Strategic Management Accounting Essay

2688 words - 11 pages

STRATEGICMANAGEMENT ACCOUNTINGDuring the last years issues of strategic management accounting have received widespread attention in the accounting literature. Adapting to the changing needs of business in the 1990's is one of the main challenges facing management accountants today. One dramatic change, in how many organisations operate, is the growing shift towards strategic alliances and partnering agreements with suppliers. However, there is still no comprehensive framework as to what constitutes strategic management accounting. Basically the management accounting practices has one or more of the following characteristics: environmental or marketing orientation, focus on competitors and long term forward-looking orientation. To implement these criteria there are twelve main key recommendations have been identified: attribute costing, brand value budgeting and monitoring, competitor cost assessment, life cycle costing, quality costing, strategic costing, competitive position monitoring, competitor appraisal based on publish financial statements and value chain analysis. This paper will review some of these recommendations that have had impact on development of strategic management accounting.The term SMA was coined by Simmond (1981, 1982). Simmonds (1981) defines the concept as 'the provision and analysis of management accounting data for use in developing and monitoring business strategy, particularly relative levels and trends in real costs and prices, volume, market share, cash flow and the proportion demanded of a firm's total resources'.Unlike the conventional cost and management accounting, strategic decisions usually involve the longer-term, have a significant effect on the organization and, have not only an internal element, but also have an external element. Adopting this definition suggests that the provision of information that supports an organization's major long-term decisions, such as the use of activity-based costing information for product profitability analysis, falls within the domain of strategic management accounting. This view is supported by Cooper and Kaplan (1988) who state that strategic accounting techniques are designed to support the overall competitive strategy of the organization, principally by the power of using information technology to develop more refined product and service costs.Because of the lack of consensus on what constitutes strategic management accounting Lord (1996) takes the external competitor focus a little further and outlines the different strands or emphasis in understanding of SMA. These are:-Competitor Focused Accounting (CFA): The key question being to determine what a company's competitors are doing.-Accounting for strategic position where the relationship between the strategic position chosen by a firm and the expected emphasis on management accounting is examined.-Cost Reduction: Based on analysing the different ways of decreasing costs and/or enhance differentiation of a firm's products,...

Find Another Essay On Strategic Management Accounting

International Business Financial & Management Accounting

6097 words - 24 pages -industrial world.In our attempt to explain the global trend of homogenization in macrolevel financial and management accounting practices, an issue worthy of special emphasis relates to corporate strategies and strategic positioning (Porter 1996). While the macro-level management accounting practices currently are oriented toward global convergence, there also is reason to suggest that the global tendency of convergence probably is even more

Studying Accounting and Branches of the Field

670 words - 3 pages nothing they think accounts relates to just bookkeeping and all that stuff but there is a lot in it basically accounts is the basic step towards advancement to other fields in accounts. Financial Accounting Management Accounting Environmental Accounting Strategic Financial Management. Audit There are many more areas in this study but these are the mains one’s now I will describe about all these areas Financial Accounting Financial Accounting is a

Managerial Accounting, Applied to Successful Project Accounting Practices

1844 words - 8 pages outside of the functional business world and most do not have formal business or accounting training, it is essential that project management professionals develop these managerial accounting skills. Project management accounting, budgeting, tracking, reporting costs and profitability are all skills that help senior project managers in understanding project performance as well as how this performance relates to the strategic goals of the

Theories for the Accounting Department of an Organization

1967 words - 8 pages could be extremely important for the companies along with the application of ERM as well.   References  BEREND AUTOR WIERENGA, G.H.V.B. (2000) Accounting Management Support Systems: Principles, Tools, New York : American.  Chernev, A. (2012) Strategic Accounting Management, 7th edition, New York: McGraw Hill.  D.), W.J.M.(. (1998) Cases in strategic Accounting management: an integrated approach, New York: Saga.  Damien McLoughlin, D.A.A

