost Home Care that should be outsourced to reduce their workload.

7. Roost Home Care has decided to form a collaborative strategy in which a subset of its services such as taking customer calls, generating invoices and preparing financial statements are concentrated in a new, semi-autonomous business unit that has a management structure designed to promote efficiency, generate value, make cost savings, and improve service for internal customers of the parent corporation, like a business competing in the open market. What is the name of this strategy?

8. Roost Home Care is in the process of deciding whether it wants to develop the mobile application in-house or outsource it to an external software development company. Determine the implications of the following management accounting techniques:
• total cost of ownership
• target costing
• Kaizen costing
• open-book accounting
• strategic cost management.