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Strategic Management Accounting for Business : Assignment

   

Added on  2021-05-31

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Strategic Management Accounting 1

Table of ContentsIntroduction................................................................................................................................3Nature of SPMSs........................................................................................................................4Implications related to strategic alignment, management performance evaluation andcompensation..............................................................................................................................5Major issues related to the implementation of Strategic Performance Measurement Systems(SPMSs).....................................................................................................................................7Conclusion..................................................................................................................................8References..................................................................................................................................92

IntroductionThe measurements of the performance and the management system are the two of the systemsthat are connected with each other. These systems help in motivating and rewarding theworkforce. The increase in the competitive pressure due to the globalization of the marketsand the operational activities are forcing the organizations to reformulate their operationssystems, strategies, procedures and processes for the sustainability of the competitiveposition. Strategic performance measurement system is considered as a system which makesuse of the information in order to bring the positive changes in the system, culture and theprocesses of the organization. The positive impact upon the organization can be attainedthrough the agreement on the allocation, performance goals, resources priorities, informingthe managers for the review and to maintain the plans and the current policies for meeting thegoals as well as to share the results of the performance in attaining goals[ CITATION Jos12 \l1033 ].The strategic performance measurements system has now become the need of theorganization as it helps the organization to establish the competitive advantage in comparisonto the other organizations of the market. This system helps the organization to bring thechanges that helps in improving the performance of the various areas of the organization inan effective manner. The implementation of the SPMS in the organization creates some of theissues for the organization. It is important for the organization to develop the plan andstrategy for the effective implementation of the SPMS. The effective implementation of theSPMS in the organization help the organization meets the goals and the objectives of theorganization as well as maintaining the position of the organization in the market place.Nature of SPMSsSPMSs are used by the organization as it helps the managers in developing the competitivestrategies. These systems are designed to present the managers with the non-financial3

measures and financial measures that include the various perspectives that provide a path totranslate the strategy in performance measures. These systems assist in enhancing theorganizations’ strategic competitiveness. SPMS helps in influencing the organizationalperformance as it enables the organization to make strategic decisions and provide shape tothe strategic agendas of the organization by the formulation processes of thestrategies[ CITATION Jos12 \l 1033 ]. The balance scorecard is one of the strategicperformance measurement systems that is used by organizations for communicating the goalsto be achieved, aligning the daily work with the strategy, prioritizing the services, projectsand products and also for monitoring and measuring the progress of the organization towardsthe strategic targets[ CITATION Bal17 \l 1033 ]. There are many of the characteristics of the performance measurement systems that include:First: The measures should include the relevant non-financial information on the basis of themain success factors of the business. Second: the systems must be implemented forcommunicating the strategies and monitoring the results of the business. Third: It is importantthat the systems and the measures must be developed on the basis of the objectives of theorganization, significant success factors and customer orientation. It is important to monitorthe non-financial and financial aspects from the achieved results. Fourth: the performancesystem should follow the current strategies. Fifth: Performance system should fulfil all therequirements of the particular situation in the operations and it should be understandable andeasy to implement. Sixth: the performance system must be connected with the reward systemof the organization. Seventh: it is important that the non-financial and the financial measuresmust be consistent and coherent with strategic framework[ CITATION Eds08 \l 1033 ]. Thebalance scorecard is helpful in measuring the actual performance in comparison to theplanned performance. It is a strategic management tool that facilitates the translation of thestrategic objectives and the mission of the organization into critical drivers and the4

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