Strategic Management Accounting : Cost Advantage And Differentiation Advantage

996 WordsDec 15, 20144 Pages
Add to the previous text with regard to Porter – (cost advantage and differentiation advantage) Traditional management accounting is cost driven with short-term pricing and profit motive. It is fragmented and has internal and financial focus. Strategic management accounting is market driven with long-term pricing and profit motive. It is integrated and has value and external focus. Strategic management accounting raises the issues and addresses the weaknesses of traditional management accounting in the modern market place. Strategic management accounting requires the application of strategic management accounting tools to management accounting information and decision-making. Tools of strategic management accounting include activity-based management, attribute costing, competitor analysis, brand valuation, target costing and strategic costing. Shank (1989) shows the impact of Porter’s strategic positioning and competitive advantage on management accounting. In strategic management accounting, organisations do not only develop their own strategy but also understand the strategy of their opponent Incorporating strategic ideas into management accounting, aligning management accounting with marketing management for strategic positioning and applying strategic management accounting techniques with external and market orientation (Roslender & Hart 2010). The two elements of strategic management accounting are the adoption of strategic management accounting techniques and
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