Main topic Strategic Management Accounting

Topic Value

The Role of Strategic Management Accounting

Strategic Management And Strategic Management Accounting Accounting

Evolution of Management Accounting

Causes for change in the business environment

Figure 1.5 - Causes of Change in the Contemporary Business Environment The Global Economy Financial Crisis

Structural Change Globalisation

Technology

Capital Equipment Information & Communication Technologies

Stakeholders focus corporate social responsibility Corporate Governance Ethics

Internal Structures

Offshoring and Outsourcing

Virtual Offices and Global Teams

Joint Ventures and alliances

Reaction to Change Strategic Management Accounting

Brief description Definition of Value Value creation described in Public Sector, Non Profit sectors Value creation described for Shareholders, Customers & Stakeholders Difference between Strategic Managment and Strategic Managment Accounting

Name

Page no. 1.4 1.5 1.6

1.7

Role of accounting to support decision making Decision making by management areas - Products, Supply Chain, Infrastructure, Financing & Resource Allocation Decision making by external user groups - investors, Lenders, Suppliers, Customers and Government/Public Interest Groups Difference between Financial Reporting and SMA - focus on useful reporting to support day today and strategic decision of management IFAC's traditional definition of Management Accounting IFAC 1998 Five stages of historical development of Management Accounting: Stage 1: Prior to 1950 Stage 2: 1950 up to 1965 Stage 3: 1965 up to 1985 Stage 4: 1985 up to 2000 Stage 5: 2000s to the present Activities performed by SMA External Factors: Globalisation, Increased Competition, Increasing focus on Corporate Governance & Broader Stakeholders perspective of Corporate Accountability and Developing Technology. Internal Factors: Changing structure of organisation & Decentralisation in Decision-Making

1.8 1.8 1.9 1.9 1.1

IFAC 1998

1.1

IFAC 2005

1.11 1.11

Global Economy:- Financial Crisis, Globalisation, Structural Change Technology:- Capital Equipment, Information Communication Technology Sustainability:- Environmental Management Accounting, Stakeholders, Governance, Ethics Internal Structures:- Flatter Heirarchies, Joint Ventures, Outsourcing/Offshoring, Virtual Offices Economies throughout the world are interdependent. Any changes in one economy has impact and spreads across the globe and creates panic and sends share markets tumbling. Government debt has substantially increased in most of the developed nations and is showing no sign of decrease Integration of International economic activity and creation of global production systems to service global markets Impact of globalisation. Consequences of globalisation Lasserre's four main drivers: Global competition Physical and capability factors Social factors and national cultures and Legal and political systems Different reasons for above drivers Rapid development in technology is helping to convert raw materials into finished goods in less time compared to olden days with less wastage and more efficiency. With technology rapidly changing every day products becoming obsolete within no time so investments needs to recouped in short period In present scenario technology is replacing humans so SMA is gaining lot of importance to see how value it adds to organisation like - stronger non-financial performance evaluation, ensuring compliance with external regulation and providing reality check for business proposal

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1.12 1.14 1.14 1.14

Lasserre (2003)

1.15 & 1.16

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1.17 1.17 1.17

CG should focus onb oth the development of performance enhancing measures and compliance with external regulations

1.12

There is a growing body of opinion that argues for greater accountability of organisations to a body of stakeholders that includes accountability for environmental and social impacts Relates to the overall framework within which an organisation is governed, and describes the interrelationships between key stakeholdrs including the board of directors, management, shareholders, creditors, customers and government Ethical implications in organisational decision-making by taking into consideration non-financial issues like OHS and Work safety issues CPA Members are expected to comply APES Code of Ethics - Integrity, Confidentiality, Objectivity, Professional Competence and Due Care and Professional Behaviour Structures incorporates the tasks, responsibilities and hierarchies given to different groupings and the authority delegated to different positions. Accounting system that are structured in functional way are called Responsibility Accounting System (RAS) RAS collects revenues and costs and are also measures performance of these responsibility - Cost Centres, Revenue Centres, Profit Centres, Investment Centres Key changes has been is reduced middle manager replacing with IT there by senior managers have direct communication with lowest employee Another change is to create organisation that are more flexible by passing information and decision between different layers of organisation Offshoring results in moving some of its activities to subsidiaries in overseas locations Outsourcing results in moving some of its activities to another organisation which might be based overseas. Many organisations have found they are very capable of in one activity but mediocre in others which why they are outsourcing non-core activities Franchising has become a popular way for both the original creators of business to accelerate their growth, and for other entrepreneurs to develop a business faster through the use of an existing brand name and business process People around the globe work on a project without meeting each other. Negative barriers are language barriers, cultural differences and difficulties in supervision. SMA tasks are: project planning, budgeting, performance measurement and reporting accross time zones and cultures.

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1.20 1.2 1.2 1.21 RAS 1.21 1.21 1.21 1.21 1.22 1.22 IBM 2004, Walker 2004 1.22

1.22

Strategic alliances and joint vbentures are very popular for organisations for actively involved in new markets, products or technologies by collaborating with partners. Advantages are faster, less-costly and less-risky penetration strategies with alliance parnters Acquiring existing operating organisation is an another alternative which gives immediate results and possibly less expensive In order to achive more success globaly and in an unknown market most of the organisation involve themselves into strategic alliances and collaboration - the more they get involved the more it is likely to lose its identity within a tangle of organisations, alliances and markets

1.22 1.22 Petrella 1996 1.23

Module 1 Basalat Bhasker Gangadhar Raj Sam

Study Guide (SG) SG SG SG SG

Starting Page 22 5 30 39 13

Ending Page 29 12 38 46 21

Total pages (approx) 7 7 8 7 8