During the last years issues of strategic management accounting have received widespread attention in the accounting literature. Adapting to the changing needs of business in the 1990's is one of the main challenges facing management accountants today. One dramatic change, in how many organisations operate, is the growing shift towards strategic alliances and partnering agreements with suppliers. However, there is still no comprehensive framework as to what constitutes strategic management accounting. Basically the management accounting practices has one or more of the following characteristics: environmental or marketing orientation, focus on competitors and long term forward-looking orientation. To implement these criteria there are twelve main key recommendations have been identified: attribute costing, brand value budgeting and monitoring, competitor cost assessment, life cycle costing, quality costing, strategic costing, competitive position monitoring, competitor appraisal based on publish financial statements and value chain analysis. This paper will review some of these recommendations that have had impact on development of strategic management accounting.
The term SMA was coined by Simmond (1981, 1982). Simmonds (1981) defines the concept as 'the provision and analysis of management accounting data for use in developing and monitoring business strategy, particularly relative levels and trends in real costs and prices, volume, market share, cash flow and the proportion demanded of a firm's total resources'.
Unlike the conventional cost and management accounting, strategic decisions usually involve the longer-term, have a significant effect on the organization and, have not only an internal element, but also have an external element. Adopting this definition suggests that the provision of information that supports an organization's major long-term decisions, such as the use of activity-based costing information for product profitability analysis, falls within the domain of strategic management accounting. This view is supported by Cooper and Kaplan (1988) who state that strategic accounting...