Strategic and Sustainable Accounting Report: Accent Group Limited

This report analyzes the strategic and sustainable accounting practices of Accent Group Limited, a major Australian footwear retailer. It begins with an executive summary outlining the importance of strategic and sustainable accounting in achieving business objectives and maintaining long-ter...Read More

Running head: STRATEGIC AND SUSTAINABLE ACCOUTNING
Strategic and Sustainable Accounting
Name of the Student:
Name of the University:
Author’s Note:

1STRATEGIC AND SUSTAINABLE ACCOUNTING
Table of Contents
Answer to question 1:......................................................................................................................3
Introduction:................................................................................................................................4
Brief overview of the company:..................................................................................................4
Analysis of business environment of the company:....................................................................5
Threats of new entrants:...........................................................................................................5
Bargaining power of suppliers:................................................................................................6
Bargaining power of buyers:...................................................................................................6
Threat of substitutes:................................................................................................................7
Rivalry among existing competitors:.......................................................................................7
Suggested strategies for the company using Porter’s Generic Strategy Model:..........................8
Potential financial and non-financial measures for evaluation of the strategies:........................9
Conclusion:................................................................................................................................10
Answer to question 2:....................................................................................................................11
Sub part 1:..................................................................................................................................11
Sub part 2:..................................................................................................................................11
Sub part 3:..................................................................................................................................12
Answer to question 3:....................................................................................................................14
Sub part 1:..................................................................................................................................14

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Sub part 2:..................................................................................................................................14
References and bibliography:........................................................................................................16

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Answer to question 1:
Executive Summary:
This report is prepared to analyze and understand the concept of strategic and sustainable
accounting and reporting. Business organizations are established with some predetermined goals
and objectives and to achieve those objectives and goals they need to build up certain efficient
strategies. Multiple set of plans are known as strategy and to make such plans there is an
immense importance of the management accounting and sustainable accounting. In this report
some of such important aspect of the strategic sustainable accounting and management
accounting tools and techniques have been discussed and analyzed based on the case study of
Accent Group Limited.

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Introduction:
Business organizations are continuously giving efforts through efficient managerial
activities and trying to maintain sustainability for a longer period. In this modern competitive
business era, every business organization needs to be efficient in their management and come up
with efficient business strategies, which will help them to survive in the market (Uyar 2013).
Behind those efficient managerial decisions and strategies, there is an important role of
sustainable and management accounting and management accounting information (Ahmad
2014). It gives the base for the management to predict the future based on the experiences and to
formulate futuristic strategies. In this report, some of such sustainable accounting strategies of
the Accent Group Limited have been analyzed with the help certain operational and financial
performance parameters of the Accent group Limited.
Brief overview of the company:
Accent Group Limited is an ASX listed Australian company and is the leader in retail and
distribution of footwear. They are having more than 420 stores and they sell their products with
10 different retail domestic brands and 10 international brands. Their business operations are
mainly restricted within the Australia and New Zealand. Accent Group Limited formerly known
as the RCG Corporation Limited is mainly an investment holding company holding controlling
interest in various renowned footwear and apparel business. They started their business with a
very small amount of investment and gradually they have increased their holding on various
national and international footwear brands (Accent Group Limited 2019). They have taken the
indirect route of growing their business by merger and acquisition of business units in the same
industry. It was a strategic move for them, which helped them to reduce the counter the
increasing competition in the market and to grow the business. It also helped them maintain a

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sustainable profit percentage over the years and to achieve a sustainable growth in their earnings.
They are having a group of highly experienced professional and management accountants who
are continuously analyzing the financial and operational performance of the business and making
various important business decisions aiming at long-term success of the company (Accent Group
Limited 2019).
Analysis of business environment of the company:
Accent Group Limited is a group of footwear brands in Australia and New Zealand. They
are holding full controlling interest in some of the domestic and international Footwear brands.
They are also having some exclusive right to trade in those brand names. Footwear is one of the
growing industries in Australia, and it is full of competition by various other national and
international companies (Accent Group Limited 2019). In the footwear industry the volume of
sales and customer base depends on, innovative designs, brand name and brand loyalty. Focusing
on such aspects of the industry the Accent Group Limited has also formulated certain strategies
to retail quality products with good brand names. Their competitive strategies and overall
business environment can be analyzed using the Porter’s Five Forces Model as follows.
Threats of new entrants:
In the initial stages in every industry, various new companies enter into the industry in
attraction of the supernormal profit earned by the existing companies. Later on with the
increased and intense competitions, inefficient companies exit from the industry incurring a huge
amount of loss (Haldma & Lääts 2014). In the Australian footwear industry, also various national
and international brands have entered from time to time and increased the degree of competition
in the market. In recent times, also entry various renowned brands can be observed in the

