Adoption Of Management Accounting Innovations: Compliance, Control, And Competitive Support Factors

Competitive Support Factor of Management Accounting

In recent times, it has supposed that the management accounting has essential; the reason behind this is that the style of doing business has modified and the organizations become more dependent on financial data (Shields, 2015). Well-organized accounting practices helped in enhancing the whole decision-making process in organizations by giving them improved financial analysis and long-term insights. The present investigation aims to assess the compliance, control and competitive support factors of management accounting practices. In this study, different factors will be discussing that have contributed to the development of Management Accounting Practice along with assessing the usefulness of a Balanced Scorecard.

The function of controlling in management accounting is attained by measuring performance, actual performances are compared with budgets, and then taking into consideration at that time when it is required. For analyzing the performance, managers utilize diverse approaches. The company measured both the performance of the segment, product and performance of managers and some other elements (Valmohammadi and Ahmadi, 2015). On the flip side of the coin, the contingency factors contain the use of management control in analytical and interactive manner, their active strain, service and size nature of organizations, however, its  inclusion in holding structure is the most competitive factor.

The compliance has been assessed with a stage of conducting practices in accordance with established guidelines and regulations. The regulations of management accounting are developed in order to guide an organization in making effective and successful accounting practices. In recent organizations, compliance is a common business concern, partially due to the growing number of rules and regulations that organizations needed to be alert concerning to keeping an understanding of regulatory compliance necessities of accounting practices (Shields, 2015). A few well-known principles, legislation, and regulations through which organization might be required being in compliance while focusing towards gaining a competitive advantage. 

In present multifaceted global arena, particularly in the repercussion of the worldwide financial crisis, a lot of competition for businesses within each industry is violent than ever before. Almost every organization, either it is private or public, large or small, profitable or non-profitable organization, is working in an extremely challenging and in dynamic surroundings, because the reason is the significance of achieving the competitive advantage of management accounting has become enhanced(Langfield et al.2017).

The present business environment is altering quicker than ever before, and the achievement of the organization inside the marketplace is depended on the well-timed possession of excellence information. Nonetheless, only the information is not sufficient, without any appropriate interpretation of information. In modern years some of the companies which focuses on the regular gathering of information on actions in the area with the strategic management accounting is considerably rising. Competitive management accounting is a mainly an essential source of information for getting a competitive advantage, and it is widely supportive to the strategic management accounting (Ax and Greve, 2017).

Usefulness of Balance Scorecard (BSC)

In management accounting, the factor of competitive support has developed and depended on the requirements of the study of opportunity and competition threats, and with the goal of making sturdy information base used for making the appropriate strategic decisions and attain the competitive advantages (Langfield et al., 2017). To create the superior strategic decisions, and therefore attain the competitive advantage, it is required that management of company utilized the wealth of information lying on related factors, which affects from the environment, in addition to the actions in the organization. With no timely, pertinent, trustworthy information on present and possible competitors, the modern company cannot have more opportunities for existence and progress. To fulfil the environmental challenges and make superior strategic decisions, a modern company should be familiar with the market situation and its competition, i.e. it should comprehend the significance of the information that is presented by the competitive support factor management accounting.

The Balanced Scorecard (BSC) gives a powerful frame which is used for creating and communicating strategy. The business model is imagined in strategy maps that force managers to consider cause-and-effect-relationships.  The procedure of building a Strategy map makes sure that consensus arrives at the excess of a set of interconnected strategic objectives. It simply means that both performance results and major enablers of future performance (like as the intangibles) are well-known to create the full image of the strategy.

