(Christina Wiwik Sunarni 2013) The rapid changing of business environment recently into global, competitive and turbulence business environment give significant impact to how people doing their business in any type of corporation, either manufacturing or non-manufacturing company, either big, medium or small company and either profit oriented or non-profit company. In today’s rapid changes, every organization must continuously ensure its sustainability in global market. Companies must able to compete nationally and internationally in order to sustain in the market. (1) (MAGDY G. ABDEL 2011) More of recent research mentions that the term of strategic management accounting was first coined by Simmonds (1981). Who defined it as the provision and analysis of information about a business and its competitors for use in developing and monitoring the business strategy? However, in the contemporary business environment, organizations are experiencing greater challenges, increased competition and rapid diffusion of knowledge. (2) Traditionally management accounting has been characterised as providing information to aid managers internally in a firm and as such the focus of the management accounting systems has also tended to be internally orientated. During the 1980s and 1990s a growing number of academics (Johnson and Kaplan, 1987; Bromwich and Bhimani, 1989, 1996) began to recognise that management accounting was not adapting to changes in the modern business environment and as such was not fulfilling its function to aid managers. In a bid to improve the quality of management accounting information for managers it was necessary to focus more widely on the external environment of the firm and thus the concept of strategic management accounting evolved. Now (strategic) management accounting involves the provision of information, which is externally orientated, market-driven and customer-focused and provides managers with a range of techniques and tools to facilitate strategically-orientated decision making. (3)
This paper critically evaluates the whole notion of strategic management accounting. It argues that the techniques and elements of strategic management accounting may in many cases already be found in firms. However, the information may not be quantified in accounting figures, and may not be collected and used by management accountants. Rather, the techniques for gathering and using information necessary for survival in a hostile and competitive environment may be part of the operational management of firms. Having heard about a firm that seemed to have successfully followed a strategy of differentiation in the face of a radically changing competitive environment, the author was interested in whether its management accounting system supported its strategy, and whether the management accounting system included the elements of strategic management accounting. In order to determine the relationship between the management accounting system and the firm’s strategy, the firm was studied over a 12-month period. Initial information about, and access to, the firm was obtained through a former director. Data were obtained from a variety of sources, including newspaper articles; company reports; interviews with former and present directors, managers, employees and customers; observation; internal management accounting and other records; and advertising material .
Elements of strategic management accounting
Collection of competitor information. In order to compare the firm with competitors, information about competitors’ pricing, costs and volume, and information to enable determination of market share would have to be collected. Exploitation of cost reduction opportunities. Instead of merely meeting standards, there would be a focus on continuous improvements. These would include finding ways of reducing costs and / or enhancing differentiation by exploiting linkages in the value chain,...
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