Discussion Board 4


Please answer these two questions from Chapters 4 and 5:

Explain three relationship traps and how to avoid each.
List five of the forces that influence B2B customers purchasing behavior.

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Are these the same for consumers? If there is a difference, explain why you think it exists.

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FFIRS 12/22/2010 10:39:2 Page 2

FFIRS 12/22/2010 10:39:2 Page 1

Key Account Management

FFIRS 12/22/2010 10:39:2 Page 2

FFIRS 12/22/2010 10:39:2 Page 3

Key Account Management

The Definitive Guide

Third edition

Diana Woodburn
Malcolm McDonald

A John Wiley & Sons, Ltd, Publication

FFIRS 12/22/2010 10:39:2 Page 4

This edition first published in 2011
Copyright# 2011 Diana Woodburn and MalcolmMcDonald

Registered office

John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ,
United Kingdom

For details of our global editorial offices, for customer services and for information about
how to apply for permission to reuse the copyright material in this book please see our
website at www.wiley.com

The right of the author to be identified as the author of this work has been asserted in
accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopy-
ing, recording or otherwise, except as permitted by the UK Copyright, Designs and
Patents Act 1988, without the prior permission of the publisher.

Wiley also publishes its books in a variety of electronic formats. Some content that
appears in print may not be available in electronic books.

Designations used by companies to distinguish their products are often claimed as trade-
marks. All brand names and product names used in this book are trade names, service
marks, trademarks or registered trademarks of their respective owners. The publisher is
not associated with any product or vendor mentioned in this book. This publication is
designed to provide accurate and authoritative information in regard to the subject mat-
ter covered. It is sold on the understanding that the publisher is not engaged in render-
ing professional services. If professional advice or other expert assistance is required, the
services of a competent professional should be sought.

Library of Congress Cataloging-in-Publication Data
McDonald, Malcolm.

Key account management : the definitive guide / MalcolmMcDonald,
Diana Woodburn. 3rd ed.

p. cm.
Includes bibliographical references and index.
ISBN 978-0-470-97415-5 (pbk.)
1. SellingKey accounts. 2. MarketingKey accounts. I. Woodburn, Diana.

II. Title.
HF5438.8.K48M35 2011


ISBN 978-0-470-97415-5 (paperback), ISBN 978-0-470-97475-9 (ebk),
ISBN 978-0-470-97473-5 (ebk), ISBN 978-0-470-97472-8 (ebk)

A catalogue record for this book is available from the British Library.

Typeset in 10/12pt Palatino Roman by Thomson Digital, Noida, India.
Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK

FTOC 12/22/2010 11:2:7 Page 5


Foreword by Martin Lamb vii
Acknowledgements ix
The purpose of this book x
Before you read this book! xiv
List of figures and tables xvi

1 The crucial role of key account management 1

2 Selecting and categorizing key customers 25

3 Relationship stages 53

4 Developing key relationships 87

5 The buyer perspective 113

6 Key account profitability 145

7 Key account analysis 173

8 Planning for key accounts 207

9 Processes making key account management work 257

10 The role and requirements of key account managers 291

11 Performance and rewards in KAM 323

12 Organizing for key account management 363

13 Transitioning to KAM 391

Further reading 417
Integrated fast track 421
Mini-cases 443
Index 467

FTOC 12/22/2010 11:2:7 Page 6

FLAST01 12/22/2010 10:59:56 Page 7


I find it truly amazing that it is only in the past decade that key account
management (KAM) has emerged as a major discipline in its own
right. Even more surprising is that most business schools resolutely
refuse to include it in their curriculum, preferring to stick with the
perennial four Ps of marketing, which, while still relevant, are totally
dependent on getting the strategy right for the new breed of powerful,
global customers, who now demand seamless service from their sup-
pliers in every country of the world where they operate.

Cranfield is a shining exception to the rule. In 1996 the first structured
research was done on best practice key account management under
the leadership of Professor Malcolm McDonald and Diana Woodburn.
The current KAM Best Practice Research Club is a sophisticated exten-
sion of those exciting, earlier forays into best practice key account

The implications for suppliers of the enormous power of buyers today
are felt across the entire corporate spectrum, and after a decade of
research at Cranfield, we can now truly say that instigating best prac-
tice key account management implies a substantial programme of
change management and simply cannot be achieved by tinkering with
the salesforce.

