Impact of Management Accounting Practices on UK’s Manufacturing Companies’ Financial Performance

Impact of Management Accounting
Practices on UK’s Manufacturing
Companies’ Financial Performance

Table of Contents
Title.......................................................................................................................................................2
Introduction...........................................................................................................................................2
Rationale...............................................................................................................................................3
Research Aim and Objectives................................................................................................................4
Research Questions...............................................................................................................................4
Chapter 2: Literature Review.................................................................................................................4
Application of the theories of Management Accounting...................................................................4
Determinants of monetary performance in manufacturing organizations:.......................................8
Critical Discussion................................................................................................................................9
Research Methods, Conclusion and recommendations:.....................................................................10
Research methods:..........................................................................................................................10
Introduction:................................................................................................................................10
Research design:..........................................................................................................................10
Search Strategy:...............................................................................................................................11
Keywords used for search:...........................................................................................................11
Research Ethics:...........................................................................................................................11
Conclusion:..................................................................................................................................11
Conclusion:......................................................................................................................................12
Recommendations:..........................................................................................................................12
Areas for further research:..............................................................................................................13
References...........................................................................................................................................14
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Title
Analyzing the Impact of Management Accounting Practices on UK’s Manufacturing
Companies’ Financial Performance
Introduction
Malmi & Granlund, (2009) has opined that the accounting techniques are used by the
business organizations to efficiently assess their operations. The techniques that prove to be
beneficial include the variance analysis, budgeting, and break even analysis. So, accounting
techniques proves to be beneficial for the business organizations to efficiently plan, direct and
control their operating costs and achieve profitability. It has been advocated by Zimmerman
& Yahya-Zadeh, (2011) that Management Accounting can be referred to as a set of
techniques and practices that facilitate the managers with all the financial information
necessary for making decision and maintaining an effective control over the corporate
resources. Advocating the advantages of Management Accounting practices, Giovannoni et
al., (2011) proposed the fact that the management accounting practices assist the
organizations to survive in the dynamic and highly competitive business environment. Thus,
on the basis of the above aspects, it can be inferred that there has been a significant change in
the basic principles of management accounting and thus has emerged as a superior practice
that adds significant value to the various organizational practices. It has been advocated by
Ramljak & Rogosic, (2012) that the practices like marginal costing and absorption costing are
not favoured by the businesses organizations since the costing systems are characterized with
certain limitations and they do provide an accurate method of recording the costs that is
important for managerial decision making. So, in comparison, the Management Accounting
Practices enable the organization to obtain relevant information that contributes to effective
decision making.
Thus, on the basis of the above aspects, the researcher in the present study has emphasized
analyzing the impact of Management Accounting Practices on the financial performance of
the firms. This would prove to be beneficial in analyzing whether the changes in the
management accounting practices have proved to be beneficial for the form or not.
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Rationale
Ahmad, (2013) has opined the fact that the contemporary business environment has become
highly competitive and as a result the business organizations have become highly dynamic
and aggressive to identify the strategies that can ensure them a profitable existence.
Competition in the business environment has been driven by rapid technological
advancements, globalization, innovation and changing customers’ demands. Thus, these
factors are driving the management of the business organization to design business strategies
and techniques for guiding the organization towards achieving maximized profits that can be
achieved by increasing sales and minimizing the production costs. Profit optimization and
cost minimization can assist the business to achieve competitive advantage within the
industry (Hopper et al., 2009). Thus, in this context it can be said that there are certain
management accounting practices that can facilitate the management with strategies for
influencing a large number of customers to have positive impression towards the brand and
have lasting preference for the products and services of the business.
From the study conducted by Sunarni, (2013), it can be said that the management accounting
practices in the recent time has undergone significant evolutions to take active participation
in the strategic planning process of the business organizations. It has also been argued by
Macintosh & Quattrone, (2010) that contemporary business organizations are efficiently
applying the management accounting skills in cases where market intelligence is needed and
strategic decisions need to be taken and competitive strategies need to be adopted and
implemented. So, on the basis of the above arguments, it can be said that management
accounting assist the firm in achieving competitive advantage in the ever demanding high
competitive business environment that demand innovative management accounting practices.
Moreover, it has also been opined by McLellan & Sherine, (2013) that the above measures in
context to management accounting practices are deemed important especially in context to
the manufacturing businesses where the firms embark upon efficiency and cost effectiveness
as a competitive for achieving profitability and growth.
The above arguments motivated the researcher to take upon the study to analyze the impact
of management accounting practices on the financial performance of the forms operating in
the UK manufacturing sector.
In addition to the above aspects, the motivation on the part of the researcher to take upon the
study can also be attributed to the personal interest of the researcher in the field of
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