The Link between Competitive Strategy and Management Accounting

Transcription

1 The Link between Competitive Strategy and Management Accounting THE 10 TH ANNUAL MANAGEMENT ACCOUNTING CONFERENCE DATE: 26th 28th June 2017 VENUE: - Travelers Beach and Resort THEME: Seizing opportunities to deliver enhanced insights and improve business performance CPA Pamela Odera

2 What is a Competitive strategy? It is a long term Plan- Objective- Help an organization gain competitive advantage over its rivals- Positive-Marketing your product services as being superior to the competitor: Negative- by discrediting the competitors- (products or services) Is often used in advertising campaigns Competitive strategy is essential in competing markets - heavily saturated with alternatives for the consumer (Politics, Audit services, Mobile service providers, Banking industry, beauty products, airline services

3 Competitive Strategies - Types Broad differentiation strategy-offer unique products or services Best-cost provider strategy- focuses on a niche marketmore value for the money Focused, or marketniche, strategy based on differentiation-niche members Low-cost leader strategy Cost Leadership overall low-cost provider Focused, or marketniche, strategy based on lower cost-outcompeting rivals on the basis of lower cost (Jambo jet)

4 What is a Competitive strategy? Every successful company tailors its own strategy to fit its specific situation- According to Arthur Thompson and A.J. Strickland in Strategic Management: Concepts and Cases: Your competitive strategy consists of the approaches and initiatives you take to attract customers, withstand competitive pressures, and strengthen your market position.,

5 What is management accounting? Identifying the information needs of management Providing timely and key financial and statistical information Developing the systems required to meet those needs, Performance measurement

6 Management Accounting? According to the Institute of Management Accountants (IMA): "Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy"..,

7 Management Accounting - Scope Strategic management a strategic partner in the organization Performance management developing the practice of business decision-making and managing the performance of the organization.? Risk management Contributing to frameworks and practices for identifying, measuring, managing and reporting risks Forward looking-valuecreation- decision making that will affect the future of the organization.

8 Management Accountant The Institute of Certified Management Accountants (CMA).states "A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking"

9 Formulation Management Modification Competitive Strategy Na Implementation Accounting Evaluation

10 The Link between Competitive Strategy and Management Accounting Phases in Strategy implementation Institutionalization of strategy Setting appropriate organizational climate Development of appropriate plans Development of appropriate organizational structure Review of the strategy What this actually means- Role of Management accounting Present the strategy to the members of the organization in a way that appeals to them and brings their support Organizational climate - the characteristics of internal environment, conditions the co-operation, the extent of commitment and dedication of people, and the efficiency with which the purpose is translated into results Operating plans,action plans, operational program and decisions that take place in various parts of the organization, allocation of resources to critical areas Organization structure The pattern in which the various parts of the organization are interrelated or interconnected. Prescribes relationships among various positions and activities. There should be periodic review of strategy to find out whether the given strategy is relevant.

11 Competitive strategies - Questions How are we performing? Did we keep projects on track? What were the drawbacks What were the advantages How could project management of the portfolio of projects be improved? Are we able to say how our projects contributed to fulfilling the strategy and facilitating the achievement of the set objectives

12 Where do we go from here? Continue as is Proposed changes ( Expansion, consolidation, reduction, Change..) Trend analysis. Role of Management accounting can not be underscored

13 Thank you Q & A