Management Accounting Innovation - Assignment Example

Running Head: MANAGEMENT ACCOUNTING INNOVATION Management Accounting Innovation Name Institution Date Q1 Management accounting innovation is a new idea in an organization that helps the managers to make decisions towards attaining the goals of the organization. This idea is either financial or non-financial information (Horngren, 67).the main purpose of management accounting is to provide managers with information which results to effective decision making. Therefore management accounting techniques are a vital prerequisite in any organization (Green, 34). Activity based Costing (ABC), Activity based Management (ABM), Balanced Scorecard (BSC) and Target Costing (TC) are some of the management accounting innovations which have been effective in many organizations when implemented. Therefore, management accounting innovation is one of the core themes driving any organization. Management accounting systems serves the decision control of the top managements as well as the lower level mangers. When the accounting systems are used for decision control, innovation brings about potential for wealth effects to occur. Innovation is considered one of the major determinants of long term organizational performance (Clark, 90). This means that management accountants are a major body for an organization to meet its goals which is the core aim of any firm; however, this is effective if the managers take and implement the information given to them by the management accountants. The main objective of any organization is to maximize profits and attain its goals. Management accounting innovations are a main consideration when an organization is aiming at improving its performance. For example, when product innovation is applied it results to improved sales. Product innovation is the development and the launching of products that are unique from the existing one (Emsley, 157). Management accounting management is used to improve performance. Performance in any organization is the degree of goals achievement which is financial or non – financial. In this matter, self rating instruments are developed for evaluating the business effectiveness (Gupta, 45).therefore when Management accounting innovations are incorporated in running any organization; they result to offering innovative information which helps the organization to attain its goals and objectives. Q2 Management accounting innovations are strategic management accountings that join the strategies to the value chain and link activities across the organization which relate to cost objectives. These innovations are very important in an organization setting. This is because they affect the activity based costing and activity based management. Activity based costing is developed to suit the manufacturing context, where activities are identified and costs allocated depending on the proportion of the resources it uses, and then the cost pool is allocated to the extent of cost driver absorbed by the product or service. Activity based management is where deals with the identifying the benefits and influence of the innovation to the managers and employees satisfaction. This results to increased production in an organization when it is implemented (Emsley, 158-169) . For effective performance of any company, the nature of information required for effective management and decision making is important. This calls for an innovative strategy which is supplied by the management accounting to the managers who in the end make decision which affect the performances of the organization from the information given by the management accountants. Therefore management accountant’s innovations are important and play a vital role in decision making in any organization. Management accounting innovation plays a vital role is the running of an organization. This is because the innovations make the managers make decision which will result to improved performance. For example, management accounting innovations affect the organization in two areas of decision making. Strategic decision making and Tactical decision making. Strategic decision making focuses on the impact of competing strategies and their influence on how the organization handles their resources. An organization achieves a competitive advantage by controlling resources that create customer value and that is not easily replicated (Emsley, 169-175) . The use of managerial accounting innovations for tactical decision making is a major area for management of a company. In this case, the focus is shifted to how worker motivation affects production. When workers are motivated there is higher chance that they will work hard and smart thus improving the performance of the organization. Management accounting aims at meeting the decision needed by managers in an organization. Recently, there have been changes in organization designs due to change in information technology and competitive environments, resulting to new management accounting techniques (Bjpoornenak, 325-338). These changes lead to innovations from management accounting which aims at fitting in the changing economic logics, social and political changes. Therefore, Management accounting plays a big role in coming up with these innovations which influence the unit managers to make decision that are aimed at increasing the organization’s performance. Therefore, a Management accountant plays a vital role in initiating innovations in an organization. Management accountants can easily know whether an innovation is appropriate or not because they work together with the business unit managers. This means that these management accountants have a clear understanding of the decision made by the managers. In this case they are therefore an important unit in the organization because they know the right information for the right decision. Management accountant develop innovations to improve the performance of the organization