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Management Accounting : Solved Assignment

   

Added on  2021-05-31

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MANAGEMENT ACCOUNTING 1STRATEGIC PERFORMANCE MEASUREMENT SYSTEMS (SPMS)Student by (Name)Professor’s (Name)CollegeCourseDate

Management Accounting 2STRATEGIC PERFORMANCE MEASUREMENT SYSTEMS (SPMS)Brief Description of SPMS Strategic performance measurement systems (SPMS) are aspects that enablemanagers of an organization to evaluate both financial and non-financial measures so as todevelop ways that the said strategies would be implemented (Koufteros et.al. 2014). Thesystems, therefore, work to ensure that the said mission and visions of an organization are putin practice by evaluating performance. The commonly used performance system is thebalanced scorecard model. The SPMS have different characteristics that define their nature.One is that the make use of the monetary measures in the organization. The role is discussedunder the BSC, where the senior managers answer the question on how the shareholder'svalue will be added by the said monetary measure. Notably, the feature is short term as itenables the organization to determine the effects of the previous actions taken in the financedepartment. The other feature of these systems is that they evaluate the non-financialelements in the company. Measures assessed here, are those that affect the monetary positionin the organization. Examples include the internal processes, innovation, and customersatisfaction. SPMS also designs purposes after the former two aspects are combined. In thiscase, the measures not only deal with strategies implementation but also communication tostalk holders about the strategy, training the employees among others. Therefore, the SPMSshave been used by most of the organizations, as they are effective in assessing all theactivities in the organization. The systems play several roles in both large and smallorganizations. One is that it facilitates the development reviews based on the strategies put byorganizations. Also, the model assists businesses in aligning its activities with the strategiesdeveloped in the planning phase (Lisi 2015). Finally, the systems enable organizations to

Management Accounting 3monitor its performance and compare to the strategic objectives. However, several issues areexperienced, while implementing the strategic performance measurement systems based onstrategic alignment, management performance evaluation and compensation in multi-nationalorganizations. Strategy Alignment One of the issues experienced by organizations in using the strategic performancemeasurement measures is on strategic alignment. This refers to where planned strategies arematched with the operations of the company, so as to meet the goals set (Akter et al.2016).The role of the SPMS is to develop measures that are used in evaluating the performance ofthe business. However, studies have shown that the systems have not met this due to severalreasons. One is that the systems develop too many assessment measures that the organizationcannot coordinate in aligning the strategy. For example, the balanced scorecard dividesbusiness perspectives into four, which are financial, innovation, internal processes andcustomer satisfaction. In each perspective, several measures are developed that assess theimplementation of strategies. With the many divisions, it becomes hard to ensure that theyare all met and thus becomes hard in aligning the strategy. For example, the monetarystatements become too many that the senior managers do not know what to handle first, asthey are all relevant to the business.In most cases, the management prefers handling the financial aspects as they seem toaffect the organization directly. However based on the nature of the systems, where bothmonetary and non-monetary measures have to be considered; considering one andabandoning the other means that the systems are not useful. The other challenge experiencedin strategy alignment using SPMS is that it does not consider other concepts that must bepresent if strategies are to be aligned with activities (Slack 2015). One is in training, wherethe management has to equip the employees for them to develop a sense of direction. The

Management Accounting 4systems are keen on assessing the performance but do not consider measures to meet the rightperformance. Employees are needed most, when intending to align strategies andperformance as they have to not only work as a team but also operate towards the samedirection (Zhao et al. 2016). The operational systems, on the other hand, assume thatinforming the management of what is needed to be done, automatically results in itsimplementation. However, the case is different from implementation needs too many actionsfor it to be successful. Strategy alignment using SPMS also faces the challenge of money and time wastage.For example, while using the balanced scorecard, regular meetings must be conducted, forupdates to be done if the model is to be effective (Benkhayat et al. 2015). This leads to toomuch money usage and time where most organizations do not afford. In strategy alignment,evaluations have to be several, considering that organizations are dynamic and changes arecommon. With the idea that the systems divide business perspectives into sections, it,therefore, means that meetings are too much which could lead to less productivity. Based onthis, it is evident that the system is not applicable to most of the small businesses, whichcannot afford the excess money required in strategy alignment. Therefore, based on thefactors that the system lead to many divisions and decisions to be followed, does not considerother aspects like training that are needed in strategy alignment as well as demands frequentmeetings for updates, it has become hard for most of the organizations aligning theirstrategies using SPMSs. Management Performance Evaluation Issues Using the SPMS in managing performance evaluations result to several challenges tothe organizations. To start with the model evaluates the internal processes of the organizationand does not consider external factors that could affect the operations of the company (Zhu2014). For example, the balanced scorecard does only identify aspects in the internal

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