CHAPTER ONE
1.0 Introduction
Strategy management can simply be defined as the effective control of
available resources in an organization and the professional uses of
accounting information for companies benefit in under to determine the
managerial performance of industries professional use of accounting data
provide information that can be expressed in financial term i.e Naira
and kobo. Accounting data in an organization are usually flexible
dependable and hence, it will assist the management of the organization
in decision making. Furthermore, the introduction of this topic is to
take a deep look into the accounting data and the records collated to
access the future of the business positively as a result of strategic
management and professional use of accounting data.
Due to the fact that sole trader has limited resources, strategic
management and professional use of accounting information is needed as
one-man business is a business organization owned run and managed by a
person if he intends to use a trade name different from his surname of
fore-name he/she must register the trade name under the registration of
business under dubious character setting up a business under dubious
name and defrauding the public. It also ensure that two or more person
setting up in separate business does not use the same name in way as to
confuse the public. Through strategic management sole trader reaps the
profits of the business for himself and also all the possess are borne
by him as the case may be.
Strategic management and use of accounting data need for effective
management control system in a large scale industry as regard profits
and loss ration the law regulating partnership Act 1890 which is
applicable to the whole of the federation except the western and
mid-western states where the partnership law 1859 applies in relation to
an organization that directly with the public like the Nigeria bottling
company strategic management and professional use of accounting data
information is needed for companies benefit to determine the areas with
immediate demand of a product also to determine the managerial
performance of the company at the end of the accounting year.
It is very important to know in each and every organization that if
you fail to plan, you plan to fail. This implies that it is very
important to adopt strategic management and professional use of
accounting data for managerial purpose and future references in an
organization. Strategic management and professional use of accounting in
administration may be defined as a proves of maintaining an
organization and at directing if for the purpose of achieving
predetermined goals.
Accounting data is an organization that are usually flexible
dependable and hence, it will assist the management of organization in
decision making.
Furthermore, the introduction of this topic is to take a deep look
into the accounting data and the records collected to assess the future
of the business positively as a result of strategic management and
professional use of accounting data.
1.1 Background of Study
In the 1980s management accounting was criticised for becoming too
internally focused on operational issues and was providing little help
to managers making strategic decisions. The term strategic management
accounting (SMA) was introduced by Simmonds (1981, p.26) and defined by
him as ‘the provision and analysis of management accounting data about a
business and its competitors, for use in developing and monitoring
business strategy’.
Since then several attempts have been made to refine this definition
and identify a set of techniques that can be classified under the banner
of SMA. However there has been little agreement within the academic and
professional literature on the definition of SMA and the associated
techniques, nor is the term widely used by practising accountants
(Langfield-Smith, 2008; Jorgensen and Messner; 2010; Nixon et al.,
2011).
When management accounting was introduced as an advanced version of
cost accounting after second world war its early advocates had claimed
that it would make accounting more useful in assisting managers in their
decision making function. As the discipline has failed to live up to
the promise now strategic management accounting has been presented as a
messiah for the discipline of accounting. New promises have been made
that while the traditional management accounting failed to make use of
strategic thinking and other qualitative aspects of management the new
discipline is likely to make accounting more relevant and important for
managers. The empirical evidence on successful diffusion of strategic
management accounting is still not overwhelming. It is therefore yet to
be seen if strategic management accounting can live up to its promise in
future or not.
Most textbooks of management accounting define the discipline in
terms of its decision making role. It is generally stated that since
managerial functions involve using information for better planning and
control, therefore, management accounting is very important for
effective and successful management at all levels. In this paper, we
review the role of management accounting and after identifying its
limitations we examine the claim that strategic management accounting is
the future of this discipline. The analytical paper looks at the
development of strategic management accounting as a new discipline which
promises to be the flagship of the accounting profession. It makes a
contribution to the general management literature by clarifying the role
of management accounting in decision making and signifying the need for
more empirical evidence on usefulness of strategic management
accounting for general management.
Strategic management involves the formulation and implementation of
the major goals and initiatives taken by a company's top management on
behalf of owners, based on consideration of resources and an assessment
of the internal and external environments in which the organization
competes.[Nag, R.; Hambrick, D. C.; Chen, M.-J (2007)]
Strategic management provides overall direction to the enterprise and
involves specifying the organization's objectives, developing policies
and plans designed to achieve these objectives, and then allocating
resources to implement the plans. Academics and practicing managers have
developed numerous models and frameworks to assist in strategic
decision making in the context of complex environments and competitive
dynamics.[Gareth R. Jones, 202]. Strategic management is not static in
nature; the models often include a feedback loop to monitor execution
and inform the next round of planning.[ Hill, Charles W.L., Gareth R.
Jones, 2012]
Michael Porter identifies three principles underlying strategy:
creating a "unique and valuable [market] position", making trade-offs by
choosing "what not to do", and creating "fit" by aligning company
activities with one another to support the chosen strategy. Dr. Vladimir
Kvint defines strategy as "a system of finding, formulating, and
developing a doctrine that will ensure long-term success if followed
faithfully."[ Kvint, Vladimir, 2009]
Corporate strategy involves answering a key question from a portfolio
perspective: "What business should we be in?" Business strategy
involves answering the question: "How shall we compete in this
business?"[Chaffee, E., 2005] In management theory and practice, a
further distinction is often made between strategic management and
operational management. Operational management is concerned primarily
with improving efficiency and controlling costs within the boundaries
set by the organization's strategy.
