Management accounting measures analyzes and reports financial information and nonfinancial help managers make decisions to accomplish the goals of an organization. Management uses management accounting information to choose, communicate, and implement a strategy. They also use management accounting information to coordinate product design, production, and marketing decisions and to evaluate performance. Management accounting information and reports do not have to follow set principles or rules. The key questions are always (1) How will this information help managers do their jobs better, and (2) do the benefits of producing this information exceed the costs? Management accounting used some methods to manage the company such as: just in time, activity based cost and total quality management. Just in time can be defined that "This method requires that producers are able to accurately forecast demand." Besides, activity-based-costing also defined that: "An accounting method that identifies the activities that a firm performs, and then assigns indirect costs to products. An activity based costing (ABC) system recognizes the relationship between costs, activities and products, and through this relationship assigns indirect costs to products less arbitrarily than traditional methods". And the last method is total quality management. ". Total quality management aims to hold all parties involved in the production process as accountable for the overall quality of the final product or service". Hence, management accountant plays important role in management accounting. Management accountants work closely with managers in formulating strategy by providing information about the sources of competitive advantages. For examples, the cost, productivity, or efficiency advantages of their company relative to competition or the premium prices a company can charge relative to the costs of adding features that make its products or services distinctive. Management accountants help managers answer these questions through strategy formulation:
+ Who is the most important customer of us, and how we provide value to them? For example, Toyota has developed computer integrated flexible manufacturing (CIM) allows it to use the same equipment to produce a variety of vehicles to meet changing customer servings.
+ What to replace the existing products on the market, and how do they differ from our products in terms of price and quality? For instance, Toyota can design new car after comparing features, quality and price of its cars to other cars available on the market.
+ What is the most important ability that we have? Or how can we leverage it for new strategic initiatives? Toyota Company, can uses the reputation of its brand to introduce new types of cars.
+ Cash should always be available to maintain and develop the company's strategy, or additional funds will need to be raised. For example: the company has the ability to issue new debt and equity to fund its acquisition strategy. In additional, we can learn more about the strategic through the definition and some techniques that it used to given the strategic management accounting. Strategic is the direction and scope of an organization over long term which achieves advantages for the organization through its configuration of resources within a challenging environment to meet the need of market and fulfill stakeholder expectations. Strategic management accounting: "A form of management accounting in which emphasis is placed on information which relates to factors external to the firm , as well as non-financial information and internally generated information." Furthermore, we can classification of strategic management accounting techniques such as:
Strategic management accounting categories
Strategic management accounting techniques
Strategic costing
Attribute costing
Life-cycle costing
Quality costing
Target costing
Value chain costing
Planning, control and performance management
Benchmarking
Integrated performance measurement
Decision making
Strategic cost management
Strategic pricing
Brand valuation
Competitor accounting
Competitor cost assessment
Competitive position monitoring
Competitor performance appraisal
Customer accounting
Customer profitability analysis
Lifetime customer profitability analysis
Valuation of customers as assets
Besides, Management accountants not only help manager answer some question about the formulate strategy, but also they help managers track performance on critical success factors related to the selection of activities competitors on the same factors. Follow what is happening in other companies as a benchmark and manage change alert their customers are watching and evaluating. It can be seen that the management accounting helps management identify the necessary elements in order to help their business beyond the competitor. we can take for example the case of the Toyota company to gain competitive advantage they offer many strategies to help companies overcome market rivals such as Daewoo, Mitsubishi and Ford in many ways. Toyota Company knows how to monitor of market changes in order to provide the best products for their customers. Moreover, they pay attention to the warnings about a change in perception and evaluation of customer to make a reasonable strategy to help them achieve goodwill of customers. Toyota knows how to classify customers in order to provide the appropriate vehicles. In addition they also aim to target a variety of different subjects to produce cars with different price to meet the needs of consumers use.
One of the most important roles of the management accountant is providing information which can help manager to manage the company. If managers want to manage the company effectively, they should be given sufficient information to enable easy management make important decisions. Hence, management accountants are people can contribute to strategic decisions by providing information about the sources of competitive advantages. CEO based on received accurate information from management accountant that can help them decision making accurately and timely rather than to guess. Decision making including five steps such as identify the problem and uncertainties. After that, obtain information or gathering information before making a decision helps managers get a better hold on the uncertainties. Next step is make predictions about the future. Based on the information that they obtained, manager can make predictions about the future. So, if information provided is not accurate may lead to serious consequences in making future predictions. Continuously with make decision by choosing among alternatives. The last step is implementing the decision, evaluate performance and learn. Thus, we consider that providing information plays important role in process of decision making. Industries automobile manufacturing sector is also quite complex because of rapid changes in product quality as well as design and utility of the product. Social is increasingly developed so they know that automobile not only the ordinary vehicles, but it also represents the face of customer. Based on the facts and information that provided by management accounting, Toyota Motor Corporation has taken the right decision in production cars for many social subjects. For example, with average incomes, the Toyota manufacturing product lines such as: Civic, Yaris, Corolla, ect. Besides with customers who have high incomes, there are products like the Camry, Avalon, Land Cruiser Prado, ect. Especially, with people have higher salary Toyota also produces the luxury cars such as Lexus, Century, Toyota Crown Majesta or Toyota Crown, ect. In the automotive industry with the current conditions, the efficiency of production depends heavily on effective analysis and evaluation of information from our customers and how they manage and exploit information in a logical way. Thus, Toyota Motor Corporation is more and more sustainable development in the world. In addition, management often requires information in an accounting system or presented various reports. For example, a sales manager will only interested in information related to the total amount of sales commission to determine payment. A manager can distribute concerned about the number of orders by geographic area and delivery time, customer requirements in each region to ensure timely delivery to consumers. A production manager is only interested in information about the number of different products and delivery on their desires.
In conclusion, management accountants plays important role in the business; because it helps managers can do their job well. Therefore, to obtain the necessary information, the management accountant had to work very hard to research, to collect and analyze information, which will help leaders base on it and make the correct decision in right time. According to the report, CEO tries to decide on the competitive strategy for the company.
Read more: What Is Strategic Management Accounting? | eHow.com http://www.ehow.com/facts_6755021_strategic-management-accounting_.html#ixzz2SKmWAahT
