module 1notes

8/22/2019 Module 1notes

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Main topic Topic

Strategic Management

Accounting

Value

Strategic

Management And

Strategic

Management

Accounting

The Role of Strategic

Management Accounting

Accounting

Evolution of

Management

Accounting

Causes for change in

the business

environment


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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


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Stakeholders focus -

corporate social

responsibility

Corporate

Governance

Ethics

Internal Structures

Offshoring and

Outsourcing

Virtual Offices and

Global Teams


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Joint Ventures and

alliances

Reaction to Change -

Strategic

Management

Accounting


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Brief description Name Page no.

Definition of Value1.4

Value creation described in Public Sector, Non Profit sectors 1.5

Value creation described for Shareholders, Customers & Stakeholders 1.6

Difference between Strategic Managment and Strategic Managment Accounting

1.7

Role of accounting to support decision making1.8

Decision making by management areas - Products, Supply Chain, Infrastructure, Financing & Resource Allocation1.8

Decision making by external user groups - investors, Lenders, Suppliers, Customers and Government/Public Interest

Groups1.9

Difference between Financial Reporting and SMA - focus on useful reporting to support day today and strategic

decision of management1.9

IFAC's traditional definition of Management Accounting

IFAC 1998 1.1

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

IFAC 1998 1.1

Activities performed by SMA IFAC 2005 1.11

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

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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

1.12

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

1.12

1.14

Integration of International economic activity and creation of global production systems to service global markets1.14

Impact of globalisation. Consequences of globalisation 1.14

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

Lasserre (2003)1.15 &

1.16

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 period1.16

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

1.17

1.17

1.17

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

regulations1.12


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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 1.19

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

1.20

Ethical implications in organisational decision-making by taking into consideration non-financial issues like OHS and

Work safety issues1.2

CPA Members are expected to comply APES Code of Ethics - Integrity, Confidentiality, Objectivity, Professional

Competence and Due Care and Professional Behaviour1.2

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)

1.21

RAS collects revenues and costs and are also measures performance of these responsibility - Cost Centres, Revenue

Centres, Profit Centres, Investment CentresRAS 1.21

Key changes has been is reduced middle manager replacing with IT there by senior managers have direct

communication with lowest employee1.21

Another change is to create organisation that are more flexible by passing information and decision between different

layers of organisation1.21

Offshoring results in moving some of its activities to subsidiaries in overseas locations1.21

Outsourcing results in moving some of its activities to another organisation which might be based overseas.1.22

Many organisations have found they are very capable of in one activity but mediocre in others which why they are

outsourcing non-core activities1.22

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 processIBM 2004, Walker

20041.22

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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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

1.22

Acquiring existing operating organisation is an another alternative which gives immediate results and possibly less

expensive1.22

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

Petrella 1996 1.23


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Module 1

Starting

Page

Ending

Page

Total pages

(approx)

Basalat Study Guide (SG) 22 29 7

Bhasker SG 5 12 7

Gangadhar SG 30 38 8

Raj SG 39 46 7

Sam SG 13 21 8

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