The strategic management discipline originated in the 1950s and
1960s. Among the numerous early contributors, the most influential were
Peter Drucker, Philip Selznick, Alfred Chandler, Igor Ansoff, and Bruce
Henderson.[ Ghemawat, Pankaj, 2002] The discipline draws from earlier
thinking and texts on 'strategy' dating back thousands of years. Prior
to 1960, the term "strategy" was primarily used regarding war and
politics, not business.[Kiechel, Walter, 2010] Many companies built
strategic planning functions to develop and execute the formulation and
implementation processes during the 1960s.[Henry Mintberg, 2004]
Peter Drucker was a prolific management theorist and author of dozens
of management books, with a career spanning five decades. He addressed
fundamental strategic questions in a 1954 book The Practice of
Management writing: "...the first responsibility of top management is to
ask the question 'what is our business?' and to make sure it is
carefully studied and correctly answered." He wrote that the answer was
determined by the customer. He recommended eight areas where objectives
should be set, such as market standing, innovation, productivity,
physical and financial resources, worker performance and attitude,
profitability, manager performance and development, and public
responsibility. Drucker, Peter (2004).
Porter wrote in 1980 that companies have to make choices about their
scope and the type of competitive advantage they seek to achieve,
whether lower cost or differentiation. The idea of strategy targeting
particular industries and customers (i.e., competitive positions) with a
differentiated offering was a departure from the experience-curve
influenced strategy paradigm, which was focused on larger scale and
lower cost. Porter, Michael E. (2002) Porter revised the strategy
paradigm again in 1985, writing that superior performance of the
processes and activities performed by organizations as part of their
value chain is the foundation of competitive advantage, thereby
outlining a process view of strategy. Porter, Michael E. (2005)
1.2 Statement of Problem
There are numerous problems hindering the effective and the efficient
use of accounting data the purpose of this project work, we shall be
looking at three major problems obstructing the proper use of accounting
data in the management of an organization.
(i) Lack of reliable data
(ii) Behavior attitude of management
(iii) Physiological impact of the staff.
1.3 Objectives of the Study
The project work aims at determining and highlighting the need for adequate accounting data, in an organization.
The study will also provide exploration and reason for accounting
data and will offer adequate solution that can reduce factors hindering
the effective use of accounting data in an organization.
The objectives are stated as follows:
1. The study will help to measure the performance of the organization from the accounting data gathered.
2. The study also is used to highlight the areas of the organization where controls are needed.
3. The study helps to gather all data relating to the activities of the enterprises for the period concerned.
4. Also, the study is used as a basis for inter-firm comparison
5. Also to assist in forecasting which would likely occur in the future and consequently.
6. To serve as a guideline for the amount of revenue to be generated to the government purse.
1.4 Research Question
The research work is guided with same research question, which will
be administered and distributed among the researchers area of study
which are the respondents to this research work and these comprise
management and staff of Nigerian bottling company within the area study.
Sample research question are:
1. What is strategic management and how can accounting data be used professionally?
2. Who can you use with the help of accounting data to measure the performance of the organization?
3. What are the areas you think the company needs controls and strategic management?
4. How can the Nigeria bottling company achieve its set out
objective with in a specific time in order to improve its performance
both industrial and commercial wise in global corporate open market.
5. What are the activities the activities of the enterprises within the period of last six months?
6. Do you consider the inclusion of accounting data in the factors chosen?
7. What sort of accounting data do you find most useful in reaching certain decisions that you make?
1.5 Statement of Hypothesis
The researcher formed some of the hypothesis which will be tested to
support this study. The hypothesis will be tested at 0.05 level of
significance using the t-test method and correlation analysis.
The research hypothesis are as follows.
1. H1: Enhanced role of accounting analysis can be used to further
the innovation, planning, management and professional drive in both
industrial and commercial sector.
H0: Enhanced role of accounting analysis can be used to further the
innovation, planning, management and professional drive in both
industrial and commercial sector.
2. H1: The Company is largely dependent on the accounting data in relation to the company
H0: The Company is not dependent on the accounting data in relation to the company
3. H1: The use of accounting data is an effective tool for economic benefit.
4. H0: The use of accounting data is not an effective tool for company benefit.
1.6 Signification of the Study
This research work will present in a precise manner, the importance
and use of Strategic Management over others management. It is believed
that the findings of this research work should provide detailed
information on the use of accounting data for companies benefit through
Strategic Management with the help of professionals. It is also expected
that the study will benefit the management, staffs of the company,
researchers and the society in general.
The findings of the study should be useful to CEO and Directors. It
is expected that the findings will expose the Company management to the
importance of Strategic Management and professional use of accounting
data. By this exposure the management could acknowledge the advantage
Strategic Management over the conventional management method in use
previously. It is possible that by this outcome the management would
realistically adjust to the application of Strategic Management in
achieving greater goals and benefits within the company. In turn, the
staffs would have real focus for better performance and achievements in
their work.
Accuracy in pin pointing the plans for strategic management and
professional use of accounting data are essential in the industrial and
commercial sector in that; it may invariably lead a firm to the
management of compatible units that are crucial to fulfilling its
objective and also for re-enforcing its objectives. However, due
consideration has to be given in thus approach through due regard for
opportunity cost of founding a new business towards the purpose.
The research will also be beneficial to the researcher. This is
because the study will expose the researcher to so many related areas in
the course of carrying out his research. This will enhance the
researcher’s experience, knowledge and understanding on Strategic
Management and professional use of accounting data for companies’
beneficial goals.
1.7 Justification of the Study
I want to justify this research work based on the objectives and the
significance of this research work, what is within its coverage, this
research work is with no doubt necessary to be carried out. Because if
done will greatly highlight the importance and advantage of using
Strategic Management and professional use of the accounting data for
beneficial interest to any company.
1.8 Scope of the Study
The scope of this research work been narrowed down to the Nigerian
bottling company. It is limited to Accounting data in the strategic
management and professional use to companies benefit evaluation in
Nigeria bottling company Lagos Nigeria.