And why, Strategic Management Accounting?
Simple definition: Management Accounting in the context of business strategies being planned and implemented by an organisation.
Strategy is the way that a firm positions and distinguishes itself from its competitors.
These business strategies must be developed in the context of the internal and external environments so that they are practical, or else they will remain a theoretical wish-list.
It is also important that business strategies are developed at the appropriate levels within an organisation An overall corporate strategy is need for the organisation in total with separate but linked competitive strategies for each sub-division of the business which is competing in different markets with different products.
At the corporate level managers must ask questions such as:
What business should we be in? What structure should we use? How should the corporation be financed? What will be our approach towards forex hedging?
At competitive strategy level, SBU's/business managers must ask:
How should this business compete in a particular market?
How can a competitive advantage be established and maintained?
These strategies have then to be successfully implemented in a dynamic and continually changing environment. It is highly unlikely that all the predicted outcomes from these action plans will be achieved.
There is therefore need for a process of evaluation, control and modification, where necessary. Thus, strategic management is a continual, iterative process.
Accounting for strategic management must operate successfully in this changing, evolving environment if it is to make a positive contribution to the financial aspect of this strategic analysis, planning and control process.
Traditionally, little attention to strategic issues. Too much focus on internal issues
Also a peanut-butter approach to cost... [continues]
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