Strategic Management Accounting

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strategic management accounting

We have all heard about strategic management accounting, but what is it and how does it affect our company? In this article you can find a comprehensive and detailed description of strategic management accounting and what it stands for, as well as some great techniques that you can use to get the best results!

What is strategic management accounting?

Simply put, strategic management accounting is designed as a process that focuses on the provision of information, in order to support the strategic decisions that take place within the organization. Most of the time, the strategic decisions  in such a situation have a major impact on the organization, from both an internal and external standpoint.

Which are the main components of strategic management accounting?

Based on numerous definitions and professionals pertaining to this industry, there are 3 main components that add up to create a working strategic management accounting.

The first one is the extension of traditional management so that it also includes the external information pertaining to competitors, while the second is the creation of a relationship between the current strategic position of the company and the focus on management accounting. The last component is basically the action of gaining competitive advantage simply by analyzing multiple ways that can be used in order to decrease the cost and even enhance the differentiation between the company products.

The best strategic management accounting techniques

You can find numerous ideas and techniques that pertain specifically to strategic management accounting. In fact, there are numerous techniques that allow you to obtain a stellar strategy execution, all while obtaining the best approach to measuring performance. While each technique works on its own, combining them can offer a huge strategic management accounting benefit. Here are the best techniques you can use:

  • Target costing
  • Lifecycle costing
  • Kaizen costing
  • The Just in Time method
  • Activity Based management
  • Benchmarking

What does strategic management accounting focus on?

Depending on your company, its focus can vary, but what always stays the same is its focus on the company environment. Usually, a company has multiple environments, as one focuses on the relationship that it has with customers or suppliers, while other can focus on the competitors. What strategic management accounting does in such a situation is that it allows you to streamline the cost structure, and this way you can figure out if you can perform another round of negotiations with the suppliers. At the same time, you can also see if the current suppliers are not up to par with what you need, something that will help a lot when it comes to making the right decision.

As a whole, strategic management accounting has a major importance in any company, as it can help lower costs and find the areas that the company has to focus on in order to get the best results. At the end of the day, with strategic management accounting you can grow your business and that’s why implementing it should definitely be a priority for any company!

Written by: Alexandru Tanase.
Alexandru is a free lance writer, reporter at Media TV and Softpedia.
He studied at the University of Bucharest; with a diploma in economics


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