The Core Management Accounting Roles - Essay Example

? By Insert Presented to Location Due Define strategic management accounting Strategic management accounting is a kind of management accounting where focus and emphasis is put on both internal and external factors of a firm. In addition, it as well emphasis on non-financial information as well as the firms internally generated information. According to Hirsch (2009) he provides that this is a form of management which uses accounting information about competitors and the firm for the purpose of developing and developing a firm strategy (Hirsch, 2009). The accounting information that is mainly used includes trends of prices, cash flow, market share and firms available resources. 2 (A) Define Sense-making This refers to the process whereby individuals provide a meaning to a particular event or experience. This process is attributed to the existence of cognitive gap where individuals encounter out of making sense from any observed data or information. According to Kauer (2008) in his investigation underlying individual sense-making provides that sense-making is basically an approach of thinking involving assumptions, conceptual frameworks, methodologies and substantive propositions (Kauer, 2008). This process in real life is considered a capability in the corporate world because of its importance in the leadership of dynamic and complex situations. The general activities underlying sense-making include collection of relevant, valid and reliable data, conversations and actions recommended. 2 (B) Describe the context of sense-making in strategic management accounting It is notable that there are theories which have provided evidence that strategic management accounting is vital in developing sense-making process. Sense-making in the context of strategic management accounting, involves examination and observation of an entity events, actors and information to enhance understanding of present, future and past events and circumstances. According to Hoque (2006) shows that by coming up with strategies involving balancing, compromising, contextualizing, bridging and harmonizing management accountants undertake sense-making activities (Hoque, 2006). Strategic plans attributed to different styles of management accounting is closely influenced by the undertaken sense-making activities and concepts. Among the core management accounting roles is to control and manage the organization budget. This involves sense-making processes activities such as knowing the budget, project funding and the current costing of the project. The sense-making activities ensure that there is accuracy in the analysis as well as the collection of organization values and operating costs. Strategic management accounting involves assigning of costs outside the budget. In regard to this aspect of strategic management accounting sense-making process is incorporated in bringing the whole picture where all the expenses and cost are pre-determined by the underlying managers. The sense-making activities under this include market analysis follow up, customer service costs and expenses. Strategic management accounting has notably adopted sense-making process in conducting competitor’s analysis and comparison (Hoque, 2006). Sense-making process integrated in the management accounting process offers an avenue where other businesses costs, revenues and profitability are examined within the same industry. According to Tor Hernes, (2012) this is attributed to organization products and services costs constantly changing because of the dynamism, market forces and other organizational factors (Tor Hernes, 2012). Sense-making activities among the strategic management manager will ensure that measures are put in place for the company to enhance its cost management in comparison with their competitors. This can also be linked with the company enhancing profitability and consolidating its market share. Finally sense-making activities in the context of strategic management accounting regard organization strategic production. In manufacturing and production industries strategic production is the foundation of management accounting. The strategies underlying this have been developed through sense-making process majorly lean manufacturing strategies. These activities include taking into account expenses, supplies, capital and labor. This ensures that organizations, companies, firms and businesses produce what is necessary saving more costs attributed to sense-making processes incorporated in the strategic accounting management (Kauer, 2008). 3. What is a core phenomenon? Explain the rationale to use core phenomenon in the study? The core phenomenon is a concept in the study of sense-making processes in the strategic concept of management accounting. Sense-making and its core phenomenon underlies the mental activities and strategies adopted by management accountants in order to understand specific situations of a company. It is notable core phenomenon sense-making in a strategic context is complex which implies that from a small controlling of a company can be made efficient to become a strategic controlling. The core sense-making phenomenon can be referred to the requirement that all the company stakeholders must enhance and foster their understanding of strategic situations (Hirsch, 2009). Organizational transparency and strategic understanding is the notable consequence of the sense-making core phenomenon. The two notable dimensions have been mainly identified as the understanding cause-effect relationships and linkages and grasping the wholeness of organization situations. Therefore a core phenomenon focuses majorly on sense-making activities as well as its underlying processes and impacts in an organization The rationality behind the use of core phenomenon is basically its significant vital role in an organization strategic context. The achievement of organization transparency and situation understanding ensures