AC2200 TOPIC 6 Flashcards
What is SMA
Strategic management accounting is the provision of information to support strategic decisions in organisations
What does SMA move away from
it moves away from internal focus of management accounting to include external information about competitors
how can SMA help formulate a competitive advantage
through exploiting linkages in the value chain
what is the role of SMA
formulate and support the overall strategy of an organisation by developing an appropriate framework of performance measurement
what are combination of techniques are based on the first steps to profit planning
flexible budgeting
cost-volume-profit
pricing
cost behaviour and measurement
what can cost behaviour help you determine
whether a business is market oriented or cost oriented
give an example of market oriented
if a business has a high proportion of fixed cost relative to variable cost, then it may be seen as being market oriented because are the cvp analysis indicated it has to achieve high levels of capacity utilisation to break even
apart from business orientation what other techniques help profit planning
helps in sensitivity analysis
ex finding the change in a firms profit as a result of a 10 % cut in price or fixed cost
what is yield managment
is is a profit planning technique that is used to segment the flexible budgeting ensures the variance analysis is based on variable levels of activity rather than a single estimate
what is value based mangment
it is an integrated framework for measuring and managing business, with explicit objectives of creating superior long-term value for shareholders
what does VBM focus on ?
increasing shareholders wealth metric, such as residual income or net present value, through the identification of value-drivers
what are some short-term decision making based on profit limitations
- short term increases may be made at the expense of long term profits
- there is no analysis of the use of capital resources
- the approach is inward- rather than outward looking
- the focus in profit only neglects the interest of other stakeholders such as employees, regulators or consumers
what is the concept of SMA and strategic positoning
that firms should place more emphasis on particular techniques depending upon the strategic position they adopt
what is the value chain analysis
it consists of the major business functions that add value to a company’s product and services
what is the aim of Value chain analysis
to find a linkage between value-creating activities, which result in lower costs and/or enhanced diferentiation
what are the business functions that make up a business value chain
r&d
product design
manufacturing
marketing
digitilisatiokn
customer services
what does shanks argue
that the financial framework sets up strategic problems in a misleading way and highlights that the pure present value analysis misses the richness of real business problem and is set up to rationalise a prior decision
what is a balance scorecard
is is a strategic planning and management tool
what are the different perspective on the balanced scorecard
- can be seen as a way of monitoring and improving operational performance
- ads/or a tool to aid the formulation and implementation of organisational strategy
what does a balanced scorecard seek to do
link performance measures to organisations strategies
what are the performance measure in the balance scorecard
financial
internal business processes
customers
learning and growth
what do financial perspective include
typical measure like
return on investment
residual income
economic value added
also growth, revenue, cost reduction, asset utilizsation
the customer perspective measure include
market share
customer retention and loyalty
customer acquisition
customer satisfaction
customer profitability
learning and growth perspective
it focuses on infrastructure that the business must build to create long term growth and improvement
what are the three categories in learning and growth perspective
employee capabilities
information system capabilities
motivation, empowerment and aligment
the internal business perspective innovation measures include>
% of sales from new products
new produ ct introduction vs competitors
product development break even time
the internal business perspective typical operation measures include>
cycle time
quality
activity and process costs
post-sales service processes
Process time is the only….
value-added time
manufacturing cycle efficiency formula
value-added time/ manufacturing cycle time
why do different companies have different scorecards
because they have different strategies
learning improves
business processes
improving customer satisfaction improves
financial results
improving business processes improves
customer satisfaction
what are criticism of the balanced score-card
- the cause and effect relationship between non-financial and financial indicators is questionable
(does improved customer satisfaction always yield good financial results) - it does not have an explicit way of monitoring competitors actions and does not propose a specific renumeration system.
