Comparative Analysis of Management Accounting in IKEA and Starbucks

This report provides an analysis of management accounting practices within IKEA and Starbucks. It examines how these companies utilize financial accounting systems to address financial challenges. The report delves into specific tools and techniques, including benchmarking, variance analysis, and key performance indicators (KPIs), illustrating their application in cost reduction, inventory management, and overall financial governance. The study explores how these companies formulate effective strategies to achieve their goals and objectives, focusing on their approach to financial problem-solving. The conclusion summarizes the use of management accounting systems for internal decision-making and sustainable growth. The report also includes references to academic literature and online resources supporting the analysis.

Management Accounting
Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK...............................................................................................................................................4
P 5- Organisation adopt financial accounting system to respond financial problem..................4
CONCLUSION -.............................................................................................................................5
REFERENCES ...............................................................................................................................6

INTRODUCTION
Management accounting provide information to manager which use to formulate
effective strategy that helps to achieve goals and objective of the company (Dekker, Kawai and
Sakaguchi, 2018).
Present report based on IKEA and Starbucks company. They use financial accounting
system to respond financial problems.
TASK
P 5- Organisation adopt financial accounting system to respond financial problem
Unicorn company adopting financial accounting system such as inventory management
and price optimisation etc that are essential to manage cost on all products. Company adopting
various tool like benchmarking , KPI and finance governance that respond to financial problems.
Benchmarking - Ikea company adopt benchmarking tool which use to evaluate current situation
that helps to formulate effective strategies and best practice improving performance. company
compare business performance or process that necessary to reduce the performance gap.
Benchmarking have many types but company adopt strategies benchmarking and performance
that because company prepare long term strategies that impact on overall performance of the
company (Hiebl, 2018) . Effective performance leads to reduce cost on product so they can
provide goods at the lower cost that would increase customer satisfaction . Starbucks not adopt
such tool because focus on customer satisfaction rather than performance and cost by applying
inventory management and cost accounting system of management accounting. IKEA can solve
financial problems like Cost reduction that helps to increase profitability which is essential to
sustainable growth.
Variance analysis - Starbucks company use this tool for comparing standard performance and
actual performance. If, any deviation found then manager can take action timely to solve
problem. Inventory management , cost accounting and price optimisation of management
accounting stem use by company to set standard budget. this tool use tool for analysis the
material variance , labour analysis ,overhead variance and price analysis so company can provide
quality and tasty food at the lower cost (Usenko and et.al., 2018) . Sometime IKEA also adopt
this tool to analysis deviation between actual and standard performance. It is important to
business trend forecasting which helps to solve financial problems like controlling the cost and

improve performance and quality of product that helps to build image in the market which leads
to market share and increase by improve profitability ratio economic cycle etc.
Key performance indicator - IKEA also use key performance indicator which use to tract
multiple level performance that helps to achieve strategic goals and performance goals of the
company. This is essential to analysis business objective and current performance. Starbucks not
adopting this tool because they focus on only improve performance by reducing cost. IKEA
Company can adopt for solve financial profit like increase sales volume that helps to increase net
profits and increase return on investment that helps to increase shareholder value , increase
customer retention by providing quality product at the lower cost. ultimately key performance
indicator helps to achieve goals and objective of the company.
Financial Governance - Starbucks and Ikea both are collect , monitor and control information to
formulate policies which helps to solve financial problems. Starbucks company can provide
healthy food to customer at the reasonable price and IKEA can provide quality and designing
goods to customers (Kibira and et.al., 2018). Inventory management and cost accounting of
management accounting system that helps to control the cost. financial governance use for
formulate policies and procedure regarding internal control , data security , workflow and
financial control that helps to solve financial problems like increase market by building image ,
improve cash flow , and control the cost.
CONCLUSION -
Above report summarised that management accounting system use for take internal
decision and company use various tools like benchmarking , variance analysis and key
performance indicator to respond financial problems like improve cash flow and finding etc that
are essential to sustainable growth of the company.

REFERENCES
Books and journal
Dekker, H.C., Kawai, T. and Sakaguchi, J., 2018. The interfirm contracting value of management
accounting information. Journal of Management Accounting Research.
Hiebl, M.R., 2018. Management accounting as a political resource for enabling embedded
agency. Management Accounting Research. 38. pp.22-38.
Kibira, D. and et.al., 2018. Procedure for selecting key performance indicators for sustainable
manufacturing. Journal of Manufacturing Science and Engineering..(1).p.011005.
Usenko, L.N. and et.al., 2018. Formation of an integrated accounting and analytical management
system for value analysis purposes. European Research Studies. 21.p.63.
Online
FINANCIAL GOVERNANCE. 2019.[Online]. Available
through.<https://www.tagetik.com/en/glossary/financial-governance#.XKRHX3Wg88o>