Management Accounting Systems
Management Accounting Systems Support Start-up Business Growth
Article “Management Accounting Systems Support Start-up Business Growth” that was written by Michael Lee and Spencer R. Cobia, describes the case of company Globe that had faced with strong business problems (mostly, profitability), and how three strategic instruments – Variance Analysis, Profit Planning, and Performance Measurement Systems – helped the company to solve its problems.
This article is focused on the idea that control system is core success factor in any company. Moreover, in case of start-ups, the role of control is even higher. And, according to authors, that company will succeed on market, which controls its performance the best. And the issue of development high-efficient control system could be solved by using three strategic tools – Variance Analysis (analysis of profit streams), Profit Planning (prevents problems with financial resources), and Performance Measurement Systems (gives the possibility to tightly control all key performance activities in the company). All these instruments were successfully used in Globe company.
On my opinion, statement of authors that these instruments will always lead to improvement in business performance is not correct. These strategic tools are connected into control system, which, according to authors, is a core factor of successful business performance. But for me, the importance of other factors (leadership style, corporate culture, etc.) is on the same level. Nevertheless, I think that Variance Analysis, Profit Planning, and Performance Measurement Systems do really help to increase business efficiency and could help to solve some operational problems, and companies really need to use all of them. But they are not a panacea.
REFERANCES
Lee, M., Cobia S.R. (2013). Management Accounting Systems Support Start-up Business Growth. Management Accounting Quarterly. Vol. 14. No. 3.
