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Issues in Strategic Management Accounting - Coursework Example

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The paper "Issues in Strategic Management Accounting" is a great example of business coursework. Strategic Management Accounting (SMA) constitutes a number of techniques that have been in use in the current portfolio of management. While earlier scholars had doubts over the existence of SMA, it was believed to be a foray of middle-level managers…
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Issues in Strategic Management Accounting Name: Tutor: Course: Date: i) Role of theorizing strategy in management accounting research Strategic Management Accounting (SMA) constitutes a number of techniques that have been in use in the current portfolio of management. While earlier scholars had doubts over the existence of SMA, it was believed to be a foray of middle level managers. However, the strategic management accounting activities and figures were not collected, used or quantified by management accountants hence lacked the detailed accounting input. Theorizing SMA meant that empirical studies could now document evidence of its widespread adoption and the success of its implementation. The concept or theory behind the accounting strategy is to rebrand management accounting concepts as instrumental and deterministic as used in organizations. Although the strategy literature as been seen as merely strategic policies with top-down approach, the management accounting scholars tend to see the world from a managerial and normative perspective (Balogun & Johnson, 2005). The result has been a deliberate attempt to melt strategy into management accounting. Besides, the SMA tool was now linked to cost-driver analysis, value chain analysis and strategic approach to costing. Furthermore, SMA gave way to the development of benchmarking, performance measurement, and lifecycle costing, and attributes costing. The new practice of SMA saw management accountants adopt the concept ‘strategic’ into pricing and cost management (Langfield-Smith, 2008). The strategic techniques could no longer be seen as internal preoccupation but rather SMA literature with an outward-looking practices that fir the top down, highly rational practices. On the other hand, the SMA accounting practices has been critiqued by a number of scholars who saw them as overemphasizing soft accounting numbers because of bean-counting and number-crunching. Similarly, the extant SMA literature extols the prevailing toolbox approach and dwells less on the synergistic relationships between the marketing colleagues and finance experts (Lapsley & Rekers, 2017). In fact, a meaningful SMA is being developed to develop a universal perspective of ‘strategy’ and may have given way for ‘Strategy-as-practice’ (SAP). The introduction of SAP in SMA literature has opened a new chapter in external organizational perspectives, and internal strategic practices and thinking. Yet, caution is necessary when looking at practices across organizational boundaries and the study of internal practices and routines. This is because SAP literature can help capture practices of organizations involved in strategic work with practices spanning across the organizational boundaries. At this point, organizations which have embedded strategizing will find it within the larger systems or fields. SMA literature and empirical evidence has come a long way from industrial economics thinking to SAP (Lapsley & Rekers, 2017). While industrial economics thinking lacked the complexity of organizational life, SAP is viewed more critically because it does not carry the burden of postmodern skepticism. The knowledge of strategy has endeared scholars to learn more about testing new ideas, marketing and new tools. With the advent of SAP, organizations have seen the reality of strategic practices. They recognize that strategic practices may shift from the platform of priorities and positioning. However, the SAP has a tendency to emphasize strategic behavior by studying practices and rituals using omissions, silent voices and observations. It is worth noting that SAP strategic practices, the facets are mainly language, artefacts and symbols used. Strategizing gives chance to multiple actors to perform. Theorizing strategy has brought deeper understanding of facets and actors to strategize activities. Ultimately, SAP scholars gain more opportunities to interpret strategizing and refocus on the meaning of strategy by taking an all round study of practices and how it works in organizations. Documenting SAP literature opens up space to understand more management accounting and mobilize ideas SAP practices to better understanding SMA concepts. ii) The research design and suggestions for improvement The research paper by Lapsley and Rekers (2017) is based on a case study from inter-disciplinary dimensions that identifies mechanism and intermediaries underlying the SAP process. To agree with SAP cohort of strategy researchers, the study used multiple research methods. The study location was Toronto and New York. New York was chosen because the latter it has triggered diffusion to distant markets while Toronto is prominent for new product development. Toronto is much smaller in theatre numbers, population, and ticket sales and additional tourist base compared to New York’s Broadway. This research study has