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Strategic Use of Accounting Information

Green Acres, Inc. is a leading supplier of yard and garden products. It distributes seed, fertilizers, gardening gloves, small tools, mulchers, yard tractors, and $2,417$ other products needed by homeowners, nursery owners, and small farmers. Service support for its equipment is provided through local dealers.

Three years ago, a senior manager recognized that a gold mine of information lay in the company's accounting records. Now, each month, Green Acres' sales records are analyzed to identify customers who have bought products in each of several categories. Marketing personnel use the monthly list to target those customers who are most likely to buy additional products. For example, a customer who has recently bought a lawn mower is also likely to need grass seed, lawn care products, and equipment such as edgers and leaf blowers. Over time, complete profiles have been drawn up of customers and their needs.

Lists of customers may also be sold to firms in the industry that are not in direct competition. For example, names of customers who have bought garden equipment may be sold to nurseries. Green Acres has no immediate plans to sell live plants, but it can bring in additional revenue from companies that do not enjoy its large accounting database. Management has even contacted lawn service companies with similar propositions. Its reasoning is that some people who have purchased lawn mowers may have become tired of using them.

QUESTIONS:

A$.$ Suggest possible strategic uses of the types of accounting data listed below:

Purchasing data, Perpetual inventory records, manufacturing cost data, customer credit and accounts receivable data, or personnel and payroll records.

B$.$ Are any legal or ethical issues involved in the use of accounting data for such purposes?