De Beers — Finance

Answer all three parts.

A management accounting and control system is part of the information-generating function internal to a firm. It helps management determine if the organization is successfully implementing its chosen strategy.

Part 1 (40%)
Using the information provided in the case, analyze the financial performance of De Beers, including an analysis of the sources and uses of cash. Use no more than five financial ratios. Select the ratios that you feel are most relevant to De Beers. Based on the results, describe areas of significant strength or weaknesses. Your analysis should be supported by reference to the De Beers activities and events described in the case.

Part 2 (50%)
De Beers is involved in the entire value chain for its industry. List in point form the financial and non-financial information and performance measures that management should consider critical to De Beers’ success prior to the mid-1980s. Then consider its new strategy and identify the factors that are critical to De Beers’ more recent success. Again, list in point form the financial and non-financial information and performance measures that management should consider critical. Be specific. Discuss how and why the critical success factors, performance measures, and related management information needs changed. Consider using tables in your presentation.

Part 3 (10%)
Compare the characteristics and uses of the management information you prepared in Part 1 to the management information you identified for Part 2. How are they similar and different? Would one type of information be more valuable than the other? Why or why not?