Strategy and control form an important relationship in management accounting as they inform the nature and use of control systems to guide decision makers. Strategy is concerned with strategic issues and the aim of having sustainable competitive advantage. Strategies need to be well thought out as well as specific, measureable, attainable, realistic and timely. Control is the task of setting standards, measuring performance and taking corrective action to ensure objectives are achieved. Strategy and control frameworks provide a means of determining the link between strategy and control. One framework is Ferreira and Otley’s performance management system which provides a more holistic view of the organisation to ensure valuable information is available to decision makers. A second framework is Kaplan and Norton’s strategies map which shows the steps and links between the development of strategies and the operations of the organisation to provide decision makers with information regarding difficult areas of operations.
Strategy can be defined as complementary actions working towards maintaining competitive advantage; however, it might be more important to understand the definition of strategic management accounting. Hopper, Ashton and Scapens (1995) define this as “an approach to management accounting that explicitly highlights strategic issues and concerns. It sets management accounting in a broader context in which financial information is used to develop superior strategies as a means of achieving sustainable competitive advantage (p. 162). The importance of an organisation’s strategy can be noted when implementing control system tools as guidance is required. This often comes in the form of the strategies. Strategy can provid...
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...n makers would not otherwise have and will impact the outcome of decisions made for the better.
Works Cited
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[1] Noreen, Eric W., Brewer Peter C., et al., Managerial Accounting for Managers, Second Edition, McGraw-Hill/Irwin, New York, NY, 2011.
Donal E. Kieso, Wegandt J. Jerry, Warfield D. Terry. (2012). Intermediate Accounting. Hoboken, NJ: Wiley.
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This case assignment will discuss managerial accounting and different income statements a business owner may use internal to the company. Divided into two parts, part one will discuss and analyze the difference between managerial and financial accounting, the needs for financial information used for internal purposes. Additionally, it will focus on the managerial accounting profession and how its roles have changed in today’s business. Expanding on the profession, it will comment on the Certified Management Accountant (CMA) certification and how it differs from the CPA certification. Part two of this assignment
Hermanson, R., Edwards, J., & Maher, M. (2010).Accounting principles: A business perspective. (Vol. 2). Textbook Equity inc. DOI: www.textbookequity.com
Hoque, Z., (2003). Strategic Management Accounting: Concepts, Processes and Issue. 2nd Edition. Pearson Education Australia
[4] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 3, Cost Assignment, p. 54-59
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“Strategy is the direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and fulfil stakeholder expectations”(Johnson & Scholes, 1997). To Johnson and Scholes (1997), there are four main characteristics of strategic decision.
The American management scientist Joey Ross says a organization without strategy is like a ship without rudder. All its activities are calf round. Corporate strategy, defined by Michael E. Raynor, is a long-term plan of an company that aimed at creating and capturing its value in a specific product market. Vision and mission are two significant parts of the strategy. In short, the vision can be defined as “How to formulate a corporate strategy” and the mission can be defined as “How to implement that corporate strategy”. According to Tim Hannagan, corporate strategy is concerned with the range of a company’s activities in terms of whether this company focus on one part of the business activity or whether it concentrates on many. For example, Tesco, as a food retailer, it mainly sales food and sometimes clothes as well. However, recently Tesco moves into financial services. Moreover, strategy is concerned as a “bridge” or a tool. It matches the resources and the company’s capabilities to itself and finds out the possible opportunities to achieve the business goal. Therefore, Tim Hannagan regards corporate strategy as a strategic planning, “which is concerned with establishing a competitive advantage, sustainable over time, not simply by tactical manoeuvring but by taking an overall long-term perspective which directly influence line management”. Corporate strategy is based the current situation of the company and influence the company’s future. This essay will critically analyse the advantages of developing an effective corporate strategy in 2014 in terms of enterprise resource management, market share and manufacturing capacity. Competitive advantage also takes a significant part in this...
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
Heisinger, K., & Hoyle, J. B.(2012). Accounting for Managers. Creative Commons by-nc-sa 3.0. Retrieved from: https://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=137
According to Innes (1998), strategic management accounting is the provision of information to support the strategic decisions in organizations. On the other hand, the Chartered Institute of Management Accountants (CIMA) in the UK defines it as a form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information (CIMA Official Terminology, 2005:54).
Numerous definitions of strategy exist, in most circumstances strategy can loosely be explained as an overall plan of deployment of resources to ascertain a favourable position within a market (Zablah, Bellenger and Johnston 2004; Grant 1994, p 14). Further, imbedded in many successful organisations are strategies, the importance of which is to remain relevant in the market, and successful in the various attributes of business; profiteering, employee motivation, maintaining sustainable core competencies, effectiveness in operation, or efficiency in the conduction of operations. Therefore challenges involved in the formulation and implementation of a strategy can revolve around the overall external market, as well as internal
The significant differences in theoretical approaches to the field of strategy lead to two different conflicting views about the nature of the organisation and consequently how to measure performance. The conflict is between the shareholder and the stak...