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Accounting, Behaviour & Organisations > Week 1 > Flashcards

Week 1 Flashcards

1
Q

MAS Acronym

A

Management Accounting Systems

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2
Q

MAS Define

A

The formal procedures and routines an organisation puts in place to collect and communicate information in order to support the implementation of business strategy.

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3
Q

MAS is used to assist

A

effective planning and monitoring
effective management control
quality decision-making

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4
Q

effective planning and monitoring

A

Planning: the development of plans that support the strategic objectives of a business

Monitoring: the checking of performance to ensure plans are being met

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5
Q

effective management control

A

the means by which managers influence other members of the organisation to perform in ways that support the organisation’s strategies

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6
Q

quality decision-making

A

Decisions are made that support achievement of strategic objectives

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7
Q

Why do organisations need MAS’s?

A

Because the elements that make up organisations need to be managed and organised. Very few organisations will be able to achieve strategic objectives without some formal process to manage the complex and diverse elements it comprises. The MAS provides relevant, timely information essential for successful INTERNAL management.

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8
Q

Examples of internal and external reports - photo in favourites 8/3

A

“I’m drunk in the back of the car”

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9
Q

The common theme in all definitions of MAS is:

A

“Supporting Strategy”

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10
Q

“Supporting Strategy”

A

The fundamental role of an MAS is to provide information to support strategy implementation and achievement. MAS support the management and coordination (control) of individual personnel, complex and diverse activities and associated scarce resources. The 3 elements are not independent of each other i.e. Individuals use resources to carry out the activities that make up their job.

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11
Q

Individual Personnel

A

with different skills
with different motivations for being part of the organisation
with different values

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12
Q

Scarce resources

A

inputs of production: land (natural resources)labour& capital
Organisations must make choices between different items because the resources necessary to fulfil their strategies are limited.

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13
Q

Planning + example

A

Plans should indicate how individuals, resources and activities will be coordinated.

An example of an MAS procedure that supports the planning function? - Preparation of a Production Cost Budget

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14
Q

Monitoring + example

A

Will check whether individuals used resources effectively to carry out the activities they were meant to.

An example of an MAS procedure that would support the monitoring function?

Variance Analysis based on the Production Cost Budget

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15
Q

Management control + example

A

Individuals should be influenced to use resources to carry out activities in ways that support strategy achievement.

An example of an MAS procedure which supports this function?

Performance Measurement

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16
Q

Decision making + example

A

Individuals make quality decisions about how to use resources and which activities to carry out

CVP Analysis

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17
Q

Why can’t businesses use Financial Accounting System (FAS) information for internal management?

A

Financial Accounting information has a different purpose. It is used in the preparation of Financial Reports for business governance, NOT internal management. Financial Accounting information is too aggregated, not timely, often not relevant for internal management. Therefore internal management requires it’s own Accounting System - the MAS

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18
Q

How can behaviour be influenced?

A

In two broad ways

Directional influence on behaviour

Motivational influence on behaviour

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19
Q

Directional influence

A

MAS’s can direct individuals to towards behaviours valued by the organisation (and away from behaviours not valued) by:

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20
Q

MAS’s can direct individuals to towards behaviours valued by the organisation (and away from behaviours not valued) by:

A

Successfully communicating organisational goals/objectives

Providing performance targets that reflect valued behaviours

Providing information to support decision making and target achievement

Providing feedback on behaviour

21
Q

Motivational influence

A

MAS’s can motivate individuals to actually undertake valued behaviours by providing performance targets that are easily understood and challenging but achievable and rewarding target achievement.

22
Q

Mapping MAS design - photo in favourites 8/3

A

I knew you were trouble when you walked in

23
Q

Corporate strategy

A

Concerned with where to compete

Which industry/ies should we be in

24
Q

Business (unit) strategy

A

Two elements of business strategy that are useful when designing MAS’s:

Business (unit) planning

Basis of competitive advantage

25
Q

A number of different concepts of “Strategy” exist.

A

Corporate strategy

Business (unit) strategy

26
Q

Basis of competitive advantage

A

Cost leadership > Differentiation

27
Q

Business (unit) planning

A

The approach by which a business intends to achieve its strategic objectives

Hold, Build, Harvest, Divest (Boston Consulting Group)

28
Q

Hold,

A

Objective is to increase market share

29
Q

Build,

A

Objective is to protect market share

30
Q

Harvest,

A

Objective is to maximise short-term profit

31
Q

Divest

A

Objective is to withdraw from the business

32
Q

Boston Consulting Group Model

example - favourites 8/3

A

“You call me up again just to break me like a promise / So casually cruel in the name of being honest”

33
Q

Different business plans and MAS design

A

Business Planning (build, hold, harvest, divest) differ on a number of dimensions (in addition to KSF’s and performance objectives and goals), influence MAS design

For example:
Degree of environmental uncertainty

Market share expectations

Significance of externalities (factors outside the control of the organisation

34
Q

Business competitive advantage

A

The way in which a business intends to achieve its plans

35
Q

Generic Competitive Advantage options

A

Cost Leadership
Differentiation
Niche Market

36
Q

Cost leadership

A

achieving low costs relative to competitors

37
Q

How does a company achieve low costs?

A

Economies of scale
Productivity and efficiency improvements
Elimination of waste
Tight cost control

38
Q

Differentiation

A

offering products and services that are perceived by customers as being superior and unique relative to those of its competitors

39
Q

Could differentiate based on

A 
Brand loyalty
Function
Image
Customer service
Quality
40
Q

Niche markets

A

smaller, targeted customer group

May have differentiation or cost leadership strategy

41
Q

Competitive advantage and MAS design

A

Porter’s Five Forces model highlight the key influences on company strategies. Thus, Cost Leaders and Differentiators differ on a number of dimensions which influence MAS design. i.e.:

Importance of cost management vs other factors (e.g. quality)

Degree of environmental uncertainty

Importance of marketing

42
Q

Porters competitive forces model - photo 8/3

A

“You made a rebel of a careless man’s careful daughter / You are the best thing that’s ever been mine”

43
Q

Business competitive advantage model

photo 8/3

A

“You can plan for a change in weather and time / But I never planned on you changing your mind”

44
Q

Different Business Strategies may vary along several dimensions, which influence MAS design
Two fundamental dimensions are:

A

Key Success Factors (KSF’s)

Strategic Performance Objectives

45
Q

Key Success Factors (KSF’s)

A

the factors that each organisation in an industry must be able to perform successfully in order to compete and achieve strategy

46
Q

Strategic Performance Objectives

A

ends/results that management desires to achieve in implementing business strategy

47
Q

KSF’s for Cost Leaders and Differentiators 8/3

A

“You said it was a great love, one for the ages / But if the story’s over, why am I still writing pages?”

48
Q

KSF’s represent the most important areas on which an MAS should focus its procedures/routines/techniques for:

A 
Planning
Monitoring plans
Evaluating performance 
Comparing performance against competitors
Directing/motivating behaviour
Providing feedback
Rewarding performance
49
Q

The importance of understanding business strategy for MAS design

A

An MAS should be unique and specific to its organisation’s business strategy. Different Business Strategies have different KSF’s and Strategic performance objectives. Therefore we cannot design one MAS to suit ALL businesses. A business’s MAS needs to be custom-designed to suit its business strategy

Accounting, Behaviour & Organisations (2 decks)

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