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Australian footwear industry. Some examples of such new entrants are Alias Mae, Tony Bianco,
Wittner and Jaggar Footwear.
Bargaining power of suppliers:
Merchandising companies are depended on the suppliers for raw materials for
manufacturing of their products. If suppliers are more powerful and they are able to fix price on
their own discretion by bargaining with the companies then it will increase the input material
cost for the companies. In case of Accent Group Limited most of their subsidiaries purchases and
procures their input materials from the regional and domestic markets. Hence, no such problem
arises with the suppliers of the Accent Group Limited subsidiaries.
Bargaining power of buyers:
Customers are the ultimate objective stakeholders of every company. Selling of products
is the main parameter, which determines the rate of success for the companies. Therefore, sales
volume in units and in amount must be achieved to a significant level, which will generate a
significant amount of earnings for the company. If buyers are enough powerful to bargain the
price and fixes the selling price much below the expected sales price then the volume of sales
might be reached to the expected level but it might not generate the expected amount of profit.
Most of the subsidiaries of the Accent Group Limited are some renowned brands and they sale
their products at a predetermined prices. Therefore, in this aspect also there is less pressure from
the market but they have to come up with the competitive prices for countering the pricing
challenges given by the competitors.

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Threat of substitutes:
With the advancement in the business and innovation in the technologies, companies are
coming with innovative and substitute products, which is causing a threat to the brands of the
Accent Group Limited. Various international brands are opening their retail outlets in continents
of Australia and New Zealand, and it is crowding the market with substitute products. Hence, it
is creating a serious issue for the Accent Group Limited. The main product and brand of the
Accent Group is the Athlete’s Foot, and other companies such as Alias Mae also retailing same
like products with competitively lower price. Hence, the Accent Group Limited needs to
concentrate on this issue and need to invent new and advanced products to keep their market
share intact.
Rivalry among existing competitors:
One of the most important aspects of the porter’s five forces model is the rivalry among
existing competitors. There are various other domestic manufacturer and seller of footwear in
Australia and New Zealand. They are already competing with each other with their pricing and
marketing strategies. As the Accent Group Limited is a large group of footwear retailing brands,
they also face the same completion in the market. Competition among the existing companies is
also known as the domestic rivalry, which leads them to enter into a pricing war in the domestic
market. It indirectly affects the quality of the products and most efficient companies can only
survive in such a situation.
Therefore, the footwear market in which the Accent Group Limited is operating their
business is full of intense competition and domestic rivalry. There is also a threat of the new
entrants in the market and an intense domestic rivalry among the existing companies in the
industry. Hence, the company needs to formulate such strategies, which will help them to create

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new and innovative products at the lowest possible costs and to compete in the market with the
reasonable and challenging price for their products. Therefore, to survive is such situations,
companies need to formulate efficient business strategies in time to time and in this context the
importance of management accounting and management accounting information can be noticed.
In the following graph challenges faced by the Accent Group Limited in terms of Porter’s Five
Forces model can be well explained and presented.
Figure 1: Analysis of business environment of Accent Group in Porter’s Five Forces Model.
Suggested strategies for the company using Porter’s Generic Strategy Model:
After identifying those issues in the Porter’s Five Forces model, some strategies can be
suggested for the Accent Group Limited, which will be helping the company to counter
challenges and to be able to survive for a longer period. It can be noticed from the above analysis
that, there is an intense competition in terms of price and a threat of substitute products. As the
footwear products are very common in nature, there is no such chance of product differentiation.
DomesticRivalry:Anintensecompetitionandpricewar.ThreatsofnewEntrants:EntryofInternationalFootwearbrandsBargainingpoerorofsuppliers:DomesticSuppliersoftheinputmaterials,hencelesspressureBargainingpowerofbuysers:Fixedpricesforbrandedpriduct,butchallengingpricinngstrategyTreatsofsubstitutes:Manynewinternationalbrandsareofferingsubstituteproducts.

