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The major investment decisions made by a firm may be expected to impact on its strategic and competitive positioning. Write an that discusses critically the roles of management accounting in appraising and managing major investment decisions, and i - Essay Example

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The major investment decisions made by a firm may be expected to impact on its strategic and competitive positioning. Write an that discusses critically the roles of management accounting in appraising and managing major investment decisions, and i

As explained by Buam and Wally (2003), the firm performance in the modern world is closely linked with strategy decision making speed because the dynamics in the market as presented in Michael Porter’s five forces model have become faster than ever before. The speed and timing of decisions have become as important as the accuracy of the decisions. Increased competition in the markets and reduction of prices to stay in competition is witnessed in almost every industry sector across the world. The days of monopolies and premium pricing are now memories of the past. Ad hoc reduction of prices impacts the profitability and hence reduction of wastes and improvement of organizational efficiency has become mandatory in modern economy.
As described by Dixon and Smith (1993), organizations that lose their competitive advantages gradually lack deep visibility into their intrinsic competencies that majorly contribute to the competitive advantages in the market place because the information within the departments are not shared across the organization and analyzed thoroughly using critical thinking techniques. The framework of numbers that the management uses for budgeting and investment decision making are based on accounting reports and hence do not provide detailed information behind the accounting heads such that the investments can be aligned towards the right direction. The vision of the management of every organization is to invest in areas that can result in maximum benefits to the organization in terms of enhanced competitive advantages at the markets and also to reduce costs by cutting down investments on those areas that are not contributing effectively to the enhancement of organizational competitive advantages. This vision can only be fulfilled using management accounting because the management may end up doing the reverse (invest in wastes and reduce ...Show more

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Michael Porter’s five forces of competitiveness presented that the firms that exist in the ecosystem of rivalry are exposed to major external forces in the form of – bargaining power of suppliers, bargaining power of buyers, threat of new entrants and threat of substitute…
Author : mmckenzie
The major investment decisions made by a firm may be expected to impact on its strategic and competitive positioning. Write an essay that discusses critically the roles of management accounting in appraising and managing major investment decisions, and i essay example
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