by motivating the workers through incentives to innovate. These are rewards that enhance job satisfaction that is derived from greater job enrichment (Argyris, 234). The use of non – financial measures and financial controls improve the firm’s performance. Management accountants are involved in several roles in the organization. They play roles like scorekeeping, attention directing and solving problems (Simons, 124). Scorekeeping and attention directing involves compliance reporting and control type issues while problem solving role involves providing relevant information to unit mangers for decision making ( Friedman, 54), for any organization to improve performance, there must be a good supply of information and innovations that convince the unit managers to make decision that improve performance. This therefore requires great innovation by the management accountant. Management accountants are involved in giving information to unit managers that result to decision making. They are involved in controlling output, behaviors and social roles in operational and executive levels of an organization which at the end improves competency and performance (Emsley, 175). Therefore innovations in an organization are influenced by the management accountants. Management accounting is an operation containing value added and continuous improvements of programming, measuring, designing and implementing financial and non financial information that helps managers towards decision making that help the organization attain tactical, operative and strategic objectives (Foster, 90). Therefore, innovation of important information is required and this is influenced by management accountants. Management accountant’s innovations are important in driving the modern organization. This is due to the fact that these innovations affect the running of the entire organization towards attaining its objectives. They link the senior management and the workers who affect the performance of the organization. It is therefore true that a management accountant plays a key role in initiating innovations (Emsley, 175-178). Q3 It is evident that role involvement affects the innovativeness in terms of knowledge about the appropriateness of innovations, acceptance of the innovations by business unit managers and incentives to innovate. Role involvement according to Anderson (145) is the centralization of the functions of the management accountant to being a functional unit. This kind of set up has the informational needs of the business unit mangers at heart. The business accountant is able to view the appropriateness in the innovation in relation to the budgetary needs. The innovations have to meet the needs of the firm as this will dictate if the new idea will be embraced or not. Appropriateness will focus on the production costs which will be able to tailor the innovations to be affordable to the consumers. The business accountant is able to view the appropriateness in the innovation in relation to the budgetary needs. The innovations have to meet the needs of the firm as this will dictate if the new idea will be embraced or not. Appropriateness will focus on the production costs which will be able to tailor the innovations to be affordable to the consumers. The management accountant who views the innovation from a business unit orientation other than from a functional point of orientation has a direct link to business unit managers who are a direct link to product consumers. Innovation is the inventing of a new idea that is yet to be applied or practiced Rogers (108). The idea has to originate an innovative mind and have to serve the needs of the consumers who are in touch with the business unit managers. The business unit managers are more converse with the supply side as they are able to explain which products are first moving. The innovations have to be appropriate to the business management unit as it represents the needs of the majority consumers by gauging its supply sequence. The close proximity the management accountant enjoys with the business unit is unique as it is able to assess and prioritize valuable information that will result in appropriate innovation. The role of management accountants as scorekeepers and units that are meant to give direction as they are better placed in making decisions as the decisions have to meet the dynamic needs of the business units who are a direct link to product consumers. Thus the knowledge of the appropriateness of the innovativeness alone is not sufficient as the innovated product has to be acceptable by the business unit managers are they have the information on the flow of goods. It is vital for the business unit manager to familiarize him/herself with the innovative material information. The business unit manager can break the chain of innovation simply because the product innovated does not meet his needs (Dunk, 132). A management accountant with a functional unit unlike the business oriented approach will tend to be preferred to the business unit managers as he conforms to their needs. According to Argyris and Kaplan (154), the innovation would be hindered by the incentives given to the management accountant as gratitude for his or her innovation. This could include, material rewards which aim at boost the morale of the innovator. This is largely determined by the business unit manager as he/she is the main actor who indicates the flow of innovated products. Products that are not supported by the business unit manager will receive a negative evaluation and result in no incentives to the management accountant. Functional oriented management accountants will be evaluated on the achievement of the functional objectives which include management of steady cash flow. The management accountant in this phase will aim at convincing the business management to accept and value the benefits of the innovated product. It is therefore certain that management accountant with a business