MANAGEMENT CONTROL, MANAGEMENT ACCOUNTING 49
žThe value chain (the linked set of nine inter-related primary and support
functions, see Chapter 9) that compares the price customers are willing to pay
for features with the costs associated with providing them.
Lord (1996) argued that firms place more emphasis on particular accounting
techniques depending on their strategic position. Dixon (1998) argued that strategy
formulation and implementation:
is carried out using the techniques and language of the management
accountant. In turn, the strategic decision-making process can influence
the procedures of management accounting and the design of management
control systems. (p. 273)SMA was a development of an earlier concern withstrategic cost management
(SCM), which is based on value chain analysis and conceives of the business as
the linked set of value-creating activities from raw material to the delivery of the
product and its ancillary services to the final customer. The aim of SCM is:
to expand the domain of management accounting horizontally to include
critical elements external to the company with a particular emphasis on
adding value for customers and suppliers. (Macintosh, 1994, pp. 204 – 5)SCM also advocated lengthening the time horizon of management accounting
reports over the entire life cycle of a product. Wilson (1995) suggested that SCM
was a variation of SMA that ‘aims to reduce unit costs continually in real terms
over the long run’ (p. 163).
However, Lord (1996) questioned the role of accountants in strategic man-
agement accounting, arguing that firms successfully collect and use competitor
information without any input from the management accountant. Dixon (1998)
argued that:
the costs of capturing, collating, interpreting and analysing the appropriate
data out-weighs the benefits...[and] that the collection and use of competitor
information for strategic purposes can be achieved without implementing a
formal SMA process. (p. 278)One of the conclusions of unpublished research by Collier, Edwards and Shaw into
knowledge management found that the focus of strategic management accounting
has been external when it should have been internal. In ten organizations studied,
all believed that knowledge acquired was not being effectively shared, retained or
utilized. Management accountants do not recognize their role in broader issues of
knowledge management, and top management does not appear to appreciate the
link between knowledge management as a source of competitive advantage and
financial performance.
A theoretical framework for management accounting
In this chapter we have identified management accounting as part of a broader
management control system that is driven by goals and strategy. We have also