Management Accounting and the Modern Business Enviroment Essay

Management Accounting and the Modern Business Enviroment - Essay Example It ensures the appropriate use of and accountability for an organization's resources. Management accounting also comprises the responsibility for the preparation of financial reports for the non-management groups such as regulatory agencies and tax authorities. Simply stated, management accounting is the accounting for the planning, control, and decision-making activities of an organization." (Shim & Siegel, pg 1, 1998) Management accounting presents the executive professionals with the foundation in making educated business decisions that would allow them to be superiorly equipped in their management and be in command of functions. In contrast to financial accountancy information (which, for public companies, is public information), management accounting information is used within an organization (typically for decision-making) and it is generally classified and accessible by a select few. Its foremost focus is on the formulation of strategies, planning and assembly of business activities and the optimal exploitation of resources. The aspects of decision making, protection of assets and the assistance in making of financial reports are also amongst the fundamental principles working behind the concept of management accounting. The accounting practitioners and mentors of the late 1980s became conscious of the drastic transformation of the fundamentals of global business environment. This led them to diligently work in the development of novel skills and techniques that could cater the needs of the rapidly varying business environment. This transformation of business methodologies is known as the transition from the 'traditional' to the highly developed and sophisticated business technologies. "The business environment in recent years has been characterized by increasing competition and a relentless drive for continuous improvement. Several approaches have been developed to assist organizations in meeting these challenges, including just-in-time (JIT), total quality management (TQM), process reengineering, and the theory of constraints (TOC)." (Garrison and Noreen, 1999) TQM engross focusing on the client, and it utilizes methodical problem solving using teams made up of front-line personnel. Benchmarking and the plan-do-check-act (PDCA) cycle constitute the particular TQM tools. Any internal strife in the organization is shunned due to the emphasis on teamwork, a focus on the client, and facts. On the other hand, Process Reengineering revolves around the entire restructuring of a business procedure so that non-value-added activities are eradicated and prospects for blunders are truncated to a minimum. It relies more on outside experts than TQM and is thus more prone to be promulgated by top management. Where as, the theory of constraints, highlights the significance of administering the organization's limitations. (Garrison and Noreen, 1999) Just-In-Time (JIT) Manufacturing Just-In-time manufacturing or JIT originated in Japan and has been in practice in the country since the early 1970's. It was developed and improved by Taiichi Ohno of Toyota, who is now acclaimed to be the pioneer of the concept of JIT. "The idea was developed by Taiichi Ohno as a procedure to meet client demands with the least possible delays. JIT was therefore, initially, principally used to manufacture goods so that client orders