Adriana Alvarado has decided to purchase a personal computer. She has narrowed the choices to two: Drantex and Confiar. Both brands have the same processing speed, 6.4 gigabytes of hard-disk capacity, a 3.5-inch disk drive, and a CD-ROM drive, and each comes with the same basic software support package. Both come from mail-order companies with good reputations. The selling price for each is iden- tical. After some review, Adriana discovers that the cost of operating and maintain- ing Drantex over a three-year period is estimated to be $300. For Confiar, the operat- ing and maintenance cost is $600. The sales agent for Drantex emphasized the lower operating and maintenance costs. The agent for Confiar, however, emphasized the service reputation of the product and the faster delivery time. (Confiar can be pur- chased and delivered one week sooner than Drantex.) Based on all the available information, Adriana has decided to buy Confiar.
Required
1. What is the total product purchased by Adriana?
2. How does the strategic positioning differ for the two companies?
3. When asked why she decided to buy Confiar, Adriana responded, "I think that Confiar offers more value than Drantex." What are the possible sources of this greater value? What implications does this have for the management accounting information system?
4. Suppose that Adriana's decision was prompted mostly by the desire to receive the computer quickly. Informed that it was losing sales because of the longer time to produce and deliver its products, the management of the company producing Drantex decided to improve delivery performance by improving its internal processes. These improvements decreased the number of defective units and the time required to produce its product. Consequently, delivery time and costs both decreased, and the company was able to lower its prices on Drantex. Explain how these actions translate into strengthening the competitive position of the Drantex PC relative to the Confiar PC. Also discuss the implications for the management accounting information system.