In this assignment you are being asked to analyse and evaluate an internal management accounting approach.
You should assume that you are starting up a new company. You may choose the specific industry and its product(s)/service(s). Taking one technique from the management accounting part of the course, e.g. costing (standard, absorption, marginal, activity based), budgeting, planning, performance measures, decision making tools etc., discuss why you would implement this technique in the context of your new business in order to achieve your strategic aim/objectives.
You should include an appraisal of the technique you have chosen and why you have chosen it; its strengths and weaknesses, what results you might expect to learn from it, and how you would use those results.
Consider how practical the technique is for a start-up company, and how you might need to develop or modify it as the company becomes more established.
Your report should aim to:
- Provide an introduction to your company; for example, industry sector, product/service and geographic location and your overall strategic aim for the company in the future (e.g. to be number one in the industry, be the ‘best’ employer). It is not expected that your business would achieve this aim at the end of the first year, but it indicates the strategic focus of your company.
- Present the particular internal management accounting technique you have chosen to apply to your new business and why you think it is appropriate to support your strategic aim. You should analyse the data you expect to obtain from the technique and any limitations you can see, either from an implementation point of view or from a data point of view.
- Analyse how the data you might obtain from your technique will assist you in improving the performance of the company on the way to achieving your strategic aim. This need not be necessarily in the financial sense, as it could be improving customer satisfaction, employee retention or market share for example, depending on the technique you have selected. You should also consider how you might need to adapt your technique as the business becomes more established.
- Conclude with an overall appraisal of the technique in the start-up company to support you in achieving the business’ strategic aim.