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Business 122B notes - Advanced cost management Strategy and...

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Advanced cost management Strategy and management accounting Financial management evolution DATA → INFORMATION → ANALYSIS → IMPLEMENTATION Factors influencing today’s business environment Competition around the globe Manufacturing and IT advances Customer focus Revised organizational structures Organizations are constantly getting smaller Social, political and cultural changes Strategic cost management The development of cost management information to facilitate the principal management function We are going to manage our cost information for strategic success Cost management Financial Primarily external Non-financial Managerial accounting (primarily internal) Management techniques Business partnering Activity based costing Value chain analysis Environmental cost analysis Theory of constraints Total quality management Lean production/mass customization The balanced score card and economic value added analysis Ansari Triangle strategic triangle competition based on quality, cost and time Attribute triangle Attributes of the management accounting system as it relates to a particular strategic cost management tool impacts technical, behavioral, and cultural aspects Ansari defines quality as giving the customer what they want The link between the two triangles is when we implement Your strategy defines and determines what tools you use The two triangles are dependent on each other TBC the management accounting systems when used correctly will gives technical insight encourage behavioral changes reinforces or changes cultural attitude
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he’s saying that we as management accountants have the potential to make significant change within our companies, change that can help us win in the strategic competition The organizational role of the management accountant In 1996, a study showed that management accountants need to provide o Business and strategic partners o Providers of strategic business understanding o Be a participant in problem solving o Be a team member o Providers of information o They are a process facilitator Trifecta o Quantitative o Strategic o Tactical When the environment is such that business partnering can thrive, the following will happen o From a technical standpoint the management accountants will display broad business skills, defined as the what and the how o A management accountant operating as a business partner demonstrates a behavior that’s comfortable with ambiguity o Once a business partner demonstrates these skills, the behavior of the organization around them changes People tend to interact with that person as a process facilitator if they demonstrate these skills o A business partner from a cultural standpoint will usually act ethically When the org. sees that the MA has this business sense, and when they begin
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