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Cost Management and Strategic Decision Making

Cost Management and Strategic Decision Making. Chapter 1. The Role of Management Accounting. Provide management with information to evaluate the impact of current or proposed strategic and operational activities Create more value at less cost

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Cost Management and Strategic Decision Making

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  1. Cost Management and Strategic Decision Making Chapter 1

  2. The Role of Management Accounting • Provide management with information to evaluate the impact of current or proposed strategic and operational activities • Create more value at less cost • Minor role – measure and report costs that have already occurred

  3. Functions of the Management Accountant • Strategy and information support • Provide information and guidance • Evaluate alternatives • Cost management vs. cost cutting • Value inventory

  4. Characteristics of the Management Accountant • Team player • Visionary • Long-term focus • Understands quantitative and qualitative aspects • Self-guided • Understands causality of costs • Ethical

  5. IMA Standards of Ethical Conduct • Competence • Continues education, follows laws, rules and standards, provides clear, complete information, recognizes and communicates own professional limitations • Confidentiality • Maintains and enforces confidentiality of information, refrains from using confidential information for unethical advantage

  6. IMA Standards of Ethical Conduct • Integrity • Avoids conflicts of interest, outside influence, unethical conduct, subversion of organization objectives, activities that would discredit the profession • Credibility • Communicate information fairly and objectively, disclose all relevant information, disclose delays or deficiencies in information, timeliness, processing or internal controls

  7. Identifying Competitive Advantages • SWOT analysis • Internal • Strengths • Weaknesses • External • Opportunities • Threats

  8. Identifying Competitive Advantages • Value chain analysis • Focus on improving customer’s perceived value • Should not just look inward • The way we do things is only a part of the chain • How do we make money • Cost vs. profit strategic business units (SBUs) • Do we outsource?

  9. Fostering a Culture of Improvement • Identify a need or opportunity for change • Get help • Create a vision and strategy to achieve it • Communicate in both directions • Highlight achievements • Learn from mistakes • Do not fear or penalize failures

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