The sequence of events is as follows:

1. Select the correct accounts to be included in the key account

2. Categorize them according to their potential for helping us to grow
our profits continuously.

3. Analyse their needs.

4. Develop strategic plans for and with each of them.

5. Get buy-in from all functions about their role in delivering the
agreed value propositions. This involves IT, manufacturing, logis-
tics, HR, finance, operations and R&D. This way, these functions
will be customer-driven.

6. Get the right organization structure to serve the selected key
accounts needs.

7. Get the right people and skill sets in the key account team.

8. Implement the plans on an annual basis.

FLAST01 12/22/2010 10:59:56 Page 8

9. Measure the success of the plans, particularly in respect of whether
they create shareholder value added.

10. Reward individuals and teams for their success.

Malcolm McDonald and Diana Woodburn have done a remarkable job
in capturing all their research and practical experience in this excellent
book and I commend it to you.

Martin Lamb
Chief Executive

IMI plc

viii Foreword

FLAST02 12/22/2010 11:57:1 Page 9


We are extremely grateful to Beth Rogers, now of Portsmouth Business
School, who for many years helped us with our research and our
thinking. Her part in earlier versions of this book, and particularly for
the mini-cases for practical learning, was invaluable. We would like to
acknowledge the contribution of Professor Tony Millman on the origi-
nal key account management research report, back in 1996. Special
thanks are due to him for his enthusiasm for the topic. His previous
work, and that of Dr Kevin Wilson, was invaluable in creating frame-
works for understanding the development of supplier/customer

Our thanks are due to other colleagues for their help and support: par-
ticularly to Dr Sue Holt, for allowing us to include some of her
research; to Professor Nigel Piercy of Warwick Business School, for
stimulating our thinking on several topics; to Dr Nikala Lane for her
contribution to the section on teams; and to Professor Lynette Ryals
for her overall support. Huge thanks are due to Steve Doubleday and
Peter Mouncey for their major contribution to the editing process. We
should certainly not forget our spouses for their endless forbearance
during the writing process.

Lastly, too numerous to mention individually, are all the practitioners
and their companies who have helped to develop our understanding
of key account management, shape our thinking and validate our
ideas: through the Cranfield KAM Best Practice Research Club, its
focus syndicates and other practitioner forums, through participation
in research and in KAM development consultancy projects, and
through help with the case study insights distributed throughout the

FLAST03 12/22/2010 10:56:21 Page 10

The purpose of this book

To help the time-starved reader, we have started each chapter with
a Fast Track for those who want a rapid reprise of the content
before you delve deeper into the chapter or, indeed, skip to
another chapter that contains material relating to your immediate
priority. All the Fast Tracks have been compiled into one inte-
grated section at the end of the book, so you can start or finish
with the complete helicopter overview.

As this is a book designed for thinking practitioners, we have avoided
filling the text with academic references, but we have added a list of
items for further reading around each chapter, included at the end of
the book.

The expression caveat emptor (beware buyer) has been turned com-
pletely on its head during the past 10 years, so that caveat vendor
(beware seller) is now the norm. Customer power, particularly in over-
supplied Western economies, is here to stay, hence the growing impor-
tance of key account management as a topic on the agendas of all
companies, big or small.

This book represents state-of-the-art best practice, based on a decade
of in-depth research into global best practice key account management
from both supplier and customer perspectives, which has shown that,
among other findings:

Key account management is a strategic approach distinguishable
from account management or key account selling. It should be used
to ensure the long-term development and retention of strategic

Key account management is high profile, but difficult to do well.

Key account management is appropriate to several types of rela-
tionships, but is most clearly manifest when supplier and cus-
tomer have a mutually recognized partnership and a degree of

There are often mismatches between the way suppliers and custom-
ers perceive each other and their relationship, so careful communi-
cation and vigilance are vital.

Regular monitoring of the profitability of individual customers by
suppliers provides crucial information, but is quite rare because
customer profitability is difficult to measure.

