A and B are complementary companies in the engineering industry. Each manufactures a range of components which are sold to the following types of customer. Large assembly companies which take big quantities and constitute around 60 per cent of each company’s turnover. Wholesalers and agents who constitute around 30 per cent of each company’s turnover. Direct sales to the general public who take the remainder. As A and B have such similar markets and customers and they also employ identical technologies, they have decided to merge. As part of the process, they have conducted a review of their information systems. They each employ the following systems: CAD/CAM, stock control, financial and management accounting (including sales analysis, profit forecasting, budgetary control and annual and five year planning). In each company these systems are computer-based. However, the organisation of computing within the companies is very different. Company A has the following arrangements for its computing. It utilises a mainframe computer which uses “off the shelf” software packages to perform batch processing. User departments are charged a standard cost per hour for all the tasks performed for them and are not allowed to use external computing resources. The company’s budget for hardware and software acquisition and for operational requirements is controlled by the computing manager, who is directly responsible to the Chief Executive. Company B’s computer strategy is “to empower the user”. The company’s early experience was with a system very similar to A’s. However, 5 years ago it was decided to devolve the computing budget to functional managers. These managers were given the freedom to spend their computer budgets wherever and however they liked. This has led to most computing now being down on Personal Computers using “bespoke” or “user written” packages. A small amount of work, mainly of a developmental nature, is carried out on B’s behalf by external agencies. There are no longer any centralised computing facilities, but there is a small number of computer staff who can be hired to give advice on users’ requirements. Requirements Discuss the advantages and disadvantages of the two computer strategies in A and B. State which of these strategies you would recommend for monthly Management Accounting procedures. Justify your recommendation. Suggest a computing strategy for the new company, if A and B were to merge. Explain your suggestion.

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a Comparison of systems The main difference between the two computer strategies is that one has a ce... View the full answer