How to evaluate a strategic management accounting technique: a brief note

There are two steps involved in evaluating a Strategic Management Accounting (SMA) Technique

Phase 1: conduct a literature review on Strategic Management Accounting per se. Try to pay attention to the following questions:

1. What is strategic management accounting?
2. What is the vision of strategic management accounting? E.g. to provide effective management accounting information to improve corporate competitive performance. To enable Management Accounting to regain relevance as a business technology in the business world with significant strategic value.
3. What are the characteristics and main concerns of strategic management accounting?
4. What are the criteria to judge the value of a strategic management accounting technique? E.g. relevance, accuracy, acceptability, feasibility, reduction of uncertainty in decision making, reliability, etc.
5. What are and what should be the roles of Management Accountants in implementing and practising SMA? E.g. as project sponsor, project manager, facilitator, etc.

Use the knowledge gained from Phase 1 literature review to inform your Phase 2 literature review.

Phase 2: conduct a literature review to evaluate a specific SMA technique, e.g. Value Chain costing, Target cost management, customer profitability analysis, etc. Try to pay attention to the following questions:

1. What is the nature of the SMA technque under review? How does it differ from conventional management accounting? E.g. Does it promote strategic thinking by considering more non-financial factors in decision-making? Does it take on a more process-view of organization?
2. What are the non-accounting management theories assimilated into the SMA technique under review? E.g. Value chain model, supply chain management theory, theory of constraints, etc?
3. What are the main practical values and limitations of the SMA technique under review?
4. To what extent do you think that the SMA technique, as a technique, a theoretical framework or a methodology, is well formulated? E.g. to what extent do you think that the target costing process model of Lokamy III and Smith (2000) is well formulated? Do you think their model can be further enhanced? How?
5. What are the main factors that drive and hinder the implementation and usage of the SMA technique under review? These can be external or internal factors; economic or non-economic factors?
6. What are and what should be the role of Management Accountants in the implementation/ usage of the SMA technique under review?
7. To what extent does the SMA technique under review facilitate an organization to increase its sustainable competitive advantage, thus legitimately claiming the label as a strategic management accounting technique? Does the technique, by incorporating strategic management models and/ or other business function models, e.g. supply chain model and brand management theories, promote more effective strategic decision-making, resulting in companies gaining more sustainable competitive advantage?
8. What can be done to enhance the SMA technique under review to make it a more effective SMA technique? E.g. do you think the existing SMA technique neglects some other management concepts that are also relevant for its intended support for corporate strategic decision-making? If so, how would you incorporate the neglected concepts into the existing SMA approach to enhance it?

I am not sure if there are any major questions missing in my list of questions above; anyway, in my own literature review of SMA, I found that the existing SMA literature has long been addressing these questions. It is clear that a single SMA article may not address all the questions above nor does it explicitly address these questions. That is why in your literature review exercise, you need to formulate your own critical, evaluative and imaginative views on your SMA topics based on your understanding gained from reading the SMA literature. Some students express difficulties in understanding the meaning of the questions above, I feel that it is useful to refine the questions. On the other hand, you could only have a firmer grasp of the meaning of these evaluation questions by thinking about them while doing your own reading of SMA articles.

While the SMA evaluation questions provided above are inter-related, academics, Management Accounting professional bodies, practising management accountants and managers in non-finance/ accounting functions tend to be interested in different questions listed above, as they have different personal preferences and career interests.

Finally, I need to emphasize that literature review is not lecture note: it is not solely about summarizing what others have said or explaining the concepts involved with a numerical example for illustration. Literature review requires you to compare, evaluate, synthesize and refine others' works; in conducting such an exercise, you demonstrate to others that you have independent, critical, intellectual and innovative thinking. Such a skill on literature review is mastered via continuous professsional development by yourself. Thus, the evaluation questions on SMA techniques provided by me can only direct your attention to certain key issues in the literature review. You do need to spend time to explore and reflect on what you learn via your own literature review efforts.

References

1. Blog article 1: http://josephho33.blogspot.com/2011/09/strategic-management-accounting.html
2. Blog article 2: http://josephho33.blogspot.com/2011/09/strategic-management-accounting-vision.html
3. Lockamy III, A. and Smith, W.I. (2000) "Target costing for supply chain management: criteria and selection", Industrial  Management & Data Systems 100/5, pp. 210-218.