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Article
Publication date: 3 April 2018

Reinaldo Guerreiro and Juliana Ventura Amaral

While the gap between economic theory and companies’ practice, regarding to the pricing setting, has been extensively explored and explained, the new gap between the…

Abstract

Purpose

While the gap between economic theory and companies’ practice, regarding to the pricing setting, has been extensively explored and explained, the new gap between the marketing normative view and companies’ practice needs further clarification. In this way, the paper aims to investigate whether marketing researchers’ claim that the use of cost-based price approach prevails over the use of value-based price approach is pertinent.

Design/methodology/approach

The paper is guided by the following research question: “Does price-setting based on cost plus margin go against the value-based price approach?” The answer to this question is grounded in reflections on results of previous research studies and in a case study conducted in an industrial company. Because of the qualitative focus of the present study, hypotheses are not established, but rather the following proposition: certain companies use the mechanics of cost plus margin in the sale price-setting process, but it does not necessarily mean that these companies set prices based on cost.

Findings

The arguments, propositions and the case study findings provide the logical sequence and the support required to conclude that price-setting based on cost plus margin does not always conflict with the value-based price approach. As a result, it may be claimed that the general proposition established is theoretically valid, i.e. using a price formula that contains the elements cost and margin does not necessarily mean that the company sets prices based on cost.

Originality/value

The key contribution of this paper is demonstrating that in certain business environments, such as, B2B, using the price formation mechanics based on cost plus margin is the way found by companies to enable the approach adopted. The approach may be cost-based or value-based price. This is the first study that explicitly reveals how B2B companies may set prices based on value while simultaneously preserving the simplicity of cost plus margin formulas. Researchers have significant misconceptions about these formulas: in previous studies, they classified all price-making companies as those adopting the cost-based price approach simply because they used formulas containing the element cost.

Details

Journal of Business & Industrial Marketing, vol. 33 no. 3
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 7 October 2019

Juliana Ventura Amaral and Reinaldo Guerreiro

Empirical studies have found that cost-based pricing remains dominant in pricing practice and suggest that practice conflicts with marketing theory, which recommends…

Abstract

Purpose

Empirical studies have found that cost-based pricing remains dominant in pricing practice and suggest that practice conflicts with marketing theory, which recommends value-based prices. However, empirical studies have yet to examine whether cost-plus formulas represent the pricing approach or essence.

Design/methodology/approach

This study aims to address the factors that explain price setting whereby the cost-plus formula is not just the pricing approach but also the pricing essence. This examination is grounded in a survey conducted on 380 Brazilian industrial companies.

Findings

The results show that, for price-makers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, company size and differentiation), but it is negatively related to one factor (premium pricing strategy). For price-takers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, coercive isomorphism and use of full costs), but it is negatively related to five factors (one obstacle to deploying value-based pricing, company size, competitors’ ability to copy, normative isomorphism and experience).

Originality/value

The key contribution of this paper is demonstrating that cost-plus formulas do not go against the incorporation of competitors and value information. This study reveals that it is possible to set prices based on either value or competitors’ prices while simultaneously preserving the simplicity of the cost-plus formulas. Via the margin, firms may connect costs to information about competition and value. The authors also demonstrate the drawbacks of not segregating companies into price-makers and price-takers and an excessive focus on the pricing approach at the expense of pricing essence.

Details

Journal of Business & Industrial Marketing, vol. 34 no. 8
Type: Research Article
ISSN: 0885-8624

Keywords

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Article
Publication date: 1 March 2006

Reinaldo Guerreiro, Edgard Bruno Cornachione and Armando Catelli

This paper focuses on the determination of the cost completion rate used to calculate the equivalent units of production in a continuous process costing system. The paper…

Abstract

Purpose

This paper focuses on the determination of the cost completion rate used to calculate the equivalent units of production in a continuous process costing system. The paper aims at two research questions. What procedures do companies utilize in practical terms? How should the completion level percentage be calculated conceptually?

Design/methodology/approach

The study is a qualitative exploratory survey. The companies targeted were those noted in “Melhores e Maiores,” a ranking of the best and biggest Brazilian companies. A total of 175 questionnaires were sent to pre‐selected enterprises, each with revenues of more than US$100 million per year, and 50 usable responses were returned.

Findings

A literature review of the theoretical procedures used for continuous process costing revealed no indication of an objective method for determining the completion level. The empirical research in the present study confirmed that, in practice, companies do not adopt the general procedures proposed by the theory. The best practices applied by the companies have been shown to be an adequate alternative, because the results are identical to those obtained with the proposed method.

Research limitations/implications

The study bears the usual limitations of a qualitative exploratory survey regarding its generalization to other companies.

Originality/value

The originality of the study is based on the assumption that cost accounting theory does not offer an objective solution for the computation of the completion level percentage and, consequently, that companies in continuous process production system do not adopt the theoretical concepts with respect to inventory evaluation of goods‐in‐process and finished goods.

Details

Managerial Auditing Journal, vol. 21 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 7 November 2008

Reinaldo Guerreiro, Sérgio Rodrigues Bio and Elvira Vazquez Villamor Merschmann

This paper aims to assess the usefulness of cost‐to‐serve for customer profitability management through literature review and a case study in a food‐industry company.