FLAST03 12/22/2010 10:56:21 Page 11

Key account managers need a broad portfolio of business manage-
ment skills to deal with interdependent or integrated customer

Key account management has structural implications for selling
companies. Interdependence and integration can only be achieved
where the key account manager has a considerable degree of con-
trol over resources and decision making.

This book proposes ways of dealing with these findings, taking the
reader to a level whereby he/she can implement solutions. It is
intended to help key account strategists and key account managers to
capture and develop a scientific basis for their companys practice. The
scope of key account management is widening and it is becoming
more complex. For key account management to be successfully imple-
mented, there is an urgent need to develop reliable diagnostic tools
and measures of performance that support strategic marketing deci-
sions. The skills of professionals involved in key account management
at strategic and operational levels need to be constantly updated and
developed. So this book demonstrates how key account management
can be implemented, and describes the elements of best practice that
can be adopted by all types and sizes of organization.

Chapter 1: The crucial role of key account management

This chapter sets key account management in the context of a dramati-
cally changing business environment where increasingly complex
relationships have altered the nature of marketing, and imposed an
urgent need for greater understanding and more appropriate treat-
ment of key relationships.

Chapter 2: Selecting and categorizing key customers

We explain how to select and categorize the most appropriate
accounts to target for key account management, which arguably
means that this chapter is the most important in the whole book. Your
KAM programme can be fatally flawed by making the wrong deci-
sions at this stage.

Chapter 3: Relationship stages

There is a clear hierarchy of key account relationships increasing in
complexity and intimacy with the customer. Understanding where
you are is crucial to adopting the right behaviour towards the

Chapter 4: Developing key relationships

Important relationships should not be left to develop on their own.
Application of the right tools and techniques can help you get to the
level to which you aspire with more speed and confidence.

The purpose of this book xi

FLAST03 12/22/2010 10:56:21 Page 12

Chapter 5: The buyer perspective

Needless to say, buyers have their own view of key supplier relation-
ships, and not necessarily the one the supplier would like. Ignorance
of their perspective leads to complacency, inertia and disappointment,
so understanding it is mandatory, however unwelcome.

Chapter 6: Key account profitability

Profitability belongs to customers much more than to products. Since
customers and customer behaviour cause cost as well as revenue, real
customer profitability must be measured. It is not easy but, again,
ignorance is foolhardy.

Chapter 7: Key account analysis

This chapter examines how to analyse key accounts in order to estab-
lish and prioritize their needs.

Chapter 8: Planning for key accounts

We introduce the processes for and the tools and techniques of key
account planning. We describe how to set objectives and strategies for
each targeted key account, and how to measure their profitability.

Chapter 9: Processes making key account
management work

While key account plans are intrinsic to key account management, a
plan is only a plan until it is implemented. Most companies processes
are not set up to deliver the promises of key account management but,
like many initiatives, the devil is in the implementation.

Chapter 10: The role and requirements of key account

Key account managers can fulfil one of four roles in managing the cus-
tomer relationship, which, depending on the complexity of the rela-
tionship, may or may not involve leading a dedicated team. Each role
has its own set of competences and attributes which should be under-
stood in matching the right key account manager with each key

Chapter 11: Rewards and performance in key account

KAM is designed to improve or at least maintain performance with
challenging customers. This chapter gets to grips with what perform-
ance means in KAM, at the level of individual key accounts, the whole
key account portfolio, and the key account manager. Most companies
are determined, rightly or wrongly, to give rewards as incentives for

xii The purpose of this book

FLAST03 12/22/2010 10:56:21 Page 13

good performance, but seek assistance on how to structure a rewards
scheme and what kind of reward to offer.

Chapter 12: Organizing for key account management

There is no perfect structure for key account management as it is
essentially a cross-boundary activity, though some structures are less
KAM-friendly than others. This chapter looks at how key account
management can be positioned in the organization and some of the
issues that arise.

Chapter 13: Transitioning to key account management

The rest of the book reflects best practice KAM, but this chapter charts
the journey to achieve it from the beginning. KAM is a cultural change
as well as a business initiative, and a long haul, not to be undertaken
lightly. Following the four-phase route that other suppliers have used
will help to anticipate issues and prepare solutions for them.