Cost Accounting

1319 words - 5 pages Cost Accounting PAGE 2 Running Head: COST ACCOUNTINGCost AccountingAns.1Yes, Generally Accepted Accounting Principals (GAAP) is made for financial accounting. Management accounting is for internal purposes and can be flexible to meet the requirements of the organization. Management accounting is done for internal purpose of the organization. Generally, accepted principals govern only those transaction or accounting systems which are related to

Functions of Management

563 words - 2 pages with strategic planning which would enable them to implement their mission statement promise.Anticipating a tremendous workload, the management staff needed to hire additional staff. The staff needed to be trained and equipped with technology resources to be able to provide efficient and accurate accounting services. They organized training seminars and purchased new computer, desks and supplies.The leading and motivating function was a major

Traditional Management Accounting and Innovation Management Accounting

1756 words - 7 pages balancing of short and long-term aims in all three aspects of the company performance - customer, internal business process and learning & innovation. But with these changes ,traditonal mangement accounting considered to be too limited to generate relevant information for the long-term development . (Drury, 2008)This essay will evaluate the traditonal management accounting in comparison with the new mangement techique.It is criticized that the

Managerial and Financial Accounting

902 words - 4 pages professional body. Managerial accountants utilize procedures that are not regulated by a standard-setting body. Both financial and managerial accounting is important to all organizations. Without managerial accounting, management would not be able to forecast and make sound decisions. It helps upper management evaluate, plan and control the operations of the organization. Financial accounting is equally as important to an organization in that it helps

Changing Technology Due to Changing Manufacturing Environment

2157 words - 9 pages of potency and facilitate higher regulate management-labour relations. They mentioned that it absolutely was this perceived “lost relevance” that has triggered the event of Activity Base cost accounting (ABC) within the middle 1980‟s. It purports to undo the issues of standard management accounting by providing a company with strategic, operational, financial and non-financial info. It acknowledges that business may be a series of connected

Becoming a CPA

1422 words - 6 pages provide an independent analysis. CPA’s are many things. They are chief financial officers for Fortune 500 companies and advisors to small neighborhood businesses. They work for large and small public accounting firms. They are well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting. To become a CPA you need to meet the requirements of the state or jurisdiction in

Becoming a CPA (Certified Public Accountant)

1285 words - 5 pages financial officers for Fortune 500 companies and advisors to small neighborhood businesses. They work for large and small public accounting firms. They are well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting.To become a Certified Public Accountant (CPA) you need to meet the requirements of the state or jurisdiction in which you wish to practice. These requirements

Similar Essays

Strategic Management Accounting And The Contributions That It Can Make To The Success Of Organizations

1837 words - 7 pages During the late 1980s, criticisms of traditional management accounting practices were widely publicized and new approaches, which were more in tune with the current competitive and business environment, emerged (Drury, 2002, p923). A particularly effective approach was strategic management accounting (SMA). However, Tomkins and Carr (quoted in Drury, 2008, p.570) note that there is no comprehensive definition of SMA, even though it has received

Managerial And Financial Accounting Essay

933 words - 4 pages goals (Investopedia, 2008). Managerial accounting is concerned with providing information to managers inside the organization and those who directly control the company's operations. The management team strives to create value for the organization by managing resources, activities, and people in order to attain the organization's goals effectively. The main objective of managerial accounting is to motivate managers and other employees to direct

Managerial And Finanical Accounting Report

605 words - 2 pages tailored to fit the specific needs of the manager at a given time. Financial accounts are prepared for a given period, usually one year, while management accounts can be prepared for any period. For example, retail businesses often prepare daily reports on sales and stock levels (Comparison of financial and management accounting, 2005). Managerial accounting involves more than just financial statements. Managerial accounting can include cash

Managerial Financial Accounting Paper

760 words - 3 pages ). Management (Phillip, Libby, Libby, 2006) accounting influences business decision making in three areas: strategic management, performance management, and risk management. Strategic (Phillip, Libby, Libby, 2006) management involves the relationship of the management accountant in the role of partnering with the organization's goal setting and achievement on a corporate level. Performance management enhances the practical business decisions in