STRATEGIC MANAGEMENT AND PROFESSIONAL USE OF ACCOUNTING DATA FOR COMPANIES BENEFIT (CASE STUDY OF NIGERIAN BOTTLING COMPANY), NIGERIA

Description

CHAPTER ONE

1.0   Introduction

This research is on Strategic management and professional use of accounting data for companies benefit (case study of Nigerian bottling company). Strategy management can simply be defined as the effective control of available resources in an organization and the professional uses of accounting information for companies benefit in under to determine the managerial performance of industries professional use of accounting data provide information that can be expressed in financial term i.e. Naira and kobo. Accounting data in an organization are usually flexible dependable and hence, it will assist the management of the organization in decision making. Furthermore, the introduction of this topic is to take a deep look into the accounting data and the records collated to access the future of the business positively as a result of strategic management and professional use of accounting data.

Due to the fact that sole trader has limited resources, strategic management and professional use of accounting information  is needed as one-man business is a business organization owned run and managed by a person if he intends to use a trade name different from his surname of fore-name he/she must register the trade name under the registration of business under dubious character setting up a business under dubious name and defrauding the public. It also ensure that two or more person setting up in separate business does not use the same name in way as to confuse the public. Through strategic management sole trader reaps the profits of the business for himself and also all the possess are borne by him as the case may be.

Strategic management and use of accounting data need for effective management control system in a large scale industry as regard profits and loss ration the law regulating partnership Act 1890 which is applicable to the whole of the federation except the western and mid-western states where the partnership law 1859 applies in relation to an organization that directly with the public like the Nigeria bottling company strategic management and professional use of accounting data information is needed for companies benefit to determine the areas with immediate demand of a product also to determine the managerial performance of the company at the end of the accounting year.

It is very important to know in each and every organization that if you fail to plan, you plan to fail. This implies that it is very important to adopt strategic management and professional use of accounting data for managerial purpose and future references in an organization. Strategic management and professional use of accounting in administration may be defined as a proves of maintaining an organization and at directing if for the purpose of achieving predetermined goals.

Accounting data is an organization that are usually flexible dependable and hence, it will assist the management of organization in decision making.

Furthermore, the introduction of this topic is to take a deep look into the accounting data and the records collected to assess the future of the business positively as a result of strategic management and professional use of accounting data.

1.1   Background of Study

In the 1980s management accounting was criticized for becoming too internally focused on operational issues and was providing little help to managers making strategic decisions. The term strategic management accounting (SMA) was introduced by Simmonds (1981, p.26) and defined by him as ‘the provision and analysis of management accounting data about a business and its competitors, for use in developing and monitoring business strategy’.

Since then several attempts have been made to refine this definition and identify a set of techniques that can be classified under the banner of SMA. However there has been little agreement within the academic and professional literature on the definition of SMA and the associated techniques, nor is the term widely used by practising accountants (Langfield-Smith, 2008; Jorgensen and Messner; 2010; Nixon et al., 2011).

When management accounting was introduced as an advanced version of cost accounting after second world war its early advocates had claimed that it would make accounting more useful in assisting managers in their decision making function. As the discipline has failed to live up to the promise now strategic management accounting has been presented as a messiah for the discipline of accounting. New promises have been made that while the traditional management accounting failed to make use of strategic thinking and other qualitative aspects of management the new discipline is likely to make accounting more relevant and important for managers. The empirical evidence on successful diffusion of strategic management accounting is still not overwhelming. It is therefore yet to be seen if strategic management accounting can live up to its promise in future or not.

Most textbooks of management accounting define the discipline in terms of its decision making role. It is generally stated that since managerial functions involve using information for better planning and control, therefore, management accounting is very important for effective and successful management at all levels. In this paper, we review the role of management accounting and after identifying its limitations we examine the claim that strategic management accounting is the future of this discipline. The analytical paper looks at the development of strategic management accounting as a new discipline which promises to be the flagship of the accounting profession. It makes a contribution to the general management literature by clarifying the role of management accounting in decision making and signifying the need for more empirical evidence on usefulness of strategic management accounting for general management.

Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.[Nag, R.; Hambrick, D. C.; Chen, M.-J (2007)]

Strategic management provides overall direction to the enterprise and involves specifying the organization’s objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision making in the context of complex environments and competitive dynamics.[Gareth R. Jones, 202]. Strategic management is not static in nature; the models often include a feedback loop to monitor execution and inform the next round of planning.[ Hill, Charles W.L., Gareth R. Jones, 2012]

Michael Porter identifies three principles underlying strategy: creating a “unique and valuable [market] position”, making trade-offs by choosing “what not to do”, and creating “fit” by aligning company activities with one another to support the chosen strategy. Dr. Vladimir Kvint defines strategy as “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.”[ Kvint, Vladimir, 2009]

Corporate strategy involves answering a key question from a portfolio perspective: “What business should we be in?” Business strategy involves answering the question: “How shall we compete in this business?”[Chaffee, E., 2005] In management theory and practice, a further distinction is often made between strategic management and operational management. Operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization’s strategy.

The strategic management discipline originated in the 1950s and 1960s. Among the numerous early contributors, the most influential were Peter Drucker, Philip Selznick, Alfred Chandler, Igor Ansoff, and Bruce Henderson.[ Ghemawat, Pankaj, 2002] The discipline draws from earlier thinking and texts on ‘strategy’ dating back thousands of years. Prior to 1960, the term “strategy” was primarily used regarding war and politics, not business.[Kiechel, Walter, 2010] Many companies built strategic planning functions to develop and execute the formulation and implementation processes during the 1960s.[Henry Mintberg, 2004]

Peter Drucker was a prolific management theorist and author of dozens of management books, with a career spanning five decades. He addressed fundamental strategic questions in a 1954 book The Practice of Management writing: “…the first responsibility of top management is to ask the question ‘what is our business?’ and to make sure it is carefully studied and correctly answered.” He wrote that the answer was determined by the customer. He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility. Drucker, Peter (2004).

