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Lecture 6

This document provides an overview of strategic management accounting concepts including competitor analysis, customer profitability analysis, and non-financial performance measures. It discusses how competitor analysis examines objectives, strategies, assumptions, and capabilities of competitors to gain competitive advantages. Customer profitability analysis assesses costs associated with selling to and supporting different customers. The balanced scorecard is introduced as a management tool using financial and non-financial metrics in four areas: financial, customer, internal processes, and learning/growth. Objectives and example measures are outlined for each area.

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39 views

Lecture 6

This document provides an overview of strategic management accounting concepts including competitor analysis, customer profitability analysis, and non-financial performance measures. It discusses how competitor analysis examines objectives, strategies, assumptions, and capabilities of competitors to gain competitive advantages. Customer profitability analysis assesses costs associated with selling to and supporting different customers. The balanced scorecard is introduced as a management tool using financial and non-financial metrics in four areas: financial, customer, internal processes, and learning/growth. Objectives and example measures are outlined for each area.

Uploaded by

faisalhz
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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MBA 122 Managerial Accounting for Decision Making

:Lecture 6
Strategic Management Accounting

)ARaboshuk@su.edu.om( Course coordinator: Dr. Alina Raboshuk


Academic Year: 2022-2023
Semester: II
Course Learning Outcomes
1. Summarize knowledge on recent practices related to businesses and critically
assess in evaluating strategic options
2. Acquire knowledge on profit-planning and apply on all types of budgets
3. Analyze costing systems and their implications on the decision-making process and
managing businesses through analyzing costs and profits
4. Evaluate operational and strategic alternatives of businesses operating in
competitive environments
5. Choose appropriate and effective controlling concepts to evaluate performance
6. Integrate knowledge on advanced management accounting practices
7. Apply CVP and marginal analysis for making short-term managerial decisions
8. Construct various budgets and undertake variance analysis for effective system of
budgetary control design
Strategic Management Accounting (SMA):

It is concerned with providing information to support strategic plans


and decisions.

It is more outward looking, more concerned with outperforming the


competition and more concerned with monitoring progress towards
strategic objectives than conventional management accounting.
Competitor analysis :

• Competitor analysis examines the objectives, strategies, assumptions


and resource capabilities of competitors.

• The purpose is to gain a source of competitive advantage (for strategic


planning, product pricing and business acquisitions).
Competitor analysis :

• Two methods of undertaking competitor analysis are:

– Competitor array (identifying the key success factors for the


industry and ranking the business and its competitors according
to these factors);

– Competitor profiling (examination of the aims, intentions and


capabilities of competitors):
• Mission and objectives
• Strategies
• Assumptions
• Resources and capabilities.
Customer profitability analysis :

• CPA assesses the profitability of each customer or type of customer.

• The total costs associated with selling and distributing goods or


services to particular customers are to be identified:
– Handling the customer’s order
– Visiting the customer;
– Delivering the customer’s goods;
– Holding inventories;
– Granting credit;
– After-sale support
Non-financial measure of Performance:

• Financial measures tell us about outcomes and measure the consequences


arising from past management decisions.
• Non-financial measures are ‘lead’ indicators

• THE BALANCED SCORECARD (developed by Robert Kaplan and David


Norton):
• Is a management tool that uses financial and non-financial measures to
assess progress towards objectives

• It has four aspects:


– financial,
– customer,
– internal business and
– learning and growth

• It encourages a balanced approach to managing the business.


The balanced scorecard:

• Setting objectives and developing appropriate measures:

• 1. Financial: financial returns required by shareholders:


– Return on capital employed;
– Operating profit margin;
– Percentage sale revenue growth.

• 2. Customer: kind of customer or markets that business wishes to


service:
– Customer satisfaction;
– New customer growth levels.
The balanced scorecard:

• 3. Internal business process: which business processes are


important to the success of the business:
• Time to market new products;
• Product cycle times.

• 4. Learning and Growth: long-term business growth:


– Employee motivation;
– Employee skills profile;
– Information systems’ capabilities.
The balanced scorecard – factors examples
Department  Areas
Finance  Return On Investment
Cash Flow
Return on Capital Employed
Financial Results (Quarterly/Yearly)
Internal Business Number of activities per function
 Processes Duplicate activities across functions
Process alignment (is the right process in the right
department?)
Process bottlenecks
Process automation
Learning & Growth Is there the correct level of expertise for the job?
Employee turnover
Job satisfaction
Training/Learning opportunities
Customer Delivery performance to customer
Quality performance for customer
Customer satisfaction rate
Customer percentage of market
 Customer retention rate
:References

Atrill, P. and McLaney, E. (2018). Management Accounting for Decision Makers (8th .1
ed.), Pearson Education Limited, London. E-book weblink:
quest.com/lib/soharuni/detail.action?docID=5481312&query=
unting
(Chapter 4, 5)

2. Drury, C. (2006). Management and Cost Accounting. 6th Edition. Publisher: Thomson.
Contact Us
Dr. Alina Raboshuk
araboshuk@su.edu.om

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