Management Accounting: Qantas Case Study and Balanced Scorecard

This report delves into the principles of management accounting, exploring its evolution and the tools employed to aid managerial decision-making. It examines the development of management accounting practices, emphasizing the impact of competitive pressures, cost control, and resource allocation. The report then highlights the usefulness of the balanced scorecard as a strategic planning and communication tool, improving financial reporting. Part B focuses on a case study of Qantas Ltd, identifying critical success factors such as a strong management system, efficient route systems, cost management, and non-stop flight services. Key performance indicators (KPIs) related to customer satisfaction, profitability, flight schedules, and market share are analyzed. The report includes a strategic map illustrating the financial, customer, internal process, and learning & growth perspectives, followed by a balanced scorecard detailing key result areas and associated KPIs.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Part A...............................................................................................................................................2
Development of Management Accounting Tool.........................................................................2
Usefulness of Balanced Scorecard...............................................................................................3
Part B...............................................................................................................................................4
Critical Success Factors and Key Performance Indicator............................................................4
Strategic Mapping........................................................................................................................6
Balanced Scorecard.....................................................................................................................7
Reference.........................................................................................................................................8

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Part A
Development of Management Accounting Tool
Management Accounting may be defined as the techniques which is used by the
management of the company for the purpose of collecting vital information regarding the
business and the same is used by the executives of the business to take vital decisions regarding
the business. Therefore, it can be said that management accounting helps the management to
make internal decisions as to how the operations of the business can be improved.
Traditional Management Accounting practices such as budgeting, costing and
profitability analysis mostly focus on internal organizational issues and are financially oriented.
The modern management accounting practices which is followed aims to develop competitive
advantage and promote efficiency in the operations of the business. The management accounting
practices which is followed in most of the businesses requires proper information on the basis of
which decisions are taken by the business. Some of the factors which have contributed to the
development of management accounting principles are discussed below in details:
 Competitive Pressure: The competitive pressure in the market is one of the factors which
has led to the development of management accounting practices. The level of competition
in most of the industries is very high and therefore the businesses need to formulate a
strategy for gaining competitive advantage in the market. In order to take appropriate
decisions, the managers of the company use management accounting tools for taking
important decisions relating to the business.
 Cost Control and Improving Efficiency: One of the reasons that business is using
management accounting tools is to improve the overall business structure of the

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company. One of the popular tools which is used by businesses is budgeting which
allows the businesses to manage the operations as well as helps in controlling the costs.
Thereby, it can be said that the same helps in improving the efficiency of the business.
 Allocation of Resources and Financing Requirements: Management accounting tools
provide appropriate information to the management on the basis of which important
decisions are taken such as production scale, allocation of resources and financing
requirements are some of the decisions. This helps the management of the company to
take important decisions regarding the business and also how the same would be
operating in future.
Usefulness of Balanced Scorecard
The key benefits which are associated with the use of balanced scorecard in a business are listed
below in details:
 Better Strategic Planning: The balance scorecard provides a framework which can be
used by the business for making plans and effectively communicating the same (Gomes
et al., 2013). The tool allows the businesses to formulate strategic maps which helps the
management to visualize the strategic decisions which needs to be taken by the business.
 Improved Communication: The important decisions which are taken by the management
of the company can be communicated effectively to different departments with the help
of balanced scorecard approach in a business (Rothaermel, 2013). This helps the
businesses to have a clear understanding of the strategic decision of the business.
 Improved Financial Reporting: The companies which utilizes balance scorecard tend to
have an efficient reporting framework for reporting the performance of the business. In
addition to this, balanced scorecard approach can also promote transparency in the

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operations of the business (Bocken, Rana & Short, 2015). The balanced scorecard
approach helps the management of the company to visualize the performance of the
business.
Part B
Critical Success Factors and Key Performance Indicator
The business which is considered for this part is Qantas ltd which is engaged in providing
airline services to the customers (Investor.qantas.com., 2019). The critical success factors are
those factors which help the management of the company decide how can the business enhance
the performance and revenue which is generated by the business. Some of the critical success
factors are discussed below in relation to Qantas ltd:
 The business has a strong management system which aims at providing the best quality
services in the market and that too at a reasonable price.
 Route System which is introduced by the business also forms one of the critical success
factors of the business (Nikolaou & Tsalis, 2013). The business is dedicated to bring
about new routes such as the Perth-London route which effectively connects Australia
and Europe. Then there is Project Sunrise route which another direct route, flying non-
stop from the East Coast of Australia to London and New York. The airline company has
route system in 186 countries and effectively connects major destinations in the world.
 Efficient use of costs is another critical success factor of the business which allows the
management to effectively manage the operations of the business and keep the prices
which is charged by the business low (Zou et al., 2014).

