Strategic Management Accounting - Coursework Example

STRATEGIC MANAGEMENT ACCOUNTING INTRODUCTION The paper below tries to examine accounting in the context of strategic management in the background of an organization. The key motive of this paper is the attaining of thorough understanding of the discipline of strategic management accounting according to the organization framework and the normal organization setting. It is written in short as S.M.A DEFINITION OF S.M.A S.M.A refers to the procedure of the analysis of the data pertaining to management accounting in relation to an organization and to the competitors to that organization. It is used purposely in the monitoring and the development of the strategy of a business. (Morse, 2003) it supervises all the company features together with the handling and the daily check up and scrutiny of the activities of the business competitor’s activities. This is the part of a company that enables it to be ahead of its competitors in all the aspects. (Morse, 2003) Strategic management accounting can in a broad way be well defined as the management accounting information use in support of decision making processes which are strategic in nature. In the recent days, there has been a high level of competition in the worldwide markets. The survival and progress of the companies in these industries is partly dependent on the S.M.A functionality through which easy assessment of strategic situations is witnessed. All these functions are traits of Strategic Management Accounting. (Morse, 2003). The main aim of this study is the understanding of S.M.A in the organization but rather not on the investigations of the techniques of the Strategic Management Accounting. SENSE MAKING This is the process through which people are able to give meaning to experience. This is the process whereby an individual is able to view and understand a particular situation and a particular issue and get a clear insight of what it is all about. (Cameron, (2004). Sense making is a situation which involves the conversion of a situation into a comprehendible form. It is through it that an action is taken. It is also a process of meaning materialization. Sense making is an aspect whose scope is more directed to the future activities as compared to the undertakings at the moment. Its focus is also more on the attainment of a certain action. (Manning, A. D. (2002).)It is then organized into written context and spoken texts. After that, the written and read out texts are read and edited. They are put into a meaningful form. (Cameron .E., & Green, M. (2004)). CONTEXT OF SENSE MAKING IN S.M.A S.M.A involves the creation of a competitive advantage of a firm against all the other firms and the competitors. (Agarwal, N. P., Jain, S. C., & Gupta, P. (2005))Strategic management focuses on the creation of customer and shareholder value. Through the concept of sense making, a strategic management accountant is able to well evaluate the business environment and make decisions that will be beneficial to the firm. (Manning, A. D. (2002).) Through sense making, a manager is able to see the weak point of the competitors and make advances of them in order to create a competitive advantage.( Cameron, E., & Green, M. (2004).) Without the proper use of sense making, a strategic management accountant will not be able to clearly evaluate the advantage he has over the competitor. The weaknesses and shortcomings of the competitors are first thought about as sense making states. They are then put into writing or read out. In this stage, the accountant analyses them and edits them. He then thinks of the effective policies to be put in place in the business. The last step involves the putting in place the procedures and the policies deemed right for the business. Once the policies are put in place, the business will have an upper hand in the competition arena. This clearly points out the usefulness of the application of the sense making concept in S.M.A (Morse, 2003) According to the context of S.M.A, the process of sense making is reinforced by the actions taken by the management accountants in a bid to comprehend the situation at hand. It is a constant and a continual process in the calendar of any organization. (Agarwal, N. P., Jain, S. C., & Gupta, P. (2005)). The repetitive and continual activities in the sense making process can be described as the usual S.M.A activities which may include cost analysis and also the recording of the cost details. It is the requirement of the management accountants in the continual processes to comprehend the events which are occurring. Such analysis includes for example the analysis of details and information pertaining to a particular competitor to an organization. The analysis should involve both the internal and the external factors relating to that particular competitor. DEFINITION OF A CORE PHENOMENON According to the research at hand, the core phenomenon which stands in the study of the S.M.A has been specifically identified as sense making. The definition of sense making is the intellectual undertakings resulted to by the management accountants in a bid to comprehend the happenings revolving in and around the organization. (Morse, (2003)). In the context of strategic management, sense making is a complex activity. This is according to the wordings of Divisional Controller that emphasized the statement. The basic concept of sense making can be explained as the increase in the understanding of the participants subsequent to their individual desires and needs which lead to the promotion of integrity within the organizations. The constant search for integrity practices within the organizations can be attributed to the existence of difficulties in the strategic situations from both dimensions which are external and internal. It is crucial to possess an understanding trait so as to be able to evaluate the activities at hand. (National Association of Accountants. & Institute of Management Accountants. (1998) In the context of the creation of integrity and transparency in the situations which are strategic, S.M.A plays the leading role. The strategic management accountants are on course in a bid to understand the circumstances that underpins the organizational accomplishments. (National Association of Accountants. & Institute of Management Accountants. (1998) the effects of the deeds of the organization on the goal attainment process of the company need a proper and a thorough comprehension from all the concerned parties if all the underlying issues are to be fully maximized. (Cameron, E., & Green, M. (2004).) In summary, the core phenomenon identified in this study which illustrates and explains the application of Strategic Management Accounting in the process is identified as sense making. In a normal business scenario, accountant’s services are sought after for the simplification of the situations in the business and the activities affecting the business. ( Agarwal, N. P., Jain, S. C., & Gupta, P. (2005)) A management accountant presents the findings in a more simplified way that is easy to understand and make meaning of all the situations in the business context. (Manning, A. D. (2002).) SENSE MAKING MODEL IN THE CONTEXT OF STRATEGY In summary, the strategic management accountants evaluate the activities of sense making in the context of strategies accounting through three correlated processes which are harmonizing, organizing, connecting and contextualizing and negotiating and assessment. (Cameron, E., & Green, M. (2004). ) S.M.A. underpins activities of sense making of the controller which facilitate the process of making sense to happen. The strategic management accountants carry out the process of making sense in a certain specific way. (Manning, A. D. (2002).) Making sense has been subjected to the background conditioners. They include activities both external and internal which take place as reaction to the setting. This translates to the search by the organization seeking transparency and integrity. (Agarwal, N. P., Jain, S. C., & Gupta, P. (2005)) All the underlying circumstances are essential factors in the process of making sense. Due to this, sense making takes effect to all the parties to this whether of non accounting or accounting origin. These parties on their part undertake the actions of making sense before the decision making process takes effect. (Agarwal, N. P., Jain, S. C., & Gupta, P. (2005)) Another result of making sense is the development of the skills and knowledge levels of the strategic management accountants through the different education and socialization processes. (Manning, A. D. (2002).) REFERENCES 1. Morse, W. J., Davis, J. R., & Hartgraves, A. L. (2003). Management accounting: A strategic approach. Australia: Thomson/South-Western Pub. 2. Hoque, Z. (2003). Strategic management accounting: Concepts, processes and issues. London: Spiro Press. 3. Cameron, E., & Green, M. (2004). Making sense of change management: A complete guide to the models, tools & techniques of organizational change. London: Kogan Page 4. Manning, A. D. (2002). Making sense of strategy. New York: AMACOM. 5. National Association of Accountants. & Institute of Management Accountants. (1998). Management accounting. Montvale, NJ, etc.: Institute of Management Accountants, etc. 6. Agarwal, N. P., Jain, S. C., & Gupta, P. (2005). Strategic management accounting. 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