9STRATEGIC AND SUSTAINABLE ACCOUNTING
Hence, a cost competitive strategy can be suggested for the company. The company should adopt
the cost leadership strategy and try to manufacture the products in lowest possible costs. They
need to make an analysis of their manufacturing and distribution systems and they need to find
out the areas where the cost minimization strategies can be adopted. Some example for the need
for cost leadership strategy can be given as the price of Athlete’s Footwear brand. Many of the
other competitors are offering same quality Athlete’s footwear with a lower price. Hence, they
need to reengineer their manufacturing process and revise and improve the distribution system to
optimize the cost of their products. They also need to focus on those product segments, which
constitute the most of the volume of their total sales. Cost leadership strategy requires the
company to produce and supply same product with a minimum possible costs, but in doing so,
the quality of the product should not be hampered (Nielsen & Roslender 2015). They must
maintain the same quality for their products and rather they need to deliver more qualitative
products than their competitors do.
Potential financial and non-financial measures for evaluation of the strategies:
In the above paragraph, based on the competitive situations in the market a cost
leadership strategy has been suggested for the company. If the cost leadership strategy is adopted
by the company, then the company would be able to compete in the market with challenging
pricing of their products and they can well counter the price war in the domestic market. The
success of the cost leadership strategy can be measured by various financial and non-financial
parameters (Bromwich & Scapens 2016). If the same products or even more qualitative products
can be served to the customers with a lower price then it will help the company to attract a huge
market share and it will lead to an increase in a permanent customer base. Therefore, after
adopting the strategy the measurement of the customer base or the market share can be an

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indicator or a parameter for the evaluation of the success of the cost leadership strategy. On the
other hand, with the increase in the market share, the total sales in amount will be increasing
which in turn will lead to an increase in the total earnings (Bromwich & Scapens 2016).
Therefore, the turnover measurement and the profitability measurements can also be the
parameters for measurement and justification of the success of the adopted strategies. Strategy
formulations and implementation is a long-term process (Fullerton, Kennedy & Widener 2014).
It must be evaluated and monitored from time to time for its ultimate success and that must be
ensured. There must be certain degree of flexibility in the strategies, which will help the
organization to change the certain plans or to adopt certain changes, which will be giving
benefits to the company.
Conclusion:
From the above discussion and analysis, it can be concluded that, every business
organizations passes through certain business environments, which needs due care and must be
countered with efficient business strategies. Management accounting and strategic accounting
can help the business organization with the required information to formulate those plans and
business strategies, which will help them to compete in the market and to survive for a longer
period. Accent Group Limited is also facing certain challenges from the domestic market as well
as from the international brands and they need to adopt certain competitive strategies to survive
in such a competitive situation. It can be recommended for the company to adopt the cost
leadership strategy, which can help them to excel in the market with qualitative products with a
challenging pricing strategy.

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Answer to question 2:
Sub part 1:
In the given case study the production is constrained by the availability of machine hours,
hence the production preference should be given based on the contribution margin per machine
hour. Calculations supporting such arguments are shown in the following table.
As the contribution per machine hour is highest for the Showdown Waterproof Jacket,
that product should be given most focus for manufacturing. If production was not constrained by
machine hour then the product with maximum per unit contribution should be given most
preference, and in terms of that, the Showdown Waterproof Jacket should be given most
production focus.
Sub part 2:
Based on the production preference as identified in the subpart 1 above and considering
the available machine hour, number of units to be produced has been calculated in the following
table.

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Sub part 3:
If 12,000 machine hours are available and the production is done as per the product mix
as has been computed in subpart 2 above, then the total contribution can be computed as follows.
If 13,000 machine hours are available and the production units are revised accordingly,
then the total contribution can be computed as follows.