Porter wrote in 1980 that companies have to make choices about their scope and the type of competitive advantage they seek to achieve, whether lower cost or differentiation. The idea of strategy targeting particular industries and customers (i.e., competitive positions) with a differentiated offering was a departure from the experience-curve influenced strategy paradigm, which was focused on larger scale and lower cost. Porter, Michael E. (2002) Porter revised the strategy paradigm again in 1985, writing that superior performance of the processes and activities performed by organizations as part of their value chain is the foundation of competitive advantage, thereby outlining a process view of strategy. Porter, Michael E. (2005).

1.2   Statement of Problem

There are numerous problems hindering the effective and the efficient use of accounting data the purpose of this project work, we shall be looking at three major problems obstructing the proper use of accounting data in the management of an organization.

• Lack of reliable data
• Behavior attitude of management
• Physiological impact of the staff.

1.3   Objectives of the Study

The project work aims at determining and highlighting the need for adequate accounting data, in an organization.

The study will also provide exploration and reason for accounting data and will offer adequate solution that can reduce factors hindering the effective use of accounting data in an organization.

The objectives are stated as follows:

1. The study will help to measure the performance of the organization from the accounting data gathered.
2. The study also is used to highlight the areas of the organization where controls are needed.
3. The study helps to gather all data relating to the activities of the enterprises for the period concerned.
4. Also, the study is used as a basis for inter-firm comparison
5. Also to assist in forecasting which would likely occur in the future and consequently.
6. To serve as a guideline for the amount of revenue to be generated to the government purse.

1.4   Research Question

The research work is guided with same research question, which will be administered and distributed among the researchers area of study which are the respondents to this research work and these comprise management and staff of Nigerian bottling company within the area study. Sample research question are:

1. What is strategic management and how can accounting data be used professionally?
2. Who can you use with the help of accounting data to measure the performance of the organization?
3. What are the areas you think the company needs controls and strategic management?
4. How can the Nigeria bottling company achieve its set out objective with in a specific time in order to improve its performance both industrial and commercial wise in global corporate open market.
5. What are the activities the activities of the enterprises within the period of last six months?
6. Do you consider the inclusion of accounting data in the factors chosen?
7. What sort of accounting data do you find most useful in reaching certain decisions that you make?

1.5   Statement of Hypothesis

The researcher formed some of the hypothesis which will be tested to support this study. The hypothesis will be tested at 0.05 level of significance using the t-test method and correlation analysis.

The research hypothesis are as follows.

1. H1: Enhanced role of accounting analysis can be used to further the innovation, planning, management and professional drive in both industrial and commercial sector.

H0: Enhanced role of accounting analysis can be used to further the innovation, planning, management and professional drive in both industrial and commercial sector.

2. H1: The Company is largely dependent on the accounting data in relation to the company

H0: The Company is not dependent on the accounting data in relation to the company

3. H1: The use of accounting data is an effective tool for economic benefit.
4. H0: The use of accounting data is not an effective tool for company benefit.

1.6   Signification of the Study

This research work will present in a precise manner, the importance and use of Strategic Management over others management. It is believed that the findings of this research work should provide detailed information on the use of accounting data for companies benefit through Strategic Management with the help of professionals. It is also expected that the study will benefit the management, staffs of the company, researchers and the society in general.

The findings of the study should be useful to CEO and Directors. It is expected that the findings will expose the Company management to the importance of Strategic Management and professional use of accounting data. By this exposure the management could acknowledge the advantage Strategic Management over the conventional management method in use previously. It is possible that by this outcome the management would realistically adjust to the application of Strategic Management in achieving greater goals and benefits within the company. In turn, the staffs would have real focus for better performance and achievements in their work.

Accuracy in pin pointing the plans for strategic management and professional use of accounting data are essential in the industrial and commercial sector in that; it may invariably lead a firm to the management of compatible units that are crucial to fulfilling its objective and also for re-enforcing its objectives. However, due consideration has to be given in thus approach through due regard for opportunity cost of founding a new business towards the purpose.

The research will also be beneficial to the researcher. This is because the study will expose the researcher to so many related areas in the course of carrying out his research. This will enhance the researchers experience, knowledge and understanding on Strategic Management and professional use of accounting data for companies’ beneficial goals.

1.7   Justification of the Study

I want to justify this research work based on the objectives and the significance of this research work, what is within its coverage, this research work is with no doubt necessary to be carried out. Because if done will greatly highlight the importance and advantage of using Strategic Management and professional use of the accounting data for beneficial interest to any company.

1.8   Scope of the Study

The scope of this research work been narrowed down to the Nigerian bottling company. It is limited to Accounting data in the strategic management and professional use to companies benefit evaluation in Nigeria bottling company Lagos Nigeria.

1.9   Definition of Terms

Some of the term that will be used frequently would be defined in order to have a broad and clear understanding of the topic. There terms includes the following:

Management: Refers to proper and purposeful use of material skill e.tc so as to achieve an aim

Accounting: Can be seen as information in accounting from gathered and collapsed together showing past results that can help in future.

Book keeping: means the act of keeping records for future reference such that any error relation to it at any point may be quickly ascertained.

Management Accounting: Means the application of professional knowledge and accounting information in such a way as to assist and control of the operations undertaking.

Information: can be define as processed or analyzed data capable of solving problems.