focused on three areas; study settings, sources of information and analysis of data (Vaara & Whittington, 2012). The sources of information in the study are key informant interviews, attendance at trade events and available documents on public domain. Available documents were mainly newspapers, trade journals, blogs and industry websites while attendance on key events industry association events, theatre announcements and annual awards shows. The semi-structured interviews were obtained from expert informants in the industry, media, marketing and those in theatres and production (Lapsley & Rekers, 2017). After coding and transcribing the interview schedules, they were shared and verified using observation materials and publicly available documents. Analysis of data was done through observing and meeting the parties involved in strategizing, observing interactions for connections, and scrutinizing events. The data was analyzed based on two questions after looking at the intermediating organizations if they are closer to the consumer or the production unit (Lapsley et al., 2010). The research was interested in knowing the participants and their activities in new product development so as to increase understanding of SAP in theatres. The question in primary participants was interested in knowing the participants of key strategic practice during launch and new product development. At the same time, they were interested in knowing the activities of the participants in increasing new product uptake perceived to be worthwhile and valuable in the market. The intermediating organizations closer to the production unit were marketing partners while opinion-leading peers, industry associations and the media were considered as closer to the consumer (Lapsley & Rekers, 2017). The suggestions for improvement have confounded means of developing a meaningful SMA due to lack of universal definition of strategy. Regarding the social organization of SAP, the case study of musical theatre suggests that theatre producers should shape market development and product development in bringing to the market some of novel-cultural-content intensive products. SAP is a communicative and interpretive process which the success of the cultural product depends on the consumed cultural content and the organizational structures of the communities (Whittington, 2007). Accounting is secondary and is akin to annual financial results recording and setting of prices. Producers are interested in capturing demand where the quality of the product is already excellent. The producers are called upon to increase product awareness, sources of credible validation and different forms of endorsements in a bid to offset inherent uncertainties. The study suggests that soft information and conversations are crucial and central for the curation process. The conventional accounting practices, as suggested in management literature, are obstacles to creativity and inhibitors of product innovation. However, decisions need to be subsequently costed regarding new products and strategic choices. Relating to the specific context of popular theatre, it offers a scope to investigate the spheres of popular culture and strategic management accounting. In areas where the popular culture contains creative industries that operate in a given market setting, Lapsley and Rekers (2017) suggests that further research is recommended to investigate the shape and manner of such markets as well as the role of accounting within. In such markets, the distinctive nature of customers needs to be known and understood. Management accountants are challenged to make good use of networks within the operational platforms and adopt the idea of strategizing as a process because it is socially constructed. There is an opportunity for fresh approach to SMA through variety of extra-organizational activities and cross-organizational interactions (Carter et al., 2010). Management accountants in terms of practice, and if they are to act strategically in theatre-land, should be able to connect with institutional and the wider social settings. This means that management accountants need to consider themselves as a family of strategisers and not isolated accountants so as to create a perception of new theatre and carry its vision across the organizational boundaries. Although there is room to handle soft data more than conventional accounting, the scope of gathering harder data such as ex post analysis and product rankings should be taken into consideration. Above all, multiple actors in a de-centered organization and across a range of social space should be involved. iii) Study findings and implications for future SMA innovation research The findings generally showcase strategy as rather complex and are a practice that draws a lot from social processes. Producers and theatre owners own the task of managing strategically the route to market by managing creations of expectations in the case of theatre. Cultural industries compete on product differentiation but as it generates uncertainty the desired qualities in a show are originality and novelty. The findings further indicate that decisions to adopt theatre carries some risks to consumers because it is an experience-based good. Before judging their levels of satisfaction, consumers are advised to buying decisions based on these goods. Nonetheless, they will need to seek recommendations and third-party validations