Companies make use of this Balanced Scorecard tend to report performance and communicate performance superior to organizations without this structured approach towards the performance management (Kaplan et al., 2017). Growing requirements for better transparency are able to meet only if the companies create significance management dashboards and reports on the way to communicate performance externally as well as internally. This approach forces the organizations to design the major performance indicators for multiple strategic objectives. It makes sure that the organizations are measuring that what matters are actual in the organisation to attain the performance. The findings support this approach, as organizations tend to report the advanced quality of management information and growing benefits from this information that is utilized to guide the management insights and good strategic decision making, and it is possible only through the help of Balanced Scorecard approach. While executing appropriately, every departments and separation must bring into line with the general strategy, and Balanced Scorecard assists such process (Hansen and Schaltegger, 2016). Through the help of BSC structure, the company can connect the critical objectives to the parental company objectives. In addition, the BSC offers the structure that is required at that time when the huge assignments are shared across various divisions.

Factors for Success at Qantas Airlines

The herewith study has shown the importance of the competitive support factor of management accounting which has sharpened its development in the modern era. In order to attain improved performances, particularly in creating the company’s strategy, executing the cost leadership strategy, and usually, in creating business and strategic and financial decisions, it is important to become more competitive by using various tools of management accounting. Thus, it is vital to note that in the modern business much greater emphasis is paid on competitive support element of management accounting in order to achieve strategic objectives, but other elements are simultaneously important. In the end, it can be mentioned that the use of Balanced Scorecard tends to report performance and communicate performance in the entire organisation. 

Strong management: Qantas manages their administration strongly. They offer their best facilities to the customer in the best possible manner. Thus, they have qualified their executive to offer premium customer facilities.

Competent workforce: a competent workforce is the essential success factors at Qantas Airlines. It is observed that these airlines have a diverse and capable person who work on board. It is necessary to appoint highly competent and capable workers in the aviation industry (Annual report of Qantas, 2018). They should have good communication ability and the capability to take up liability if something goes wrong in the flight.

Route system:  For all airline companies, Route system is the most reliable success factor. It is mostly considered while flying and how regularly to fly at the destination. Qantas airlines connect almost 186 destinations in 40 countries as well as in Australia and more than 120 other states or destinations 

Efficient use of cost: Maximization of the profit by use of competitive pricing or innovation/ creativity can provide various cost-effective revenues. Efficiently supervising the costs and considering price and effectual procurement of fuel can be considered as a significant factor of success.

Key performance indicators

• Increasing  EBIT and EPS
• Add remote routes to develop a network
• Improvisation in technology (Annual report of Qantas, 2018)
• Improvising safety standards and operational productivity
• Strategic map

The BSC (Balanced Scorecard) is a Strategic planning and management system that is utilized by the organizations for the attainment of long-term objective by aligning it with day-to-day operations. With the help of this strategy, organizations prioritize the products, services and objectives, and lastly, it measures and examines the development towards the strategic targets (Keyes, 2016). Balance scorecard of Qantas Airways is as follows:

References

Annual report of Qantas, (2018). [Pdf]. Available through < https://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgyw/file/annual-reports/2018-Annual-Report-ASX.pdf >. [Accessed on 24th September 2018].

Ax, C. and Greve, J., (2017). Adoption of management accounting innovations: Organizational culture compatibility and perceived outcomes. Management Accounting Research, 34, pp.59-74.

 Hansen, E.G. and Schaltegger, S., (2016). The sustainability balanced scorecard: A systematic review of architectures. Journal of Business Ethics, 133(2), pp.193-221. 

Kaplan, R.S. and Norton, D.P., (2017). The balanced scorecard—measures that drive performance. Havard Bus Rev.

Keyes, J. (2016). Implementing the IT balanced scorecard: Aligning IT with corporate strategy. Auerbach Publications.

Langfield-Smith, K., Smith, D., Andon, P., Hilton, R. andThorne, H., (2017). Management accounting: Information for creating and managing value. McGraw-Hill Education Australia.

Shields, M.D., (2015). Established management accounting knowledge. Journal of Management Accounting Research, 27(1), pp.123-132.

 Valmohammadi, C. and Ahmadi, M., (2015). The impact of knowledge management practices on organizational performance: A balanced scorecard approach. Journal of Enterprise Information Management, 28(1), pp.131-159.

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