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Critically evaluate the view of Lord that strategic management accounting is nothing more than 'The Emperor's new clothes'

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CRITICALLY EVALUATE THE VIEW OF LORD THAT STRATEGIC MANAGEMENT ACCOUNTING IS NOTHING MORE THAT 'THE EMPEROR'S NEW CLOTHES' BY SIOW WEI LOONG (03063277) ASSIGNMENT SUBMITTED TO: MR. MALCOLM WELLSTEAD THE UNIVERSITY OF HERTFORDSHIRE 12 DECEMBER 2003 Introduction 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. ...read more.


This is conflict with the view of Simmonds, 'management accountants are the ideal people to collect and analyse external data'. Rob Dixon (1998) argued that the management accountant is only one users of the information, and each user can user the management information system at his or her discretion. The strategic management accounting was changing since Simmonds first used the term. Going through the case of Cyclemakers again, the competitor information was collected by the sales representatives, which means that the operational level involved in the process of collecting competitor information. This kind of circumstances occurred might due to the reason of changing in environmental factor. The view of collection of competitor information in strategic management accounting evolved in order to fit the environment meet. Competitive Advantages Porter (1980, 1985) sees competitive strategy as concerned with 'creating and maintaining a competitive advantage in each and every area of businesses. Others highlighting the competitive context include Ohmae (1982) and Henderson (1989); comment that business strategy is all about competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic management is to enable the company to gain, as effectively as possible, a sustainable edge over its competitors. ...read more.


And the author against the view of Simmonds (1981, 1982) coined the phrase strategic management accounting for the accounting information that would assist strategic decision-makers. This is because the view of Simmonds about strategic management accounting was too strict, and Simmonds' view of strategic management accounting was conceptual application but not in reality. The author's view of strategic management accounting is just act as a guard line for the company to develop strategy, but it is not necessary to follow completely the concept of strategic management accounting during implementing. The company can develop its own strategic management accounting based on its need. This is supported by Rob Dixon that strategic management accounting as a concept is acceptable but has practical limitations. Therefore, the strategic management accounting should alter its concept in order to fit in current environment. Moreover, the author' view of strategic management accounting was supported by Dimnik and Kudar (1989), strategic management accounting with accounting numbers should be used to guide decisions. Last but not least, the author would recommend that the company can adopt the strategic management accounting to guide the decision. And the company can come out with good strategy by using strategic management accounting with the cooperation of marketing managers and management accountants. (Rickwood et al, 1990). ...read more.

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