Innumerable tomes have been written about the importance of cus-
tomer focus and getting close to customers. There can be no closer
focus than the segment of one. While all customers are important,
there is a danger in spreading scarce resources too thinly and achiev-
ing little of the real intimacy required by those few customers who can
help us make significant progress towards our long-term objectives.
The dilemma, then, is which customers to include in the key account
management programme.

The growing complexity of business-to-business markets, which are in
a state of metamorphosis from chains of value to integrated recipes of
value, presents a great challenge.

All the indications are that in business-to-business marketing, key
account management is not so much an option, but a customer

This book is designed to provide a route through this most difficult of
terrains. It is a route map that has emerged from the authors extensive
research into the practice of global key account management with
some of the worlds leading companies. Although there is still much
to learn, we believe readers will find this book representative of the
very best of best practice.

Diana Woodburn
Professor Malcolm McDonald

Marketing Best Practice

The purpose of this book xiii

FLAST04 12/22/2010 10:53:59 Page 14

Before you read this book!

Just to give you an idea of your start point, try completing the two
questionnaires below before you read further. The first questionnaire is
designed to establish the current position of your organization on key
account management, overall and on the 10 fundamental requirements
of a successful KAM programme. The score profile will show you areas
of existing strength and areas in need of serious attention. Try it with
other people in your organization and see if they hold the same view.

The second questionnaire is aimed at your individual position, since
most readers of this book will have had at least some experience of
managing key accounts. Be as honest as you can no one is looking!

Come back to this page after you finish reading the book and repeat
the questionnaires. Your view may change as you learn more about
what key account management really means, in practice, and your
personal scores may change too, if you have picked up some of the
ideas in the book and implemented them.

1. Howwell developed is key account management in your

Score out of 10: 0 not at all; 10 best practice.

Does KAM in your organization have: Before reading
the book

After reading
the book

A role in achieving the strategic vision?

High profile support from senior management?

Buy-in from appropriate organizational framework
including teams?

Careful selection of appropriate customers?

Deep understanding of key customers and their strategies?

Well-grounded, analysis-based customer plans?

Customized offers, service or costs?

Excellent, well-rounded key account managers?

Excellent communications?

Supportive, effective, dependable processes?


FLAST04 12/22/2010 10:53:59 Page 15

2. Howwell do you know your key accounts?

Score out of 10: 0 not at all; 10 best practice.

Do you know: Before reading
the book

After reading
the book

Your key customers segments/products and how
you add value to them?

The customers strategic plan?

The customers financial health (ratios, etc.)?

The customers business processes (logistics,
purchasing, production, etc.)

What the customer values/needs from its

Your companys proportion of the customers

Which of your competitors the customer uses, why,
and how it rates them?

How much attributable (interface) costs should be
allocated to your customer?

The real profitability of the account?

How long it takes to make a profit on a major new


Before you read this book! xv

FLAST05 12/22/2010 10:58:7 Page 16

List of figures and tables


1.1 The value chain 10
1.2 Internal value chain: service companies 10
1.3 The product/market lifecycle and market characteristics 11
1.4 Concentration of buying power in industries 13
1.5 Cost of servicing the customer 14
1.6 Evolution of market maturity 16
1.7 The relationship as a medium 17
1.8 Relationship closeness versus relationship success 20
2.1 Key account numbers 31
2.2 The importance of defining the customer clearly 33
2.3 Three types of selection criteria 35
2.4 Account attractiveness assessment for selection as a

key customer 37
2.5 The key account selection matrix 40
2.6 One global customers statement of its requirements of

its suppliers 43
2.7 Relative business strength for comparative supplier

evaluation 44
2.8 Reducing numbers of key customers 46
2.9 Unidimensional list versus multidimensional portfolio 47
2.10 Adding the customer dimension to project approval 50
3.1 The relationship perception gap 57
3.2 Hierarchy of key relationships 59
3.3 Needs of the individual compared with the needs of key

relationships 61
3.4 Exploratory KAM relationship 64
3.5 Basic KAM relationship 66
3.6 Cooperative KAM relationship 70
3.7 Contact between selling and buying companies 72
3.8 Customer profitability and the relationship trap 74
3.9 Interdependent KAM relationship 74
3.10 Extent of information exchange between selling and