Abstract

Purpose

This paper aims to assess the usefulness of cost‐to‐serve for customer profitability management through literature review and a case study in a food‐industry company.

Design/methodology/approach

The research is based on a case study. The study presents the state‐of‐the‐art of the literature review related to cost‐to‐serve measurement and customer profitability analysis and a case study of a Brazilian food‐industry company with high operational complexity and an extensive customer product and commercial service line.

Findings

The literature review demonstrates that few empirical studies have actually addressed the problem of cost‐to‐serve measurement and customer profitability analysis. The findings of the study show that the measurement of cost‐to‐serve provides specific and detailed customer information that enables a more comprehensive customer profitability analysis than the classical paradigm.

Research limitations/implications

A single case study does not allow the results to be generalized to other organizations.

Originality/value

The paper includes a comprehensive review of literature and the empirical case study in a Brazilian food company offers additional insights in cost‐to‐serve measurement and customer profitability analysis.

Details

The International Journal of Logistics Management, vol. 19 no. 3
Type: Research Article
ISSN: 0957-4093

Keywords

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Article
Publication date: 16 May 2013

Luciane Reginato and Reinaldo Guerreiro

The objective of this study is to investigate the relationship between external environment and organisational culture, and the subsequent relationship of organisational…

Abstract

Purpose

The objective of this study is to investigate the relationship between external environment and organisational culture, and the subsequent relationship of organisational culture with the adoption of management control systems in large Brazilian companies.

Design/methodology/approach

The research involves 109 of the “Best and Biggest” companies in Brazil, as designated by the Brazilian financial magazine Exame. Data are collected by a research questionnaire distributed electronically to senior managers of the sample companies. The data are analysed by multivariate structural equation modelling.

Findings

The results show that a significant relationship exists between the constructs of “external environment” and “organisational culture”, thus indicating that the environment exerts a significant influence on planning, execution, control elements, and managers' characteristics and skills. The results also show a significant relationship between the constructs of “organisational culture” and “management controls”, thus indicating that organisational culture has a strong influence on the choice of management control systems in practice in the companies.

Originality/value

Although isolated studies have investigated various aspects of the external business environment, organisational culture, and management control systems, few studies have explored the relationships among them.

Details

International Journal of Organizational Analysis, vol. 21 no. 2
Type: Research Article
ISSN: 1934-8835

Keywords

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Article
Publication date: 1 September 2006

Reinaldo Guerreiro, Carlos Alberto Pereira and Fábio Frezatti

The objective of this case study is to evaluate the change process, under the old institutional economics (OIE) approach, that had occurred within the…

Abstract

Purpose

The objective of this case study is to evaluate the change process, under the old institutional economics (OIE) approach, that had occurred within the management‐accounting system of Brazilian bank. The present study examines the efficacy of the change process in management accounting, from the perspective of system users, seven years after its beginning.

Design/methodology/approach

The research is based on a case study. The study presents a literature review of institutional theory and a case study of Banco do Brasil – a large Brazilian bank that has implemented profound changes in its management‐accounting system.

Findings

The results indicate that new concepts have been effectively institutionalised and converted into new values, habits, and routines inside the organisation. The study provides new insights into management‐accounting change.

Research limitations/implications

A single case study does not allow the results to be generalised to other organisations.

Originality/value

The study offers a conceptual structure and operational guidelines to evaluate institutionalisation of management‐accounting change processes. The main contribution of this study is to offer new operational insights on management‐ accounting institutionalisation using the conceptual framework proposed by Burns and Scapens.

Details

Journal of Accounting & Organizational Change, vol. 2 no. 3
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 1 June 2015

Rodrigo Paiva Souza, Reinaldo Guerreiro and Marcos Paulo Valadares Oliveira

The purpose of this paper is to investigate the relationship between the maturity level of supply chain process management (SCPM) and the company’s organisational life…

Abstract

Purpose

The purpose of this paper is to investigate the relationship between the maturity level of supply chain process management (SCPM) and the company’s organisational life cycle (OLC).

Design/methodology/approach

Based on a theoretical review, a questionnaire was developed to measure the maturity level of SCPM and the OLC. Data from 228 companies operating in Brazil were collected to assess the association between variables by using correspondence analysis technique.

Findings

Among the key findings, evidences of a relationship between the maturity level of SCPM and the company’s OLC could be highlighted. In addition, it was found that the maturity level of SCPM has no significant relationship with the age or size of a company but it is related to the capabilities inherent to the SCPM.

Research limitations/implications

Measurement of SCPM and the OLC was based on the managers’ perceptions about the actual configuration of their firms. Accordingly, there is a certain level of subjectivity inherent to those models. The study is valid for companies operating in Brazil and might not be applicable for other countries.

Practical implications

This study increases awareness about the influence of organisational issues, such as the decision model, power hierarchy or governance structure, in the development of SCPM maturity. Such issues must be addressed to develop SCPM.

Social implications

Management and control of organisational issues might help to develop the maturity of SCPM, so the service level of companies, in order to deliver high quality services to society. Still, further research is required in the social area.

Originality/value

The paper tried to analyse the relationship of two well established models where this link was overlooked in the past. It was not found in literature similar investigation.

Details

Business Process Management Journal, vol. 21 no. 3
Type: Research Article
ISSN: 1463-7154

Keywords

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