Site Loader
Rock Street, San Francisco

According to (Bell and Ansari 1995). Management accounting
is a system of measuring and providing operational and financial information
that guides managerial action, motivates behaviours, and supports and creates
the cultural values necessary to achieve an organization’s strategic objectives

The primary goal of management accounting is to provide
information for internal decision making, with an emphasis on planning and
control purposes. Decisions made by managers rely substantially on accounting
information because financial accounting information does not provide enough
detail for internal decisions so it must be subdivided into the detail of the
individual products or services provided by a company. According to (CIMA). Strategic
management accounting was later on introduced in 1981 and was defined as the
provision and analysis of management accounting data about a business and its
competitors. The sole purpose of SMA is to help developing and monitoring
business strategies. Since then several attempts have been made to refine this
definition and identify a set of techniques classified under the banner of
strategic management accounting. In other words this is the merging of the
businesses strategic objectives with management accounting information to
provide a forward looking model that assists management in making business

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

Strategic management studies how to organize the structure
of a firm such as what products the firm should sell, how it should position
itself in the marketplace, where it should get its supplies and whether it
needs to adjust or compete on costs. Strategic management also involves with
other types issues, such as human resources policies, employee compensation
plans, competitiveness and productivity. Awareness of competitive conditions is
the primary difference between strategic management accounting and traditional
management accounting systems. SMA focuses on the company’s environment. One
environment a firm focuses on revolves around its relationship with suppliers
and customers. Another environment involves a company’s current and potential
competitors. Hence, a firm’s intelligence may indicate a need to reduce prices
to compete. SMA would evaluate the organization’s up-stream (suppliers) cost
structure to determine if it can renegotiate with suppliers, or if it must seek
suppliers with lower price points.

See appendix 1 for an overview of the two differences

There is also a traditional approach which according to involves

Post Author: admin


I'm Dora!

Would you like to get a custom essay? How about receiving a customized one?

Check it out