AC2200 TOPIC 6

Question 1

What is SMA

Answer 1

Strategic management accounting is the provision of information to support strategic decisions in organisations

Question 2

What does SMA move away from

Answer 2

it moves away from internal focus of management accounting to include external information about competitors

Question 3

how can SMA help formulate a competitive advantage

Answer 3

through exploiting linkages in the value chain

Question 4

what is the role of SMA

Answer 4

formulate and support the overall strategy of an organisation by developing an appropriate framework of performance measurement

Question 5

what are combination of techniques are based on the first steps to profit planning

Answer 5

flexible budgeting
cost-volume-profit
pricing
cost behaviour and measurement

Question 6

what can cost behaviour help you determine

Answer 6

whether a business is market oriented or cost oriented

Question 7

give an example of market oriented

Answer 7

if a business has a high proportion of fixed cost relative to variable cost, then it may be seen as being market oriented because are the cvp analysis indicated it has to achieve high levels of capacity utilisation to break even

Question 8

apart from business orientation what other techniques help profit planning

Answer 8

helps in sensitivity analysis
ex finding the change in a firms profit as a result of a 10 % cut in price or fixed cost

Question 9

what is yield managment

Answer 9

is is a profit planning technique that is used to segment the flexible budgeting ensures the variance analysis is based on variable levels of activity rather than a single estimate

Question 10

what is value based mangment

Answer 10

it is an integrated framework for measuring and managing business, with explicit objectives of creating superior long-term value for shareholders

Question 11

what does VBM focus on ?

Answer 11

increasing shareholders wealth metric, such as residual income or net present value, through the identification of value-drivers

Question 12

what are some short-term decision making based on profit limitations

Answer 12

• short term increases may be made at the expense of long term profits
• there is no analysis of the use of capital resources
• the approach is inward- rather than outward looking
• the focus in profit only neglects the interest of other stakeholders such as employees, regulators or consumers

Question 13

what is the concept of SMA and strategic positoning

Answer 13

that firms should place more emphasis on particular techniques depending upon the strategic position they adopt

Question 14

what is the value chain analysis

Answer 14

it consists of the major business functions that add value to a company’s product and services

Question 15

what is the aim of Value chain analysis

Answer 15

to find a linkage between value-creating activities, which result in lower costs and/or enhanced diferentiation

Question 16

what are the business functions that make up a business value chain

Answer 16

r&d
product design
manufacturing
marketing
digitilisatiokn
customer services

Question 17

what does shanks argue

Answer 17

that the financial framework sets up strategic problems in a misleading way and highlights that the pure present value analysis misses the richness of real business problem and is set up to rationalise a prior decision

Question 18

what is a balance scorecard

Answer 18

is is a strategic planning and management tool

Question 19

what are the different perspective on the balanced scorecard

Answer 19

• can be seen as a way of monitoring and improving operational performance
• ads/or a tool to aid the formulation and implementation of organisational strategy

Question 20

what does a balanced scorecard seek to do

Answer 20

link performance measures to organisations strategies

Question 21

what are the performance measure in the balance scorecard

Answer 21

financial
internal business processes
customers
learning and growth

Question 22

what do financial perspective include

Answer 22

typical measure like
return on investment
residual income
economic value added
also growth, revenue, cost reduction, asset utilizsation

Question 23

the customer perspective measure include

Answer 23

market share
customer retention and loyalty
customer acquisition
customer satisfaction
customer profitability

Question 24

learning and growth perspective

Answer 24

it focuses on infrastructure that the business must build to create long term growth and improvement

Question 25

what are the three categories in learning and growth perspective

Answer 25

employee capabilities
information system capabilities
motivation, empowerment and aligment

Question 26

the internal business perspective innovation measures include>

Answer 26

% of sales from new products
new produ ct introduction vs competitors
product development break even time

Question 27

the internal business perspective typical operation measures include>

Answer 27

cycle time
quality
activity and process costs
post-sales service processes

Question 28

Process time is the only….

Answer 28

value-added time

Question 29

manufacturing cycle efficiency formula

Answer 29

value-added time/ manufacturing cycle time

Question 30

why do different companies have different scorecards

Answer 30

because they have different strategies

Question 31

learning improves

Answer 31

business processes

Question 32

improving customer satisfaction improves

Answer 32

financial results

Question 33

improving business processes improves

Answer 33

customer satisfaction

Question 34

what are criticism of the balanced score-card

Answer 34

• the cause and effect relationship between non-financial and financial indicators is questionable
  (does improved customer satisfaction always yield good financial results)
• it does not have an explicit way of monitoring competitors actions and does not propose a specific renumeration system.