Management Accounting for Decision Makers

Strategic Management

1.  Establish mission and objectives 
2.  Undertake a position analysis (for example, a SWOT analysis)
3.  Identify and assess strategic options 
4.  Select strategic options and formulate plans 
5.  Perform, review and control
6.  The changing business landscape

Increased competition and advances in technology have changed the business landscape in UK. There have been changes in the types of businesses operating as well as changes in the ways in which businesses are structured and operate. 

A key financial objective is to enhance owners' wealth. When setting financial objectives right balance must be struck between risk return. All management accounting is useful information for decision making and this requires a clear understanding of for whom & for what purpose the information will be used. 

Management Accounting can be viewed as a form of service as it involves providing financial information required by the managers. To provide a useful service,management accounting must possess certain qualities, or characteristics. These are relevance, reliability, comparability, and understandability. In addition, management accounting information must be material. Providing a service to managers can be costly and financial information should be produced only if the cost of providing the information is less than the benefits gained. 

Management Accounting information is part of the total information system within a business.To meet managers' needs information relating to 

• Developing objectives and plans
• Performance evaluation and control
• Allocating resources
• Determining costs and benefits

Providing non financial information has become an increasingly  Important part management accountants' role. 

Changing role of the management accountant.

The main purpose of management accounting is to affect people's behavior. This effect is not always beneficial.IT has had a major affect on the ability to provide accurate, detailed & timely information. 

Developments in IT have enabled information and reports to be more widely disseminated throughout the business.

Less time is spent preparing reports. The management accountant is now a key member of the management team.This new dimension to management accountant's role should benefit the design of more relevant management accounting information systems.

Reference: Financial Accounting for Decision Makers 

A snippet from today's budget: 

We have to have a less debt burdened economy. Consumer spending - if its a debt ridden one like the recent one, then its not progressive growth for the economy. Conservatives are adamant that's the old way we have to avoid. What I mean is, if consumer spending is reckless spending, mounting serious credit card high, significant APR debt, then we will be living in a false boom economy again. That is against Conservativeness.