The importance of this issue lies in the fact that information provided by management accounting tools, if used correctly, can support the business strategy and its success. The main research question of this work was whether managers use the tools of management accounting to support their decision making and whether those tools are used together with business strategy tools in the strategy formulation process.
Introduction
Managerial accounting
It mainly deals with decision making, planning, management, day-to-day operations and control of the business or organization. This leads us to the next section of work, business strategy, as it concerns senior executives and business management, who will set long-term goals.
Business strategy
It is an essential part of accounting science that deals with the information that will help managers to achieve the best possible results which, if properly combined with financial and cost accounting data, will ultimately determine the cost of the services or products , which is produced, and of course all the company's operations. Although the accounting departments of a company or the relevant financial staff are responsible for the data accuracy that will be used in these tools, the value of the derived reporting is extremely high for the company or organization as a whole, since these tools affect the quality of information in the process with supporting a decision from the management.
Importance of the topic
Research Questions
Research methodology
Dissertation structure
In the third chapter, we will present a theoretical overview of managerial accounting concepts and the main tools that are widely used by the top management of companies and organizations. In the fourth chapter of the work, we try to connect management accounting and business strategy and the various tools that these disciplines have.
The business strategy
Business Strategy literature review
Although it is clear that strategy refers to a long-term decision-making horizon, where a company or organization will move to a new level, we must not forget that there are strategies that have a shorter life span and implementation horizon, such as emerging strategies. , defensive strategies adopted for a shorter period to tackle a problem of our own or the market and of course there are short-term strategies to deal with competition such as pretension strategies (Myloni, V., Georgopoulos, A. 2015).
Mission, Vision and Values
Maintaining good communication with the external environment such as customers and of course competitors, while also maintaining a clear message to the internal environment of the employees of the organization and the business, is a difficult balance to achieve. There are also the business shareholders who always try to keep us happy and interested in investing in the business.
Strategy and decision making
The values are a set of written and unwritten (verbal) rules that specify the professional behavior of internal customers and suppliers and the way in which they communicate regarding their relationship with external customers and suppliers or with the external environment in general. Most of the time the vision and the mission and the values are decided by the top management, before the business starts, but very often we also have changes in the vision, the mission and the values of the business when we have a crisis, reorganizations, acquisitions or mergers and repositioning in the market due to our relationship with the competition (Fitch, 2017).
General strategies
For better decision-making, it is of great importance to have the right data available to the people who will make the decision, the data can be qualitative and quantitative. The other variables we study, qualitative data, are considered to be related to variables that cannot be easily quantified (Elbanna, 2006).
The competitive advantage and its maintenance
Although competition theoretically leads to greater prosperity for consumers, due to the higher quality or lower price that consumers can get, it is a measure of the sector's sensitivity to a company's movement (Švárová and Vrchota, 2014) . The competitive advantage must be visible to customers from the very beginning, so that the customer will prefer one company from the sector and this comparative advantage must be sustainable in the long term, so that we can talk about a sustainable competitive advantage that will give them the basis for strategic competitiveness.
The main tools of business strategy
Every company that enters a certain market or a certain industry has to face some problems, which can vary from lack of resources or lack of competitiveness to other companies in the industry. Once the strategic planning phase is complete and the strategy implementation phase begins, progress and results will be monitored for the adopted strategy using the same tools presented here.
External Macro and Micro environment
PEST analysis
A pest analysis starts with a general recognition of the environment in each of them individually, political, economic, socio-demographic environment, technology and so on, and proceeds from the general to a more specific level, to the level of the business sector and the company itself. So in the Pest analysis we study the economic factors such as the gross domestic product, global and domestic economic growth, inflation, loan interest, disposable income. In the social environment, we usually study the demographic, we make an analysis of the population of a country by age, gender, consumer habits and lifestyle.
Porter's 5 Forces
Of course, for a while it is possible to think that the products are substitutes, but they may not be related to each other. To be 100% sure which products are substitutes, we need to check their cross elasticities. Although it has been criticized by many researchers in the field, it is one of the most important analytical tools that is widely used because it is an understandable tool that can be used by managers, it is reliable and it can be adapted to each individual. studied industry.
Internal business environment
Resources and capabilities analysis
Another approach to the allocation of resources and skills is whether they are tradable or not. Marginal (or threshold) competencies are those that everyone, even competitors, have and can easily imitate. Core competencies (or core competencies) are those that can be the basis of a sustainable competitive advantage.