that the perceived complexities of its external and internal contexts of strategic situations are minimized. In addition it equips strategic management teams with the capability to asses the various strategic situations for effective management (Tor Hernes, 2012). In the study of strategic management accounting it ensures that its main function of creating transparency and understanding is fostered. This facilitates assessments and effective decisions in regard to mapping of various complex cause-effect relationships influencing organizational actions. The influence of the core phenomenon of sense making notably impacts the organizational actions in regard to its profitability and performance as well as the reason why to maximize any of these strategies (Hoque, 2006). The core phenomenon provides an insight understanding of cause-effect relationships and linkages that needs to be addressed in an organization and understanding various strategic situations within the organization. In addition important aspects in an organization strategic context are identified and the strategies focused on them. Strategic management accounting, their underlying actions based on a core phenomenon of sense-making enhanced organization understanding and its underlying operations through routine management accounting practices (Tillmann, 2006). This facilitates the ability to predict events and the assessment of the competitor’s potentiality making use of both internal and external information 4. Describe the paradigm model of sense-making in a strategic context. The paradigm model of sense-making is evident in various strategic considerations in organization notably companies. In strategic context company management accountants have widely adopted various strategies contributing significantly to the sense-making process and its underlying activities. The paradigm model of sense-making indicates the refined concept of sense making and all these is attributed to the strategies (Ward, 2012). This paradigm can be discussed using these strategies which explain the role of sense-making activities and its successful implementation. The identified strategies include structuring and harmonizing, bridging and contextualizing and finally compromising and balancing. It is through the implementation of these strategies underpinned in the strategic Management accounting that the sense-making activities are evident. According to Kauer (2008) in the study of sense-making in organizations provides that although sense-making activities are implemented in varying ways in an organization it is always specified in strategic context majorly management accounting (Kauer, 2008). It is notable that sense-making activities in organizations and companies are subjected to constraints as well as contextual conditioners. The management accounting strategic aspect of structuring and harmonizing promotes better understanding and transparency and these sense-making activities arise in response to this strategic context. This enhances flow of information thus enhancing understanding and clarity, at the same time this paradigm model in this strategic context minimizes inherent complexity. For the purpose of comparison company or organizational information should be arranged and organized systematically. This includes both internal and external sources in adherence to the prescribed rules; it is notable that the internal information of the company has significant influence on sense-making process (Tillmann, 2006). Sense making also play important role in sense-making activities such as information sets, management know-how and the overall perception of the company. The strategic measures put in place such as bridging and contextualization and others formed important inputs fostering sense-making efforts. This is achieved through comparison and contextualization of any information which is useful in strategic context (Kauer, 2008). According to Moore (2011) he provides that the underlying constraints plays significant role triggering sense-making activities thus transforming how these strategies are implemented and monitored within the organization or a company. Sense-making activities in strategic context are undertaken either consciously or unconsciously where in the case of management accountants it enables them to understand better strategic situations. Management accounting as a strategic option comprises of complex operations and this requires full implementation of the underlying strategies and sense-making activities (Moore, 2011). Sense-making in a strategic context contributes to full understanding of organization strategic context and its complexities. Sense-making process in an organization has its underlying consequences to both the internal and external stakeholders since they can be easily communicated to these audiences. It is notable that this process in strategic context play significant role in regard to strategic decisions taken. Finally on the paradigm model of sense-making in a strategic context is the overall improvement of strategic management skills attributed to the fostered organizational learning and socialization processes. References Hirsch, M. L. (2009). Advanced management accounting. New York: Cengage Learning EMEA. Hoque, Z. (2006). Strategic management accounting: concepts, processes and issues. London: Pearson Prentice Hall. Kauer, D. (2008). The Effect of Managerial Experiences on Strategic Sensemaking. Boston: Springer. Moore, D. T. (2011). Sensemaking: A Structure for an Intelligence Revolution. New York: Government Printing Office. Tillmann, K. (2006). Strategic Management Accounting and Sense Making: A Grounded Theory Study. Southampton: University of Southampton. Tor Hernes, S. M. (2012). Process, Sensemaking, and Organizing. Oxford: OUP Oxford. Waldeck, T. z. (2006). The effect of team composition on strategic sensemaking. New York: Springer. Ward, K. (2012). Strategic Management Accounting. London: Routledge. Read More