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 Non-stop flight services are another reason for the success of the business and the same
also contributes to the revenue which is generated by the business.
The key performance indicators of the business which can be identified by analyzing the
financial statement of the business are listed below in details:
 Customer satisfaction and customer loyalty are tow important consideration which affect
the business of Qantas and the business model which is followed effectively contributes
to the performance of the business.
 The net profit estimate which is shown in the annual report is also considered to be an
indicator of the performance of the business and therefore business of Qantas ltd needs to
adhere to policies which would enhance the profit-making capacity of the business.
 The number of flights which is scheduled for take both in terms o domestic travel as well
as international travel also shows the performance of the business and therefore
considered to be a key area of performance of the business.
 The management of the company focuses on high valuation of market shares which is
also an indicator of the performance of the business.

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Growth in Sales Reduction in Cost Investment Management
Brand Awareness Customer Satisfaction
Interpersonal Relations with customers
Waste Minimization Introduction of New RoutesInnovation and Development
Improvement in Training Promoting Efficiency in OperationsImproving internal Communications
CREATION OF LONG TERM VALUE FOR SHAREHOLDERS
Financial
Perspective
Customer
Perspective
Internal
Process
Perspective
Learning
and Growth
Perspective
Strategic Mapping
Figure 1: Table Showing Strategic Map of Qantas Ltd
Source: (Created by the Author)
Balanced Scorecard
KRA (key
result area)
Target KPI (key
performance
indicator)
Result

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Financial
Perspective
The plan of the business is to
enhance the profitability of the
business along with enhance the
revenue which is generated by the
business (Hansen & Schaltegger,
2016). The management also
plans to reduce the costs of the
business.
Increase in Net
profit of the
business and
reduction in
operating costs
Increase in profit
Business
Process
Perspective
Improving the waste management
policies of the business with a
view of sustainable approach and
also engage in innovations in the
business (Hoque, 2014). The
management also plans to
introduce new routes to serve
more customers
High rate of
success in
Converting
Business
opportunities
Sustainable
development and
innovation
Learning and
Growth
Perspective
Better quality of staff who have
necessary skills which would be
developed by proper training and
improvement in internal
communication
Highly skilled
labour force
Reduction in costs
and efficiency in
business
Customer
Perspective
Better services offered to the
customers for their satisfaction
and improvement in business
perspective towards generation of
value for customers
Positive
Feedback,
Improvement in
Brand loyalty
Improvement in
brand image and
reaching out to new
customers base with
the policies of the
business.

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Reference
Bocken, N. M. P., Rana, P., & Short, S. W. (2015). Value mapping for sustainable business
thinking. Journal of Industrial and Production Engineering, 32(1), 67-81.
Gomes, E., Angwin, D. N., Weber, Y., & Yedidia Tarba, S. (2013). Critical success factors
through the mergers and acquisitions process: revealing pre‐and post‐M&A connections
for improved performance. Thunderbird international business review, 55(1), 13-35.
Hansen, E. G., & Schaltegger, S. (2016). The sustainability balanced scorecard: A systematic
review of architectures. Journal of Business Ethics, 133(2), 193-221.
Hoque, Z. (2014). 20 years of studies on the balanced scorecard: trends, accomplishments, gaps
and opportunities for future research. The British accounting review, 46(1), 33-59.
Investor.qantas.com. (2019). Retrieved 30 May 2019, from
https://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgy
w/file/annual-reports/2018-Annual-Report-ASX.pdf
Nikolaou, I. E., & Tsalis, T. A. (2013). Development of a sustainable balanced scorecard
framework. Ecological Indicators, 34, 76-86.
Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill Irwin.
Zou, W., Kumaraswamy, M., Chung, J., & Wong, J. (2014). Identifying the critical success
factors for relationship management in PPP projects. International Journal of Project
Management, 32(2), 265-274.