buying companies 77
3.11 Integrated KAM relationship 79
4.1 Customer expectations of minimum levels of trust and

relationship 91
4.2 Layers of understanding of the customer 93
4.3 Matching relationship level with key customer strategies 96
4.4 Customer organization chart overlaid with contact

importance and relationship 97
4.5 Mapping team-based relationships 100

FLAST05 12/22/2010 10:58:7 Page 17

4.6 Intercompany relationship layers 101
4.7 Combining organization and individual levels in

relationship-building strategies 103
4.8 Features of interdependent relationships 104
4.9 Mapping relationship links with the customer at different

levels of management 106
4.10 Mapping relationship links at different levels of

management 107
5.1 Business relationship network 117
5.2 Impact of cost savings on net profits 121
5.3 Progress of product development compared with

commitment of final unit cost 125
5.4 Topics for information exchange in KAM relationships 126
5.5 The IMP model 129
5.6 Risks and risk reduction mechanisms 130
5.7 Buying companys strategy direction matrix 132
5.8 Supplier relationships as a source of business advantage 133
5.9 Strategic supplier criteria 134
5.10 Development of supply chain management 135
5.11 Buyer and supplier perceptions of relationships 138
5.12 Balance of power versus common interest 142
6.1 Financial risk and return 148
6.2 The route to sustainable competitive advantage (SCA) 148
6.3 Customer retention by segment (answers to a Cranfield

questionnaire using an audience response system to
guarantee anonymity. The question was We measure
customer retention by segment) 150

6.4 Intangibles are the key driver of shareholder value 152
6.5 Customer profit contribution over time 155
6.6 Impact of customer retention rate on customer lifetime 156
6.7 The relationship development model 156
6.8 Financial risk versus business risk 157
6.9 A match between buyers and sellers 162
6.10 Mismatch between buyer (basic) and seller (integrated) 162
6.11 Mismatch between buyer (interdependent) and seller (basic) 162
6.12 Cranfield survey on key account profitability 163
6.13 The widening rift between profitable and unprofitable

customers 164
6.14 A basic profitability model 168
6.15 How organizations build value from key accounts 169
6.16 Portfolio analysis directional policy matrix 170
7.1 Example of a market map including the number of each

customer type 178
7.2 Determining the presence of market segments 179
7.3 Market segmentation process 181
7.4 A four-box directional policy matrix 182
7.5 Business partnership process 183
7.6 Forces driving industry competition 184
7.7 Objectives analysis exercise (industry driving forces) 188
7.8 Annual report summary 189
7.9 Financial analysis 190

List of figures and tables xvii

FLAST05 12/22/2010 10:58:7 Page 18

7.10 The value chain 191
7.11 Sources of differentiation in the value chain 192
7.12 Value chain analysis summary 192
7.13 Buying process for goods and services 195
7.14 Sales analysis and history 201
7.15 Competitive comparison and competitor strategy 202
7.16 Strategic marketing planning exercise SWOT analysis 203
7.17 The applications portfolio 204
8.1 The relationship development model 210
8.2 The 10 steps in the strategic marketing planning process 212
8.3 Strategic and operational planning 213
8.4 The impact of effectiveness and efficiency on success 216
8.5 Tactical orientation 217
8.6 Strategic orientation 217
8.7 Hospital groups and key account managers 218
8.8 The planning hierarchy 219
8.9 Prioritizing and selecting segments 220
8.10 Portfolio analysis matrix 220
8.11 Delivery service levels versus cost of holding inventory 222
8.12 Results of a survey of orders over a defined period 223
8.13 Short-term (one-year) customer classification 223
8.14 Breakdown chart with high fixed costs 225
8.15 Breakdown chart with low fixed costs 225
9.1 A process as a series of steps 263
9.2 Audit framework for supplier processes 264
9.3 Layers of activity and processes 265
9.4 The key account managers role by process component 267
9.5 Process data capture proforma 267
9.6 Strategic processes in key account management 269
9.7 Value-adding processes in key account management 276
9.8 Relationship development as a process 277
9.9 Critical steps in the business development process 278
9.10 Outline of a process for added-value customer

