Strategic Management Accounting Master Essay Example | Topics and Well Written Essays - 3000 words

Strategic Management Accounting Master - Essay Example As organizations have a decision-support system in place for continuous evaluation of their market position, business strategies and competitive analysis, there is a need for improved techniques for evaluating the same at regular intervals and SMA is one such tool that is increasingly being used as an appropriate tool for mangers to gauge the strategic position of their company and enhance it continuously. The issues related to the use of SMA and its resulting effectiveness is also studied and evaluated. It is seen that the use of SMA can be uniform for a set of similarly operating businesses which aids in the decision-making process of these businesses and hence this technique can be generalized and applied for a group of businesses with similarities in operational strategy. Strategic Management Accounting (SMA) has been defined by different authors in different perspectives. However, it is found that it serves the common goal of supporting the decision-making in any organization. Smith (2005: 15) observes that managers need to "take strategic decisions in a variety of areas like corporate strategy, competitive strategy and operational strategy". It boils down to the more mundane tasks of the manager to understand and make key strategic decisions on a regular basis to ensure profitability and sustainability of the business. Strategic decisions related to the corporate strategy include decisions as to what profile of business the company needs to be in, what products it should roll-out, the pricing of these products, the procurement, development and manufacture of the same, along with the operational strategy of the organization for enabling the business and its smooth running without being run over by competitors. This requires the managers to effective ly equip themselves with the cost and income of the activities involved and the net profit from these activities on the whole. Further, these activities of the organization are to be ensured to be in-line with the "organizational goals, the mission statement, objectives, operational strategies and the performance measurement" (Smith, 2005: 15). Smith defines SMA as "an integral part of the establishment of a decision-support system providing information to decision-makers" while Drury quotes Innes definition of SMA as "the provision of information to support the strategic decisions in organizations and Cooper and Kaplan's definition as it being a technique to support the overall competitive strategy of the organization, principally by the power of using information technology to develop more