STRATEGIC MANAGEMENT ACCOUNTING

Strategic Management Accounting

[Name of College]

Strategic Management Accounting

Introduction

Budgeting and budgetary control is the most essential part of planning as it helps in defining what resources are available and how they could be utilize appropriately and efficiently to get maximum possible benefit out of it. The process of budgeting is crucial in the achievements of the organizational objectives of the company. This directs company to the right path for the attainment of the organizational objectives in the limited budget. The planning process is critical to the company, as it is crucial to define the way forward to achieve the goals and objectives of the business. In this regard, there are three questions that a company must always bear in mind in the process of planning: is the company in the right boat? Is everyone rowing in the same direction? Is the company paddling in the right direction? (Wanna, Jensen and Vries, 2003)

This paper will be comprises of two parts, both concerning to the strategic management accounting domain. In the first part, a case of two companies operating in the different sectors have been chosen, one company is operating in a static and stable market, while other is running its operation in a highly competitive, ever changing and dynamic business environment. Traditional budgeting and budgetary control approaches would be discussed first, so that which approaches is appropriate for which market would be suggested at the end of the part one. On the second part of the study, a XYZ company has been chosen who is looking to enhance the capacity of its working capital. Methods and ways to improve the working capital for the enhancement of the productivity would be defined in this part, using various strategic approaches of doing so. (Albert-Roulhac, 2008)

Part One

Traditional Budgeting and Budgetary Approach

The budget is a planning, coordination and control functions presented in quantitative terms the activities to be conducted by an organization in order to use more productive resources, to achieve certain goals. In other words, a plan of action directed to meet a target, and values expressed in financial terms, must be fulfilled particular time and under certain specified conditions. The term "budgeting" has long been associated not only with the public finances, but also with finance companies. Over the past decade, many companies have managed to get to know theoretical basics of budgeting and successfully implement a management and planning system, based on the use of budgets. First of all, it should be noted that, under traditional budgeting means periodic process by which the organization seeks to define its future earnings and costs. For the determination of future performance is used as a rule, top-down approach, which cost packages, consisting of a set of forms, down from the head office to the level of various operating units, where the data form filled out and sent back to consolidation, this time from bottom to top (Gray, Jenkins and Segsworth, 2002). This procedure is usually repeated several times until long as you reach the final ...