ABSTRACT
Strategic management
accounting (SMA) is central to the accomplishment of organizational objectives.
Without the implementation of SMA, it would be quite difficult for a firm to
survive, given the competitive nature of business environment in Nigeria. The
study examined strategic management accounting and performance of listed firms
in Nigeria, a study of selected listed firms in Nigerian manufacturing
industry. The study prioritized on three SMA techniques namely corporate
planning, capital investment analysis and cost-volume profit analysis. The
study employed the descriptive survey design. Structured questionnaire was
administered to 55 randomly selected staff. The data collected were analyzed by
the use of descriptive statistics and multiple regression analysis. Findings of
the study revealed that corporate planning, capital investment analysis and
cost-volume profit analysis positively and significantly influence profitability
of selected firms. In addition, the joint effect of these three techniques is
statistically significant on firm profitability. To this end, the study
suggested that organizations should develop internal capacity and network
systems in order to be able to capture external strategic information for
decision making. Organizations should also establish units/departments that
will specifically focus on collection and analysis of external strategic
information.
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
One of the
functionalities of organizations is their strategic drive
that enables them compete well in the market through sound decision making
process. Ahmad (2014) points that the principal challenge of management
accounting lies on the fact that its conventional tools such as variance
analysis, budgeting, costing, profit analysis and standard costing lack
relevance to address accounting problems in contemporary period . Apart from
the irrelevance of these tools, they are only good on paper as they lack
applicability in the real world (Ojira, 2014; Ojua, 2016). The mandate of
management accounting is to supply information to management of organizations for
decision-making. These information most times, neglects information from rival
firms. Management accounting only supplies internal information to
organizations excluding information from external stakeholders whose actions
subtly affect the performance of organization.
The Chartered Institute of Management
Accountants (2005) defines strategic management accounting (SMA) as a form of
management accounting (MA) that prioritizes on information relating to factors
external to an organization, as well as non-financial information and
internally generated information. Ojua (2016) maintain that SMA can be
captioned from two aspects – SMA as a component of strategically-oriented
accounting and the engagement of accounting practitioners in corporate
strategic decision-making processes. The application of the tools of SMA is
referred to as Strategic Management Accounting Practices (SMAP). SMAP are
various tools of accounting that supplies authentic information to various
parts of decision-making needs of an organization. The needs of decision-making
of an organization are but not limited to strategic costing, target costing,
consumer accounting, competitors accounting, strategic decision, planning,
control, performance management and evaluation (Khatabb, etal, 2015). SMA as
described by Tillman and Goddard (2008) refers to the application of the
systems of management accounting for making strategic decisions. Techniques of
SMA as enumerated by them include activity based costing, attribute costing,
brand value budgeting, benchmarking, competitive monitoring position,
competitor cost assessment, environmental accounting management, strategic
costing, customer accounting, value chain costing and strategic pricing.
The techniques of SMA are effectively
utilized by organizations in the developed economies for the sole purpose of
making strategic decisions (Ojira, 2014; Ojua, 2016). The impacts of these SMA
techniques have been found to positively impact on the growth of organizations
(Aremu & Oyinloye, 2014; Khatabb, et al, 2015; Mwangi, 2014). Only few
organizations in Nigeria recognized the importance of SMA and have been
consistently applying its techniques to enhance their organizational
performance (Ojua, 2016). However, the extent to which SMA contributes to the
performance of Nigerian firms is limited or perhaps, imaginary (Fagbemi, etal.,
2013).
Majority of organizations in Nigeria
still apply management accounting in their day-to-day operations. The
limitation of management accounting has been its inability to cope with the
advancement in business environment (Akenabor & Okoye, 2011). SMA sets the
pace for strategic decision making by providing vital information to management
of organization which will consequently enhance productivity and organizational
performance (Ahmad, 2014; Mwangi, 2014).