Value chain
More product or service advertising identifies a part of the value chain that the company performs better than competitors. However, the activities of the value chain are the cornerstone of creating value for the customer and this is perceived by the customer, and thus the business gains a comparative advantage over competitors - and again the main concern of the business is to make this comparative advantage sustainable competitive advantage. The value chain model has also been criticized, for example for being too linear or restrictive and so researchers have come up with other models for capturing the value chain such as the value constellation.
SWOT analysis
The value chain is a very structured and useful tool for analyzing the internal environment and is also challenged by the external environment of the company, because each company depends on its sector and acquires specific characteristics in its value chain. SWOT analysis is the tool most used by managers and executives in the world, but that does not always mean that it is correct because they often tend to conduct a SWOT analysis directly without having a thorough analysis of the external environment or the internal environment in particular. terms of resources and possibilities. Another mistake made while conducting a SWOT analysis is the subjectivity of the factors as managers record them.
TOWS analysis
Finally, by combining internal weaknesses with external threats, we have mini-mini strategies where we try to reduce our weaknesses and avoid threats (Aslan, Çınar, & Kumpikaitė, 2012). It is very important that in the process we have done so far, we remain objective until the end, in order to fill in the data as much as possible. A bad assessment of the internal or external environment, a wrong hypothesis (as if things are about to improve) and the wrong completion of the tool in the previous steps will lead us to the situation of transferring these wrong data and factors to SWOT and TOWS. and finally make the wrong strategic decision.
Managerial accounting
- Managerial Accounting literarure review
- From Accounting to Managerial Accounting
- Managerial Accounting and Decision Making
- The main tools of Managerial accounting
- The Costing Framework
- Direct, Indirect, Fixed and Variable Costs
- Inventory control and valuation
- Production and productivity
- Breakeven point
- Margin of Safety
- Contribution margin
- Product and service pricing decisions
On the other hand, variable costs are proportional to the level of sales of the entity. The "break even point" is the guideline for the management of the entity in order to make rational decisions. According to this method, the producer estimates the cost of the finished products or services and then puts the amount of money he wants as profit "on top".
The relationship of Managerial Accounting and Business Strategy
- Business strategy and managerial accounting relationship for decision making
- Problem solving and decision making
- Data and Key performance indicators
- The Balanced Scorecard tool
- Strategic Managerial Accounting
The Balanced Scorecard therefore has four key dimensions, which focus on the vision and strategy of the company. The financial dimension of the Balanced Scorecard is the first to be presented, as it is normal that all business efforts contribute to the achievement of financial results that satisfy the shareholders' objectives. It is in constant interaction with the external environment of the company so that the strategy of the economic entity is adjusted accordingly.
Conclusions
Βrief review of the results and concluding remarks
Managerial Accounting (or Management Accounting) is the field of accounting that provides information to help managers and organizations make better decisions. Managerial accounting is a discipline that deals with the analysis and presentation of financial and non-financial data so that they can be used by management in order to facilitate the design and evaluation of each business and organization, to ensure the rational use of resources available. Another research question was whether management accounting tools are used together with business strategy tools in the strategy formulation process.
Research Restrictions
This is mainly achieved with tools commonly used by both disciplines, such as Key Performance Indicators and Balanced Score Card, which were presented in the fourth chapter. At the same time, the objectives of this thesis, and in particular to highlight the tools provided by management accounting as the appropriate tools for managers' information, to highlight the strategic tools used in the decision-making process and to present a in depth The literature review on management accounting concepts and the various tools that this discipline can provide in formulating planning and business strategies was met. The companies and organizations that use strategic and administrative accounting tools embody their stakeholders as part of the external environment and in the appropriate tool (e.g. PEST), or as part of the internal environment and the relevant tools (e.g. Value Chain).
Topics for Future Research
2018) "The Impact of Management Accounting Research: An Analysis of the Past and a Look at the Future", International Journal of Business and Management, 13(5), pp. What resources and capabilities support strategic key account management?", Industrial marketing Management, 75, pp Improving productivity and quality in manufacturing organizations", International Journal of Production Economics, 36(2), pp The organization's internal environment and its importance in the organization's development", International conference. Balanced Scorecard Implementation, Integrated Approach and the Quality of Its Measurement", Procedia Economics and Finance, 25, pp Break-even analysis — a useful management tool in the hospitality industry", International Journal of Hospitality Management, 2(3), pp. . What general performance factors exist in the Spanish wine industry?", Wine Economics and Policy, 7(2), pp Strategic management accounting and decision making.