unit orientation will benefit much more compared to the functional unit oriented counterpart who will spend much more time in convincing the business manager of the importance of the innovated products. A business unit oriented counterpart will have little time convincing the business unit manager as the innovations will have met his/her requirements. A businesses unit oriented management accountant embraces innovation to greater levels than the functional oriented management accountant. The system involves the management accountant to be conversant with the business unit which is the key element that innovativeness grows from. The business unit manager is the basic determiners of how new innovated products are accepted in to the market. Newly invented products have to pass through various stages for them to be accepted by the consumers. The business unit manager has to give a nod for the products to be allowed to pass through the chain. A business unit management orientation allows the idea of the business unit manager in his innovation and thus the new product is easily marketed to the consumers. Q4 Management accounting aims at building a functional team that will be able to gear their efforts in attaining the formulated goals of a firm. For this to be effective the firm has to recognize the organizational structure that exists in the firm. The organizational culture that exists in an organization explains the kind of management style that is in existence in the firm. This will be the basis on how the tasks are handled in a given firm (Schwartz, 206) a management accountant is able to identify the needs of a community through the analysis of the costs and thus being able to formulate goals and a right innovation strategy. This will enable him cultivate uniqueness in the team that is aimed at competitiveness. Unique varying ideas geared towards the same goal have the ability to produce unique innovations that are able to sustain the ever competitive nature of the business environment. The management accounting encourages support that involves cooperation and teamwork which increases creativity. The management in this sense is able to guide the team in to production of products that are appropriate based on their flow and demand in the market through the analysis of the business unit management cost. To increase efficiency, the management accountant can organize his firm into departments each handling different but complementing functions Gosselin’s (48). The management innovative accountant can be able to effect change through his organization by evaluating he product complexity in the firm’s environment. The finding of the product diversity is able to enable the firm to be able to improve flexibility of a firm by assessing the variability in product demand. This will be able to assess whether the innovations are able to meet the dynamic demands of the consumers and make the product competitive in the prevailing market conditions Nguyen and Brooks (107). The management accountant’s interaction with the business management unit results in the realization of the business unit goals and the gain of insight on the performances of products in a market. This will enable the management accountant to convince the firm leadership in the need to embrace the innovation to meet the performance results which will guide the management on the right innovation concept. The right leadership that embraces innovativeness increases the likelihood of new ideas being implemented and encourages creativity. By meeting the needs of the business unit and having a leadership that embraces innovation the management accountant is able to offer incentives to the innovators as the products are able to be accepted internally and externally. The management accountant should be able to advice the firm on the right performance indicators. He/she should be able to identify the right methodology in measuring and evaluating the business and define a successful course for it. The scorecard is identified as a commonly used tool for identifying the position of the firm and a clear way to be able to find the right strategies to attain or maintain success in a long term basis. The scorecard should be able to enable the management accountant experience a meaningful corporate structure that incorporates the best business practices (Baldvinsdottir et al, 245). The management accountant should acquit himself with the opportunities that innovations bring to organizations. They should be able to make smart choices in identifying the innovations that will meet the social and behavioral needs of the ever dynamic society. An understanding of the right implementation strategy is also of great importance as this will ensure sustainability and stability. The management accountant has to adopt new accounting tools that will be able to give him/her the relevant information needs to maintain a radical change. They should be able to form their decisions based on the past eventualities and be able to understand the existing political dynamics and culture in the firm (Burns, 126). References Anderson, S.W., 1995. A framework for assessing cost management system changes: the case of activity-based costing implementation at General Motors, 1986–1993. J. Manage. Acc. Res. Argyris, C., Kaplan, R.S., 1994. Implementing new knowledge: the case of activity-based costing. Acc. Horizons 8. Baldvinsdottir, et al 2009 ‘The changing roles and changing discourses of the management accountant. Bjørnenak, T. & Olson, O1999 Unbundling management accounting innovations, management accounting research. Vol 10 No 4, pp. 325-338 Burns, J & Scapens, R 2000 ‘conceptualizing management accounting change and institutional framework’, Management accounting research. Clark, K.B., & Fujimoto, T 1991 Product development performance. harvard business school press:boston. Dunk, A 1989 Management accounting lag Abacus. 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