Analysis Paper on Komatsu, Ltd. (B) Profit Planning Product Costing Article

Analysis Paper on Komatsu, Ltd. (B) Profit Planning Product Costing - Article Example The fact that the remaining operations (construction, real estate, unit housing, chemicals and plastics, and software development) brought forward only 20% of the corporate revenues would have been considered the need for a change in planning It seems that the 3G† strategy of growth, globalization, and group diversification adopted in 1989, was able to make a financial progress by following correct processes of Profit Planning and Product Costing. The act that Komatsu’s profit planning process consisted of three major stages: policy making, profit planning, and evaluation to be a good starting point towards progress. Similarly, the decision to change/revise the Profit planning to be done on yearly basis, instead of the previous semi-annual practice, is a prudent move based on the given three reasons. It is true as it takes a lot of pre-preparation time, as everyone has to devote a substantial amount of their working time in preparing reports. This has been found out as counterproductive as it happens at the expense of their working time. It is also true, that semiannual report is based on a short-term perspective. Perhaps, it may not give the relevant picture as some of the processes take time to produce the expected outcome. It is also correct to understand that if allocations of fixed costs have to be changed based on the figures emanating from the semi-annual, it may not be realistic as well as too arbitrary to be me aningful. While analyzing the processes followed under Policy Making Stage, it can be clearly seen that they followed correct procedures, instead of taking arbitrary decisions by the policymakers. The fact that the development of the long-term plan began with the preparation of a preliminary long-term plan by the corporate planning and control department is an exemplary procedure to follow, which is ignored by most of the contemporary businesses. Their practice of submitting the approved preliminary long-term plan to each division is very practical and commendable.