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If the increased contribution and increased fixed contribution is taken into consideration,
then the additional benefit can be computed as follows.
From the financial ground, it can be observed that, there is an increased financial benefit
to the company for a total amount of $329,002. Hence, the proposal should be accepted.
Moreover, it will make a thinner distribution of the fixed costs to the products, which in turn will
lead to the cost reduction, and it will be benefiting the customers by a lower pricing of the
products. On the other hand, it can create some employment opportunity for the local youths as
well as can contribute to the society by means of more spending on corporate social
responsibility activities from the increased earnings.

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Answer to question 3:
Sub part 1:
It can be seen from the above computation, that 1,000 units of Street Cleat and 3,600
units of Side Street is to be produced in order to maximize the total contribution.
It can be seen from the above calculations that there is no change in units of production
considering the total profit as the objective function. Therefore, the production mix of 1,000
units of Street Cleat and 3,600 units of Side Street is the optimal solution.
Sub part 2:
From the above solver analysis, it can be observed that there are still some unutilized
hours in final assembly and in pattern preparation. First suggestion to increase the contribution
margin is to increase the availability of sole preparation hours. If that could be increased then the

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contribution margin could be increased to a significant level. If the sole preparation hours can be
increased to 1,200 hours then the total contribution that can be achieved has been completed in
the following table.
In another way, if the availability of the stitching hours can be increased then also the
contribution margin could be increased to a significant level. If the availability of the stitching
time can be increased to 2,000 hours then the total contribution margin that can be achieved has
been computed in the following table.
In both the cases the production mix has been changed and in both the cases the total
contribution margin can be increased to a certain level. Lastly it could be suggested to make the
production system much more efficient through the learning curve, which will in turn help the
organization to produce more units in lesser time and it will ultimately increase the total
contribution margin.

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References and bibliography:
Accent Group Limited. (2019). Retrieved 23 August 2019, from http://www.accentgr.com.au/
Ahmad, K. (2014). The adoption of management accounting practices in malaysian small and
medium-sized enterprises. Asian Social Science, 10(2), 236.
Bromwich, M., & Scapens, R. W. (2016). Management accounting research: 25 years
on. Management Accounting Research, 31, 1-9.
Carlsson-Wall, M., Kraus, K., & Lind, J. (2015). Strategic management accounting in close
inter-organisational relationships. Accounting and Business Research, 45(1), 27-54.
Chenhall, R. H., & Langfield-Smith, K. (2017). Adoption and benefits of management
accounting practices: an Australian study. Management accounting research, 9(1), 1-19.
Fullerton, R. R., Kennedy, F. A., & Widener, S. K. (2014). Lean manufacturing and firm
performance: The incremental contribution of lean management accounting
practices. Journal of Operations Management, 32(7-8), 414-428.
Haldma, T., & Lääts, K. (2014). Contingencies influencing the management accounting practices
of Estonian manufacturing companies. Management accounting research, 13(4), 379-
400.
Horngren, C. T., Bhimani, A., Datar, S. M., Foster, G., & Horngren, C. T. (2015). Management
and cost accounting. Harlow: Financial Times/Prentice Hall.
Jamil, C. Z. M., Mohamed, R., Muhammad, F., & Ali, A. (2015). Environmental management
accounting practices in small medium manufacturing firms. Procedia-Social and
Behavioral Sciences, 172, 619-626.

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Martínez-Ferrero, J., Banerjee, S., & García-Sánchez, I. M. (2016). Corporate social
responsibility as a strategic shield against costs of earnings management
practices. Journal of Business Ethics, 133(2), 305-324.
Nielsen, C., & Roslender, R. (2015). Enhancing financial reporting: the contribution of business
models. The British Accounting Review, 47(3), 262-274.
Pavlatos, O. (2015). An empirical investigation of strategic management accounting in
hotels. International Journal of Contemporary Hospitality Management, 27(5), 756-767.
Quattrone, P. (2016). Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research, 31, 118-122.
Renz, D. O., & Herman, R. D. (Eds.). (2016). The Jossey-Bass handbook of nonprofit leadership
and management. John Wiley & Sons.
Uyar, A. (2013). Cost and management accounting practices: a survey of manufacturing
companies. Eurasian Journal of Business and Economics, 3(6), 113-125.
Van der Stede, W. A. (2015). Management accounting: Where from, where now, where
to?. Journal of Management Accounting Research, 27(1), 171-176.