projects 282
9.11 Operational processes 283
9.12 Lines of communication 285
9.13 Reasons to communicate 286
9.14 Planning communication 287
9.15 Developing a communication plan 288
10.1 The role of key account management internally

and externally 296
10.2 Purchasing trends and supplier responses 298
10.3 Corresponding perspectives on the role of the key

account manager 301
10.4 Link between customer relationship, roles and

competencies 304
10.5 Linking roles to the key account strategy matrix 305
10.6 A model of an interdependent relationship 308
10.7 Cross-functional and sales teams in key

account management 311
10.8 Success factors for key account teams 314

xviii List of figures and tables

FLAST05 12/22/2010 10:58:7 Page 19

10.9 Example of how to allocate key account managers to
customers 316

10.10 Roles and core competencies and attributes 320
10.11 Examples of KAMScope# feedback 321
11.1 The purpose of performance measurement at different

levels in the company 328
11.2 Differences in performance of key accounts 330
11.3 The role of the strategic key account plan 335
11.4 Asset growth and yield 338
11.5 Drivers of behavioural performance 343
11.6 The customer element in performance 344
11.7 Factors linked to KAMmodel 347
11.8 Spectrum of approaches to incentivization 350
11.9 The strategic account plan as a three-way contract 355
12.1 Boundaries limiting key account management success 366
12.2 The interaction between different supplier and customer

organizational structures 372
12.3 Matching local and global structures 375
12.4 Traditional country-based structure 378
12.5 Structure with dedicated, independent key account

management unit 380
12.6 Compromise structure with designated lead key account

manager 382
12.7 A suppliers portfolio of customers 384
12.8 Decision-making levels 386
12.9 Assessing opportunities 387
13.1 Drivers of KAM 396
13.2 Transitioning to KAM 403
13.3 Cross-functional key account teams 408


1.1 Responding to rapid change 8
1.2 Refining the process 9
1.3 Redefining the marketplace 11
1.4 Pleasing the customer 13
1.5 Coping with globalization 15
2.1 Characteristics of three types of categorization criteria 36
2.2 How to scale and score selection criteria: examples 38
3.1 Criteria-based qualification of a potential key account 64
3.2 Advantages and disadvantages of basic relationships 68
3.3 Causes of disintegrating relationships 82
3.4 Summary of development stage characteristics 85
4.1 Building relationships through developing

specific features 105
5.1 Single company thinking versus extended enterprise

thinking 135
5.2 Sources of power 141
6.1 Intangible assets acquired by Procter and Gamble when

they bought Gillette for a total price of 31 billion 153

List of figures and tables xix

FLAST05 12/22/2010 10:58:8 Page 20

6.2 Example of market growth performance: InterTechs
five-year performance 160

6.3 Example of market-based performance: InterTechs
five-year market-based performance 160

6.4 Quality of profits 161
6.5 Performance of selected companies 19791989 165
6.6 Performance of sector leaders 19902000 166
6.7 Retention of customers by segment 166
6.8 Relationship risk factors 171
7.1 External audit 185
7.2 Internal audit 185
7.3 PEST analysis and market factors external

(opportunities and threats) 186
7.4 Internal factors (strengths and weaknesses) 187
7.5 Responsibility for financial expenditure 196
7.6 Buying influences by company size 196
8.1 Contents of a strategic marketing plan 214
8.2 KAM plan evaluation guidelines 226
10.1 The role of key account management 297
10.2 The role of the organization in key account management 299
10.3 Interpretation of success factors for key account teams 315
10.4 Practitioners view of the ideal breakdown of key account

managers time 318
11.1 Summary of measurements of key account management 329
11.2 Measuring key account management input 332
11.3 Differences between performance as behaviour-based

and results-based performance 340
11.4 Performance drivers 342
11.5 Checklist for change 345
11.6 Common reward strategies by KAM phase 352
11.7 Assessing a reward scheme 359
11.8 Checklist of rewards scheme application effects 359
12.1 Drivers of misaligned targets and their effects 389
13.1 Litmus test for KAM-ready customers 397
13.2 Account management versus KAM 398
13.3 Description of KAM 400
13.4 Comparison of incremental and step changes to KAM 401
13.5 Activity streams in KAM development 404
13.6 Phase A subphases in Scoping KAM 405
13.7 Phase B subphases in Introducing KAM 407
13.8 Phase C subphases in Embedding KAM 409
13.9 Litmus test for the organization 412
13.10 Litmus test for key account managers 412
13.11 Phase D subphases in Optimizing value 413

xx List of figures and tables

C01 12/01/2010 9:8:5 Page 1

1 The crucial role of key account

Fast track

For over 15 years, the authors have been researching global best
practice in the domain of account management, sponsored by
many of the worlds leading companies. The following topics in
particular have been the focus of our research:

Key account selection: Only a few selected customers can be
included in the key account programme.

Classification of key accounts: Derogatory labels like A, B, C, or
gold, silver, bronze should be avoided at all cost.

Key account profitability: The power of customers and their
increased purchasing power has led to greater demands on the
services of their suppliers. Unfortunately, many traditional
accounting systems are incapable of accurately capturing all of
the associated costs of dealing with major customers. Conse-
quently, many suppliers are acting in ignorance of which cus-
tomers make or lose them money.

Key account needs analysis: A deep understanding of the cus-
tomers business is essential to success.

Strategic planning for key accounts: Just as a three- to five-year
strategy is essential for any business, so strategic plans for
selected customers, signed off by the customers themselves, are
also critical to success.

Roles and skills of key account managers: Selling and negotia-
tion skills are no longer sufficient on their own.

Other issues: Information technology, organization structure
and internal marketing all contribute to creating successful key
account programmes.

The challenges that all organizations face today are:

Market maturity: In most sectors, mature markets have trans-
ferred power from suppliers to customers, as suppliers compete
for a share of a decreasing number of customers.

C01 12/01/2010 9:8:5 Page 2

Globalization: Market maturity has led to an increasing number
of industries in which only a handful of truly global companies
dominate the landscape. Hence, any supplier who cannot offer a
seamless service in every part of the world where the customer
operates will not win the business.

Customer power: With their new-found power, customers are
increasingly looking to selected suppliers to give them competi-
tive advantage by product and process development.

All these developments mean that suppliers have to be much more
stringent in their key account selection criteria. They must allocate
their scarce resources intelligently across their customer base, tak-
ing account of the risks associated with different kinds of customers
in order to


i want to solve my assignment

i want to solve my assignment

Version 1

Student ID Number:

Module Code Module Title Module Credits

GAA6000 Advanced Financial Reporting 20

Academic Year and

Examination Board Level & Block

2022-23, 1st Semester Jan 2023 L6B1

Method of Assessment Term Weighting

Coursework Mid-term 30 %

Module Leader Module Leader email

Abdul Samad Khan [emailprotected]

Additional Information (if any)

Module Tutor: Muhammad Saleem ([emailprotected])

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1. Assessment Details

2. Submission Details

3. Assessment Criteria

4. Further Information

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Submission problems

Unfair academic practice

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Assessment Details

Assessment title Abr. Weighting

Coursework WRIT1 30%

Pass marks for undergraduate work is 40%, unless stated otherwise.

Task/assessment brief:

Assessment Task

IAS 36 Impairment of Assets seeks to ensure that an entity’s assets are not carried at more than their recoverable

amount (i.e. the higher of fair value less costs of disposal and value in use). With the exception of goodwill and

certain intangible assets for which an annual impairment test is required, entities are required to conduct

impairment tests where there is an indication of impairment of an asset, and the test may be conducted for a

‘cash-generating unit’ where an asset does not generate cash inflows that are largely independent of those from

other assets.

You are required to critically discuss the Impairment of Assets of an entitys assets as per the guideliness
provided under IAS 36.

1) Explain and discuss the concepts with reference to IAS 36

a. Carrying amount

b. Cash generating unit

c. Are you agree that an entity shall assess at the end of each reporting period the recoverable

amount of its assets?

2) A company owns a car that was involved in an accident at the year end. It is barely useable, so the value

in use is estimated at OMR 1,000. However, the car is a classic and there is a demand for the parts. This

results in a fair value less costs to sell of OMR 3,000. The opening carrying value was OMR 8,000 and

the car was estimated to have a life of eight years from the start of the year.

