The New Foundations of Management Accounting

By Ahmed Riahi-Belkaoui | Go to book overview

5
THE STRATEGIC FOUNDATIONS

Management accounting is built on strategic foundations. First, management accounting provides a framework and a language of discourse for the three stages of strategy: preenactment, resolution, and implementation. Second, the conduct of management accounting differs for different distinctions in the strategic process and the strategic decision-making process. Third, it works best when there is consequence between the design of management control systems and types of control strategies. Finally, the new area of strategic management accounting requires management accounting to focus on the firm's value added compared to its competitors and to monitor the firm's performance using strategic rather than tactical indicators. These relationships between strategy, strategic process distinctions, strategic archetypes, and strategic management accounting on one hand and management accounting on the other hand are exhibited in Exhibit 5.1 and explicated in this chapter.


NOTIONS OF STRATEGY

The Greeks refer to strategy as the "art of the general." 1 It evolved in the Harvard mold into an imaginative act of integrating numerous complex decisions. 2 A. D. Chandler, Jr. was the first to use strategy as a managerial tool. 3 He defined it as "the determination of the basic long-term goals and objectives of the enterprise and the adoption of courses of actions and the allocation of resources necessary for carrying out these goals." 4 The influence of this definition is clear in R. N. Anthony's depiction of strategic planning as "the process of deciding on objectives of the organization, or changes in these objectives, or the resources used to attain these objectives, and on the policies that are to govern the acquisition, use, and disposition of resources." 5 According to the last two

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The New Foundations of Management Accounting
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Exhibits ix
  • Preface xi
  • 1 - The Accounting Foundations 1
  • Notes 26
  • References 28
  • 2 - The Problem and Decisional Foundations 31
  • Notes 50
  • Notes 51
  • 3 - The Organizational Foundations 55
  • Notes 89
  • Notes 94
  • 4 - The Behavioral Foundations 99
  • Notes 129
  • Notes 135
  • 5 - The Strategic Foundations 139
  • Notes 154
  • Notes 156
  • 6 - Conclusions 163
  • Notes 165
  • Index 167
  • About the Author 177
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