to reduce the risk of disappointment (Lapsley & Rekers, 2017). The study shows that consumers and producers rely on intermediaries to indicate value, quality and to generate awareness though it contrasts with extant literature of management accounting on incorporation of customer into strategic thinking. The study findings agree that intermediaries play a huge role in the market development process hence increase the reach of cultural industry products from their place of origin to distant markets (Lawrence & Phillips, 2002). New product strategies apply a distinct model of SAP which in accounting is seen as limited and ex post. Most industry experts are keen on annual review processes more than the return on investment suggesting that management accounting practices are instrumental and contemporary in line with strategic pricing, strategic planning and strategic costing. The findings demonstrate that there are multiple actors who engage in a number of activities, interactions and strategies across the organization (Obrist, 2015). The study shows that products high in cultural content are tied to interpretive strategies and local cultural frameworks owing to perceived network positions and expertise. The study mirrors in research studies that edge on product innovation which is rather informal, judgmental, interpretive and approximate. In the accounting literature and the findings of this study, Lapsley and Rekers (2017) show that it is evident for the so called ‘fuzzy front end’ to be no longer ignored in accounting literature. This is because management accountants in the theatre world are adopting ‘strategy as practice’ (SAP) in contracts to other traditional strategies captured in the management accounting literature. The future of innovation research in theatre is the use of popular culture to usher in the broad perspectives in organizational strategizing beyond the confines of entertainment (Jorgensen & Messner, 2010). This implies that the numbers of SAP scholars will increase as they show interest in unraveling the strategies to be used in contemporary strategic management accounting. The continued research and empirical evidence on how popular theatres enact strategies shows the urgency of strategizing to counter rising competitiveness to increase concerns over new product perceptions and quality preoccupations (Lapsley & Rekers, 2017). Research needs to look at organizations as capable of mediating the market process by certifying new products and raising awareness. As more studies engage in organizational studies, innovation and creativity research, increased focus goes to the definition of ‘input’ boundary of organizations such as incubators, trade associations and technology transfer offices. As a result, intermediaries are able to narrow the gap existing between the different actors due to differences in incentives and goals (Clement, 2015). Furthermore, the differences in reference frameworks and previous experiences also exist. Innovation in SMA research will be further advanced by new cultural products that seek to address gaps between consumers and producers. As a result, there will be marked changes and contribution to modern SMA thinking and the customer concept as outlined in industrial economics. To bridge the gap between consumption and cultural reference framework, it is important to see organizations as highly dependent on credible intermediaries (Lapsley & Rekers, 2017). This will help increase customer satisfaction and bring in favorable appreciation of the product. The route to the market is negotiated by producers by supporting the strategic process and communicating the reputation of cultural products. The implications of this study to SMA literature is far reaching as it confronts the current concerns of strategic thinking and strategy as practice among theatre companies as they seek to make more revenue in a competitive market. References Balogun, J. & Johnson, G. (2005). From intended strategies to unintended outcomes: the impact of change recipient sensemaking. Org. Stud. 26(11), 1573-1601. Carter, C., Clegg, S. & Kornberger, M. (2010). A Very Short, Fairly Interesting and Reasonably Cheap Book About Studying Strategy. Sage, London. Clement, A. (2015). Managing popular culture: a practitioner perspective. In: Presentation at the workshop Managing Popular Culture, University of Edinburgh Business School, 27 April. Jorgensen, B. & Messner, M. (2010). Accounting and strategising: a case study from new product development. Account. Org. Soc. 35, 184–204. Lapsley, I., Miller, P. & Panozzo, F. (2010). Accounting for the city. Account. Audit. Account. J. 23 (3), 305-324. Lapsley, I. & Rekers, J.V. (2017). The relevance of strategic management accounting to popular culture: The world of West End Musicals. Management Accounting Research, http://dx.doi.org/10.1016/j.mar.2017.01.001 Langfield-Smith, K. (2008). Strategic management accounting: how far have we come in 25 years? Account. Audit. Account. J, 21(2), 204–228. Lawrence, T.B. & Phillips, N. (2002). Understanding cultural industries. J. Manag. Inq. 11 (4), 430-441. Vaara, E. & Whittington, R. (2012). Strategy-as-practice: taking social practices seriously. Acad. Manag. Ann. 6, 285-336. Whittington, R. (2007). Strategy practice and strategy process: family differences and the sociological eye. Org. Stud. 28, 1575-1586. Read More
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