1.2 Statement of Problem
In recent times, focus has shifted
from management accounting to strategic management
accounting. The reason is simply because the latter contains financial and
non-financial information as well as internal and external data that are
beneficial to the growth of an organization. Strategic management accounting
has moved from reporting historical information, especially on variance
analysis, to taking part in the strategic planning process of an organization
(Mwangi, 2014). Strategic management accounting skills are actively applied in
the business environment where both market intelligence is sought and
evaluated, and strategic decisions are made and competitive strategies put in
place. These are factors ensures organization maximizes profits and wealth for
its shareholders and also gain competitive advantage over its rivals. Strategic
management accounting is prominent in manufacturing outfits where firms gears
effort to remain profitable and competitive (Uyar, 2010; Mwangi, 2014). These
measures are particularly important in the manufacturing sector where
efficiency and cost effectiveness may be used as a competitive tool for growth
and profitability, which are measures of financial performance. However, Uyar
(2010) maintain that despite the benefits of SMA, many companies still adopt
traditional management accounting approach in their daily business activities.
1.3 Objectives of the Study
i.
To ascertain whether selected listed
firms in nigerian manufacturing industry in Akwa Ibom State have accounting
strategy.
ii.
To determine how accounting strategy
affects the growth of the selected listed firms in nigerian manufacturing
industry in Akwa Ibom State.
iii.
To determine how employer respond to accounting
strategy in selected listed firms in nigerian manufacturing industry Akwa Ibom
State.
iv.
To establish the relationship between accounting
strategy and the growth of selected listed firms in nigerian manufacturing
industry.
1.4 Research Questions
a.
Does accounting strategy have any effect
on the growth of selected listed firms in nigerian manufacturing industry in
Akwa Ibom State?
b.
Does accounting strategy help on the
growth of selected listed firms in nigerian manufacturing industry in Akwa Ibom
State?
c.
Is there any relationship between accounting
strategy and selected listed firms in nigerian manufacturing industry growth in
Akwa Ibom State?
d.
Does accounting strategy contribute to
the growth of selected listed firms in nigerian manufacturing industry?
1.5 Research Hypothesis
This
section of the research study consists of the two types of hypothesis, in which
the researcher considered in the course of carrying out this research study;
such as the null hypothesis (H0) and the Alternative Hypothesis (H1).
H0: States that accounting strategy do not
have any relationship with selected listed firms in nigerian manufacturing
industry development.
H1:
States that accounting strategy have
a relationship with selected listed firms in nigerian manufacturing industry
development
H0: States that accounting strategy do not contribute
to selected listed firms in nigerian manufacturing industry development
H1: States that accounting strategy contribute
greatly to selected listed firms in nigerian manufacturing industry development.
1.6 Significance of the Study
The
basic of this study is to seek out how Strategic management accounting will
help improve selected listed firms in nigerian manufacturing industry. This
study will bring about an increasing awareness in the application of management
strategy on selected listed firms in nigerian manufacturing industry.
The
study will also be significance to the society, since the finding of the study
will bring about formulation and implementation of strategy to achieve business
aims. Strategic planning force the organization to look ahead setting targets, anticipating
problems and focusing on set goals and directions. The study helps to enrich
the knowledge of the reader.
1.7 Scope and Limitation of the Study
To
enhance an effective study within the given time frame. Uncompromising attitude
of respondent’s financial constraints, time factor and unavailability of
resource materials constituted some of the limitations encountered by the
researcher. Despite these problems, a considerable effort has been made to
process the data for the successful completion of the research.
1.8 Definition of Terms
Management:
The organization and coordination of the activities of a business in order to
achieve defined objectives. Management the basic task of management includes
both marketing and innovation.
Strategy:
As a unified comprehensive and integrated plan that relates the strategic
advantages of the firm to the challenges of the environment. It is designed to
ensure that the basic objectives of the enterprises are achieved through proper
execution by the organization. Jauch (2015).
Effectiveness:
Means doing the right things, it is the result of making the right choice and
following through to their logical conclusions.
Selected
listed firms in nigerian manufacturing industry:
Are normally privately owned corporations, partnerships or sole proprietorships
(web definition).
Productivity:
Is a quantitative or statistically weightier measure of how efficiently a given
set of resources is used in achieving a given set of objectives (Sauser, 2015).
Development:
Is the process of growing, or is the process of increasing in size.
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Item Type: Project Material | Attribute: 45 pages | Chapters: 1-5
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