Introduction: With the advent of information technology, customers have found a way to aggressively bargain with a product or a service provider. Information technology has allowed consumers to go on the internet, and extract all pertinent information regarding their desired product or service…
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This shift in orientation has brought with it the requirement to induct new practices and upgrade exiting practices. In this endeavour, a change in the orientation of management accounting is required. Rather than just supporting internal processes and providing information for decision making by top management, management accounting has taken a more strategic outlook (Baines and Langfield-Smith, 2003). Management accountant, from just being focused on operational issues have added new responsibilities in their job description. These responsibilities are more strategic and have to do with knowledge regarding customers, financials, human resources, and processes. Thus, management accountants have become strategic accountants in this new and evolved business environment (Dixon, 1998). In reaction to a more pronounced competition, companies have started doing competitor appraisals, changing from its previous practice of internal assessment. A framework for strategic management accounting, based on contingency theory has been adopted by companies. This framework allows companies to better adapt their internal business processes to fit the underlying variables in the external business environment (Langfield-Smith, 2008). The internal business processes should correspond with factors like the firm’s size, business strategy, and market orientation etch. In order to design business processes in this way, the urge is to use management accounting techniques which have strategic applications, and use the insight of management accountants in strategic decision making. The second point requires giving management accountants a more active role in the strategic management processes (Cinquini and Andrea, 2007). These changes, although very dramatic, are essential to maintain a sustainable business. Businesses from being mechanical have become more organic, making them sensitive to the slightest of change. But in order to maintain a competitive business operation changes in the way things are done is required. The development of commercial management expertise, including marketing, general management and financial management, has become essential (Atkinson, Banker, Kaplan, and Young, 2011). This has given rise to the concept of looking at the business holistically. This concept of looking at the business from a 360-degree viewpoint has given precedence to the build-up of cross-functional teams, team-based structure and horizontal integrations. This new approach has blurred the line between boundaries and has lead to a culture build around information sharing and collective decision making. Firms who believe in this have merged their activities across their supply chain to become more customer and competitor focused (Bisbe, Batista-Foguet, and Chenhall, 2007). As mentioned earlier, management accounting has taken a more strategic outlook, with a focus on strategy, long term future oriented time frame, and an external focus, whereas previously, this focus was more towards internal processes and a short-term time frame. Thus this change is more of a strategic nature rather than of any other reason (Potter, 2005). Consequences of the changes: As highlighted earlier, businesses in order to face the hostile business environment effectively and efficiently have become more nimble and strategic in orientation. Traditional functional departments have been dissolved to form cross functional teams. Functional areas are working keeping in
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……………………………………………...6 References…………………………………………………………………………………………7 Introduction British Airways plc (BA) is one of the largest airlines worldwide and is considered as the national carrier of the United Kingdom based on its large fleet, international flights and destinations.
XYZ Financial Consultants were engaged by Sprockets Ltd to evaluate their prevailing job costing system for its efficiency. It was understood that Activity Based Costing method is being considered to replace the current traditional system and that recommendations in this regard were required.
Specifically, the multi-divisional forms of business, which are the results of the emergence of large-scale business, led to a need for developing new forms of accounting. Furthermore, the strategic developments that were taking place occasioned new managerial structures, which in turn brought about the need to redesign the accounting system – these changes led to differentiation of management accounting on one hand and financial accounting on the other hand.
Since the director’s of companies cannot execute their company’s strategies on their own, they have to rely on people and thus create an organization structure that allows decentralization of management responsibilities. According to Hoskin & Macve (1990, pg.
This occurrence has forced many businesses and organizations to devise different strategies through which they can adapt to the existing business environment, and thus increase both customer and organizational value. This has been achieved through: Enhanced marketing/outreach efforts The business environment is ever changing and very dynamic.
Management accounting is a branch of accounting which mainly deals with various managerial aspects. This is primarily handled by the managers within the organization, and it is an essential component in taking appropriate decisions. The concept of management accounting comes under the Management accountant who is responsible for the preparation of financial statements, and management accounting report for appropriate decision making.
They play different roles in the process of satisfying the needs of the stakeholders of a particular organization. This essay attempts to provide a clear understanding regarding the differences that exist between the management
In Just-in-time system, the firm only produces what is required at the right time and when demand of product arises without excess production. Firms adopt the just-in-time accounting practice to eliminate
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