Strategic Management Accounting: Practices Comparison Essay

This essay provides an in-depth analysis of strategic management accounting, defining its core principles and applications. It explores the factors driving the implementation of strategic management accounting, emphasizing its role in enhancing decision-making and fostering competitive advantages. The essay compares and contrasts strategic management accounting practices in developed and developing economies, using case studies of companies like Tesco Plc and Woolworths Ltd to illustrate the practical application of techniques such as benchmarking, flexible budgeting, and the balanced scorecard. The discussion highlights the importance of strategic management accounting in maintaining operational efficiency, ensuring sustainability, and enabling businesses to adapt to market dynamics. The essay concludes by reiterating the significance of strategic management accounting in achieving strategic goals and fostering long-term success. The essay is a contribution to Desklib, a platform for students to access study resources.

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

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................5
Bibliography....................................................................................................................................7

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Introduction
Strategic management can be defined as the management accounting processes which
helps the management of a company to implement strategic processes which can then
accommodate strategic visions of the business. In the modern business environment, strategic
management can be referred to as a primary tool which allows the management of a company to
take decisions and also helps the businesses to develop a competitive advantage in the operations
of the business. In other words, strategic management accounting can be referred to as a practice
which utilizes both financial and nom-financial information for the purpose of taking a decision
which would be assisting the organization in achieving the goals of the business. The
effectiveness of accounting is further enhanced and the same has a role to play in strategic
planning for a business. In fact, there has been several companies which hires Certified public
accountants for such a purpose.
Discussion
The business environment which is current seen in developing countries reveals that the
level of competition which exists in the market is significantly high depending on the nature of
the industry. It is therefore for such reasons that strategic management practices are quite
common in companies. Besides competition, there are several other factors which makes
businesses to implement strategic management techniques in a business. Some of the factors
which can be identified to be responsible for implementation of strategic management tools are
listed below in details:

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Figure 1: (Factors Responsible for Implementation of Strategic Management Accounting)
Source: ()
Some of the factors which drives implementation of strategic management accounting in
businesses are listed in the figure above. The strategic management practices of a business help
the senior manager with the forecasting of the future and also estimate if any new business would
enter the market. Strategic management accounting involves effective techniques like
benchmarking, standard costing, marginal costing and several other techniques which can not
only help the business with internal operations but also with the external threats which the
business might face in future. It is to be noted that most of the companies aim to improve the
performance of the business and therefore for such a purpose chooses a strategy which best suits

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the operations of the business.
As per the analysis of market, the UK food and farming industry are key areas where
strategic management accounting practices have been applied so that significant changes can be
brought about in the productivity levels of the business. It has even been implemented in
countries like Australia and New Zealand for the purpose of creating efficiency in the operational
process of the business. In addition to this, manufacturing markets also tend to follow
management accounting practices so that they can stay competitive in the environment and also
develop strategic advantage so that the overall profitability for the business enhances. The
business of Tesco Plc which operates in UK is regarded as one of the leading retail chains
operating in the region and in Australia, the business of Woolworths ltd is engaged in the same
operations. As per the internal management analysis for the companies based on the information
published n the annual reports, both the companies apply management accounting practices in
order to ensure a certain level of efficiency and effectiveness can be maintained.
One of the common practices which is followed by both the companies is benchmarking
which allows the senior management to study competitor’s policies and practices so that the
same can be implemented in their own businesses. In such practices, the business using
benchmarking further tries to perfect the policy so that it can provide more advantage to the
same. In addition to this, it is also to be noted that benchmarking practices are also survival
tactics which are followed by a business so that it can face the tough competition in the market.
Another common practice which is followed by both the businesses is flexible budgeting which
allows the senior management to plan the revenue and expense which is likely to take place
during a period. Budgeting practices for a business allows the senior officials to reduce the costs
and also monitor the performance of the business considering the targets which was initially set.

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Both the business of Tesco and Woolworths ltd applies such techniques in order to stay ahead of
the competition in the market and also for the purpose of developing competitive advantage in
the market. One other technique which is followed by both the business is balance scorecard.
This allows the business to plan ahead and consider four different perspectives which is closely
related to the overall performance of the business. The balanced scorecard approach has
numerous advantage and helps the business to consider the key areas of performance. These
strategies are applied by the management of the company so that they can expand their
operations and be in a good financial state in future.
The role of the accountants and senior managers are quite important in implementing
strategic management practices in a business and also ensure that the same are being followed. In
the case of Tesco Plc and Woolworths ltd, the senior officials are looking to make changes and
improvements in their operational structure which is the primary reason that the strategic
management practices in such companies are providing positive results. One other reason for
implementing strategic management accounting practices in a business is to maintain
sustainability in the operations of a business. The future resources are scarce and therefore every
means needs to be applied by the business to ensure that the activities of the business are
sustainable. This would ensure that resources are saved and future generation can carry on their
operations. In an overall analysis, it can be said that strategic management accounting plays a
key role in current business environment both in terms of assisting businesses to maintain the
operational process or for developing competitive advantage in the business.
Conclusion
The analysis of different strategic management tools shows that businesses are able to
develop strategic advantage in the competitive environment. The analysis further cites the case

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examples of Tesco Plc and Woolworths ltd where the managers have successfully implemented
strategic management practices so that efficiency and effectiveness is maintained in the process
of the business. The discussion also shows that strategic management tools also plays an
important role in maintaining sustainability in the operations of the business. Therefore, it can be
said that strategic management tools allow a business to pan ahead as well as develop strategies
to effectively develop competitive advantages in the market.

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Bibliography
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Woolworthsgroup.com.au. (2020). Retrieved 7 January 2020, from
https://www.woolworthsgroup.com.au/icms_docs/195582_annual-report-2019.pdf
Tesco PLC. (2020). Annual Report 2019 . Retrieved 7 January 2020, from
https://www.tescoplc.com/investors/reports-results-and-presentations/annual-report-2019/
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