Though management and cost accounting is not mandatory (not
legally enforced), the importance of management accounting is escalating in
present vibrant and turbulent business environment. Generally, everyone knows
organisation use cost accounting to enhance the productivity and profitability
and government use it to levy taxes in imports and exports……………………
Strategic management
accounting
Revisiting Paper F1 (Strategic analysis, Strategic choice
and Strategic implementation) links below we can summarize strategic management
accounting as process of using internal and external information which focuses
on companies core competencies, competing competitors and monitoring
performance in line with organisation’s objectives in both financial and
non-financial terms.
Ø
Strategic analysis: E.g. Porters Value Chain Analysis,
SWOT Analysis, Gap analysis, Stakeholders Analysis
Porters Value Chain Analysis: Porter identified different
activities within business that adds value to the product and contributes to
stay competitive within industry. He divided activities into two
groups.……………………
Ø
Strategic choice = Suitability (Internal and
external environment), Acceptability (Risk and return) and Feasibility
(Resources)
Porters Strategic Choice: The figure below defines the
choices of "generic strategy" a firm can follow. A firm's relative position within an industry
is given by its choice of competitive
advantage (cost leadership vs. differentiation) and its choice of competitive scope…………..
Ø
Strategic implementation = Apply and review stage
Strategic implementation: Implementation
of strategy has direct impact on bottom layer staffs. It may results change in
practice and culture existing in the firm. It may require recruitment, training
and motivation……………
CSF, KPI and Target (Referring back to blog post -
Performance measurement Part3)
Ø CSFs (Critical Success Factors): CSFs are those components
of strategy where the organisation must excel in order to outperform its
rivals.
Ø KPIs (Key Performance Indicators): Measures that quantify
objectives and can be used to gauge the organisation's strategic performance.
Ø Target: Target proposes a certain level of achievement.
ACCA Article: Strategic Management Accounting
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