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Acc3023w 2024 Sma Slides

Strategic Management Accounting emerged in the 1980s as a response to the limitations of traditional management accounting, focusing on providing data for strategic decision-making about a business and its competitors. The document outlines the importance of integrating strategic objectives with financial management, supply chain management, and pricing strategies to enhance value creation and sustainability. Key topics include the role of accountants in strategic planning, life cycle costing, and various pricing strategies.

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12 views26 pages

Acc3023w 2024 Sma Slides

Strategic Management Accounting emerged in the 1980s as a response to the limitations of traditional management accounting, focusing on providing data for strategic decision-making about a business and its competitors. The document outlines the importance of integrating strategic objectives with financial management, supply chain management, and pricing strategies to enhance value creation and sustainability. Key topics include the role of accountants in strategic planning, life cycle costing, and various pricing strategies.

Uploaded by

omphimahlangu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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STRATEGIC

MANAGEMEN
T
ACCOUNTIN
G
ORIGINS OF STRATEGIC
MANAGEMENT ACCOUNTING?
Came in the 1980s, management accounting was
criticized for becoming too:

internally focused on operational issues and

Providing little help to managers making strategic


decisions.
SO WHAT IS STRATEGIC
MANAGEMENT ACCOUNTING?
Introduced by the esteemed Kenneth Simmonds (1981, p.26),
who defined it as

The provision and analysis of management


accounting data

About a business and its competitors,

For use in developing and monitoring business


strategy.

“ Since then, there has been little agreement on


definition and techniques to include”
SAICA TO THE RESCUE.

The CA as a professional accountant


provides:
 insights and impactful decisions

 Short, medium, and long term

strategic objectives, which culminate in


the organization’s business model.
SO WHAT DO WE NEED TO
LEARN?
WHAT YOU HAVE DONE SO
FAR.-MDMC Planning
Costing Decision
and
Making
control
• Cost and cost • CVP • Budgeting
behavior • Relevant cost • Standard
• Process and • Pricing and costing
Job order profitability • Performance
costing • Activity evaluation
• Joint and by based • Transfer
product costing (ABC) Pricing
costing • Risk and
• Activity uncertainty
based • Capital
costing (ABC) Investment
WHAT ARE WE GOING
TO COVER?
1. How does SRMG fit in with MDMC

2. Value creation and the balanced

scorecard

3. Supply chains and cost management

4. Pricing
STRATEGY AND RISK MANAGEMENT
MDMC

Finance
Financial management
THE BUSINESS PROCESS
SUSTAINABILITY OF VALUE
CREATION
SUPPLY CHAIN
MANAGEMENT
Goal of supply chain management
1. Reduce the risks
Natural disasters, Terrorism, Theft, wars, bankruptcy,
inefficiency, or demand fluctuations
2. Improve sustainability
Reducing greenhouse gas emissions,
Improving working conditions and
Adopting eco-friendly practices.
LIFE CYCLE
COSTING
LIFE CYCLE
COSTING

Charge a higher
Might not price initially Not
introduce Reduce taking
because of theand lose market
design into
lack of share
phase account
profit all costs
incurred
WHAT ARE WE GOING
TO COVER?

1. Supply chains and life cycle

costs

2. Application to some companies

3. Pricing
IGNORING LIFE CYCLE
COSTS
SUPPLY
CHAINS
Application
Should we go green?

1. 2. 3.
Generatio Transmissio Distributio
n n
n
Application
What if we don’t change?

1. 2. 3.
Generatio Transmissio Distributio
n n
n
PRICING
AND
PRICE
SETTING
FIRST FEW
CONSIDERATIONS
• Costs drive pricing
• Competition– price takers vs price setters
• Mix and elasticity
• Time horizon impacts costing which impacts pricing (I.e. long vs short run)
 Short run think relevant costing special order
 Short /long run unique (Cost plus) vs comparable (Target)
• Pricing policies: Price-skimming (insensitive, new products), Penetration
pricing (gain rapid acceptance of the product), and product life cycle –
Introductory (consider constraints), growth (discount), maturity (constant
with special offers – think short run profits) and decline (CM)
PRICE SKIMMING
PRICE SKIMMING
PRICE PENETRATION
STRATEGY AT ITS BEST
THE END!

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