Small businesses can take advantage of this strategic management accounting to improve decision making overtime for higher profits
The current strategic management accounting practices emanate from activities of businesses to nsure sustainability of its operations over time. For instance provision of finance to suppliers of major raw materials of firms. Where finance is the issue, this is usually done in order to ensure continued supplies of raw materials to the firm. Another areas is the distribution chain, the firms can provide needed assistance to major distributors of products in order to ensure the unlimited distribution of their products. In the nineties till date we have had producers of soft drinks providing refrigerators to retails distributors in order to ensure the products are appreciated. These are some of the strategic management accounting practices today.
Promotion of investment by the government involved.
Offering the subsides to small investors
Investing abroad to bring balance of currency exchange.
Strategic management accounting issues are of prime importance in developing countries. The very basic reason is that developing countries lack accumulation of capital. Capital is scarce in developing countries. Consequently, efficiency is required in manufacturing and service industries. Companies work on loan-liability based structures rather that equity based. They pay interest, their bottom-line figures are weaker than they are in developed countries. Besides, inflation, devaluation wipe out their profits in developing countries in general. Therefore, efficiency being one of the subjects in the coverage of management accounting is of a prime issue in developing countries.
Some of most important issues of management accounting are:
- Monitoring the added value created and not only profit;
- Developing new indicators of efficiency and effectiveness, based on the added value;
- Offering fundamental information as a base for decisions on added value distribution and to protect workers from exploatation;
- Offering basic information of capital adequacy to ensure solvency of the company in the future;
- Developing the approach to support sustainable development, monitoring and reporting as well;
- Monitoring of quality progress and business excellence in the operations;
More about above, in: Bergant, Živko: Accountancy and social responsibility (2021), Pargrave Macmillan, Springer.
The major strategic management accounting in countries like Nigeria is accounting for and effect of foreign exchange, especially as foreign exchange is sourced from unstable parallel market where you can have four ruling rates in a day and major inputs are sourced from the international market
Strategy is planning, processing, and implementing. Some developing countries use the strategy of accounting management by using the International accounting framework. Such as IAS, IFRS, BAS,IAS
Strategic management accounting (SMA) practices are increasingly being adopted by organizations worldwide to aid in strategic decision-making processes. Some of the common SMA practices in developing countries include:
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