Part 1: Strategic Management Accounting Flashcards
Hatton & Smith (1995) Four reflection levels
- Descriptive writing - No discussion beyond reflection
- Descriptive reflection - Shows some evidence of deeper reflection
- Dialogic reflection - “stepping” back from the events and actions. Discourse with self and an exploration of the role of self
- Critical reflection - Shows evidence that the learner is aware that the same actions and events may be seen in different contexts with different explanations
Management accounting is
- Planning
- Directing and motivating
- Controlling
- Performance evaluation
- Decision making
(Not mandatory as opposed to financial accounting)
Strategic management accounting
Provision and analysis of management accounting data
Internally & from competitors
To develop and monitor business strategy.
Prospective Relative Out-ward looking Competitive focus Proactive Information oriented
Traditional management accounting
Focus on financial targets and a kind of “now” picture
Value based management
Focuses on how to increase shareholder wealth, through identifying and managing value drivers
((such as residual income or net present value through the identification and management of value-drivers))
Strategic management accounting differs from Value base management
as there is more focus on competitor analysis, and how value is created and sustained
The balanced scorecard
Financial
Customer
Internal business processes
Learning and growth
The problems with using MCS techniques such as balance scorecard, benchmark, and budgeting
- Mostly internal focus
- Different techniques
- Much focus on costing
- Much focus on the past (except budgeting)
- Number exercise & accounting tasks
- Very hands-on and operational
- Today management control area mostly
- From strategy to implement tactical & operational
What is needed in order to meet the problems with using MCS techniques?
- Internal and external focus with benchmarks
- SWOT language
- Business concept/model and strategy language
- Strategy integration and involvement
- Value creation
Strategic choice
Organisations can choose which industries and products they want to compete in, but also that companies within the same industry can adapt different strategies
Business functions making up the value chain
Research and development Product design Manufacturing Distribution Customer service
Structural and executional cost drivers
Structural – scale, scope, experience, technology, and complexity
Executional – work force involvement, quality management, capacity utilization, etc.
What is management accounting and control for strategic processes?
There is no agreed definition of SMA in literature
SMA is about making management accounting more strategic
Self-leadership is…..
Develop sense for: -Who you are -What you can do -Where you are going Coupled with the ability to actively influence your -Communication -Feelings -Behaviour
Four components (levels) of Self leadership
Intention
Self-awareness
Self-confidence
Self-efficacy
Competence is
Knowledge x skills x attitude = competence
Factors influencing the accountant’s involvement in the strategic management process (CIMA)
Accountant led factors
Organisational factors
Practicalities
(Accountant + organisational = business knowledge)
(Accountant + organisational + practicalities = ability to add value)
CGMA – Competency framework
Technical skills Business skills Leadership skills People skills Digital skills (influences all other)
Beyond budgeting
Creating business agility and enable good performance through:
- Leadership principles
- Management processes
What are the Accountant led factors in the CIMA framework?
Skill set
- interpersonal
- technical
Desire
What are the organisational factors in the CIMA framework?
Position in organisation
Culture
Trust/Credibility
Relationship
What are the practicalities factors in the CIMA framework?
Resource capacity
Provision of information
Information systems
What are the leadership principles in beyond budgeting?
Purpose Values Transparency Organisation Autonomy Customers
What are the management processes in beyond budgeting?
Rhythm Targets Plans and forecasts Resource allocation Performance evaluation Rewards
What is reflection?
Individuals thinking about and critically analysing their learning and teaching experiences
Why reflective writing? (Carlile & Jordan)
- Adaptive response to change
- Professional expertise
- Academic discourse, critical thinking and continuing professional development
- Deep learning
- Construction and dissemination of shared meaning
- Self-empowerment
Strategic vs Traditional management accounting
Strategic management accounting recognises
- Strategic choice
- Choice in measures & implementation
Traditional management accounting
- Focused on the analysis of existent activities
- Often “one size fits all”
A well-constructed balance scorecard should be able to answer questions such as
- What internal processes should be improved?
- Which customer should be targeted and how will they be attracted?
- Additionally, it links measurements on a cause-effect basis. Where improvement of one measurement leads to better performance in other
(CGMA) Finance professionals add value to the organisation through the process of
- Assembling information
- Generating insights
- Influence decision makers
- Achieving impact