3) An entity owns a property which was originally purchased for OMR 300,000. The property has been

revalued to OMR 500,000 with the revaluation of OMR 200,000 being recognized as other

comprehensive income and recorded as revaluation reserve. The property has a current carrying value

of OMR 460,000 but the recoverable amount of the property has just been estimated at only OMR

200,000. What is the amount of impairment and how should this be treated in the financial statements?

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This assignment work will be examined in accordance with the following criteria.

Introduction: 150 words

Structure and contents: 900 words
IAS 36 procedures of accounting treatment for:

Carrying amount
Cash generating unit
Discuss to an entity shall assess at the end of each reporting period the recoverable
amount of its assets

Discuss the following case as per IAS 36 guidelines for:

1) A company owns a car that was involved in an accident at the year-end. It is barely useable, so the value

in use is estimated at OMR 1,000. However, the car is a classic and there is a demand for the parts. This

results in a fair value less costs to sell of OMR 3,000. The opening carrying value was OMR 8,000 and the

car was estimated to have a life of eight years from the start of the year.

2) An entity owns a property which was originally purchased for OMR 300,000. The property has been

revalued to OMR 500,000 with the revaluation of OMR 200,000 being recognized as other comprehensive

income and recorded as revaluation reserve. The property has a current carrying value of OMR 460,000

but the recoverable amount of the property has just been estimated at only OMR 200,000.

What is the amount of impairment in both cases and how should this be treated in the financial


Conclusion 150 words

Note: References

Use at least 8 academic sources from journals, Books, or e-books.

Use the Harvard referencing style.

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Additional instructions:


Word count (or equivalent): 1200

This is a reflection of the effort required for the assessment. Word counts will normally include any text,

tables, calculations, figures, subtitles and citations. Reference lists and contents of appendices are

excluded from the word count. Contents of appendices are not usually considered when determining

your final assessment grade.

Academic or technical terms explained:

Submission Details



Mid 3rd November 2022



Return Date

After the result

announcement (10

working days) January

2023 EB



9:00 PM

Turnitin: Any assessments submitted after the deadline will not be marked and will be

recorded as a non-attempt unless you have had an extension request agreed or have

approved mitigating circumstances. See the Gulf College website for more

information on submission details and mitigating circumstances.

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File Format: The assessment must be submitted as a word document and submit through the

Turnitin submission point.

Your assessment should be titled with your:

Student ID number, Module code and Assessment ID,

e.g. 1610200 GAC3000 WRIT1

Feedback Feedback for the assessment will be provided electronically via Turnitin / MS Teams

/ Face to Face. Feedback will be provided with comments on your strengths and the

areas which you can improve. Module tutors give students two types of assessment

feedback: formative, which is given when the student is working on the completion

of an assignment or coursework, and summative, which is given upon completion of

the module. A comprehensive assessment feedback on your performance will be

given after the announcement of the results. (10 Working Days)

Assessment Criteria

Learning outcomes assessed

On successful completion of the module, a student should be able to:

Critically evaluate and apply the key requirements of company law, accounting standards and concepts in the

context of financial reporting

Extract, analyse and manipulate data, from multiple sources

In addition, the assessment will test the following learning outcome:

This assignment comprises 30% of the total assessments marks. It contains one component assignment. This will

develop the Analytical skill of the student. The discussion on IAS 36 enables the students to analyse and evaluate

the benefits of the different activities done in the class. This skill will eventually help them evaluate options

necessary to make decisions in the workplace

It will develop the following skills:

Analytical skills. This will develop the critical thinking of the students in analyzing the various tasks.

Research skills. This will enhance their proper research and referencing skills that are necessary when they

enter the real world of work.

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Mathematical skills. The analysis and calculation of the ratios will help the students develop the required skills

for their specialization.

Marking/Assessment Criteria

Task Description


Introduction 150 words 10 %

Structure and contents:
IAS 36 procedures of accounting treatment for;
Carrying amount
Cash generating unit
Discuss to an entity shall assess at the end of each reporting period the
recoverable amount of its assets
Discuss the following two case as per IAS 36 guidelines for:
900 words

80 %

Conclusion 150 words

10 %

Total 100%


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