CRITICALLY EVALUATE THE VIEW OF LORD THAT STRATEGIC MANAGEMENT ACCOUNTING IS NOTHING MORE THAT ‘THE EMPEROR’S NEW CLOTHES’
SIOW WEI LOONG (03063277)
ASSIGNMENT SUBMITTED TO:
MR. MALCOLM WELLSTEAD
THE UNIVERSITY OF HERTFORDSHIRE
12 DECEMBER 2003
Simmonds (1981, 1982) coined the phrase strategic management accounting for the accounting information that would assist strategic decision-makers. Further with Keith Ward (1992) defined strategic management accounting as ‘management accounting in the context of the business strategies being planned and implemented by an organisation’. However, the term ‘strategic management accounting’ has been in the management accounting literature for more than a decade, but there only seems to be a paucity of examples of strategic management accounting actually being used in reality. Thus, the existence of strategic management accounting was doubtful. We might curious of what is strategic management accounting? Is it a prerequisite for survival in a global economy (another job to pad out the diminishing role of the accountants), or only the emperor’s new clothes?
This paper will concentrate on the discussion of whether the strategic management accounting was applicable in reality. A discussion of comparison between the theoretical and empirical study will be given in order to support the argument. The current status of strategic management accounting can be clearly defined by going through the discussion of empirical study.
Collection of Competitor Information
Simmonds’ (1981, 1982) definition and description of strategic management accounting focused on comparison of the firm with its competitors. While in literature of Lord, she’s view of collection of competitor information has some weaknesses. Given the wide range of error inherent in figures based in many cases on informal guesses, one could question any comparability between the firm’s figures and those for the competitors. Moreover, even with the ease of data manipulation and display available with computers, the costs of collecting and collating detailed competitor information may exceed any benefits. Therefore, Lord feels that the firm should not adopt the element of collection of competitor information.