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Strategic management accounting and the Balanced Scorecard
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The term strategic management accounting (SMA) has been used to describe the
process of ‘provision and analysis of management accounting data about a business
and its competitors for use in developing and monitoring business strategy’.1 We
may illustrate the basic ideas of SMA by looking at one of the leading retailers in
the United Kingdom, Tesco, which has tailored its key performance indicators to
the economics of its business. For example, rather than maximise EVA, Tesco has
realised that its main fixed assets are its stores. With this type of asset base, the
company aims to reduce the cost of building good quality new stores through
strategic partnering with construction companies. In order to check its market
positioning, the company is constantly monitoring the prices of its merchandise
relative to the prices charged by its main competitors. As well as promoting
customer loyalty, it uses its store card as a database for targeting the specific needs
of individual customers as revealed through their purchase patterns. It also keeps
a close eye on non-financial indicators such as the length of queues at the
check-outs.
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Strategic management accounting and the Balanced Scorecard
Strategic Management
English
2013
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