Strategic Management Accounting

Strategic Management Accounting

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Table of Contents
1.0 Introduction………………………………………………………………………………………………………………………………………….3
2.0 Management Accounting Principles That Can Be Used To Incorporate Sustainability In A Business……………………………………………………………………………………………………………………………………………….4
2.1 Environmental Accounting Principles Towards Sustainability Development………………………………………………..5
2.2.1 Global Environmental Accounting…………………………………………………………………………………………………….5
2.1.2 National Environmental Accounting………………………………………………………………………………………………….5
2.1.3 Corporate Environmental Accounting……………………………………………………………………………………………….5
2.1.4 Environmental Management Accounting…………………………………………………………………………………………..5
2.1.5 Environmental Financial Accounting………………………………………………………………………………………………..6
3.0 How Sustainability Issues Are Incorporated Into An Organization In such A Way As To Create Competitive Advantage…………………………………………………………………………………………………………………………………………………..6
3.1 Competition…………………………………………………………………………………………………………………………………………..6
3.2 Significance of Sustainable Competitive Advantage To Business Environment……………………………………………..7
3.3 How A Firm Can Acquire Sustainability Competitive Advantage…………………………………………………………………7
3.3.1 Restriction From Internal Weakness Within The Firm…………………………………………………………………………7
Table of Contents 2
References 13

1.0 Introduction
Today, most of the upcoming markets are embracing the need for mass urbanization. The necessity of mass urbanization in the markets in the future may be useful in raising the production rates and the living standards of the people through a sustainable business environment. However, it also comes with such adverse effects to the environment and other significant negative impacts that may hamper the development of the plan.
Presently, most countries work with the inclusion of the theme of sustainable development within their strategies. The process of the economic growth will deploy the use of such strategies. They cause a positive change in the living standards of the people living in such countries about the conservation of the environment and other resources in place. In order to ascertain this strategy, there has to be laid down frameworks that will help in the evaluation of the achievements of such upcoming countries in meeting the expected goal or target (Mudacumura, 2005).
Evolution of recent models towards sustainable growth in most emerging markets facilitates the introduction of new metric index measures that help in the evaluation of the sustainability index of such nations. The sustainability index is important in assessing the gap for implementation by the managerial authorities. It also the investors in coming up with the best methodologies that will assist such countries in attaining the desired sustainability development. The sustainability index, therefore, assists in analysis of the market performance of the upcoming markets. It achieves this through determination of the elements such as finding whether the set index meets the basic needs of the people and also how efficient is the available resource towards uplifting their life standards. Sustainability index also seeks to explain the environmental condition of the country in question and also the composition of that particular environment towards its commitment to the upcoming sustainability issues. Most developing and the developed countries should, therefore, use the sustainability index tool in the economic evaluation processes (Hopwood, Unerman, & Fries, 2010). It should also work through the themes of restructuring of the industries towards the environmental conservation processes by renewing or recycle of waste products.
Other items would also include making the land go green through tree plantation to ensure that the atmosphere remains clean and also the application of charges and standards that are transparent in their nature. Recycling should also take place in a large mass through the involvement of the management authorities in charge to realize its effectiveness (Chapman, Hopwood & Shields, 2007).
2.0 Management Accounting Principles That That Can Be Used to Incorporate Sustainability into Business Decision
For the sustainability in the business, management accounting, therefore, should deploy the use of environmental accounting principles. The environmental accounting applies both the use of economic and the environmental information to realize the sustainability development of the business in place. It evaluates and presents the economic cost that a company incurs in meeting the environmental conservation process (Burritt, 2011). Examples of these costs are the site cleanups, fines that accrue from the environmental regulators of the country in charge. Other expenses include the taxes and the purchase of the implements that aid in the pollution prevention process and also the cost that the company incurs in the management of wastes it produces.
The principles that fall in the environmental accounting towards the realization of the sustainability development are the as outlined below

2.1 Environmental Accounting Principles towards Sustainability Development
2.1.1 Global Environmental Accounting
The principle accounting covers the fields such as energetic, the ecology, and the economics that takes place all over the world.
2.1.2 National Environmental Accounting
The principles cover the environmental accounting methodologies in economics that only take place within a particular nation.
2.1. 3 Corporate Environmental Accounting
It aims to explain the structural costs and the resultant performance of the environment where the company operates.
2.1. 4 Environmental Management Accounting
It is a management accounting that deals with how a policy that relate to the environment conservation takes place and their implementation. The management adopts a deep evaluation and analysis of the findings for making decisions that contribute to the management of the company. The areas it majorly deals in are; Information that relates to the usage, flows and the resultant fate of the natural resources such as the energy, water and the waste materials at large. It also covers the information pertaining to the monetary issues that relate to the environmental costs and savings
2.1.5 Environmental Financial Accounting
It is a type of management accounting principle that seeks to provide the information needed by external stakeholders on the company’s financial performance. Management accounting principles makes it possible for the interested parties to develop an interest in knowing how effective the company operates.
3.0 How Sustainability Issues Are Incorporated into an Organization in Such A Way as To Create Competitive Advantage.
3.1 Competition
Competition in the business world is a process that entails the strategies and the methodologies that a given person or individuals use to outwit each in the area they are fighting for the control over. Competition among the companies does involve the need to contain the customers available in the market structure (Burritt, 2011).
Market in a simple definition is a collection of people with the same interest with the aim of involving in the transaction of goods and services for the exchange of money. In such environments, there exist various types of products and services with the same function. It is from this similarity of goods and services that; therefore, the producers or manufacturers of such products and services have to compete for the potential customers in the market. A firm in this case must come up with most effective strategies that can ensure it not to be competed out in the market structure.
3.2 Significance of Sustainable Competitive Advantage to Business Environment
It will ensure that the organization is in a place to counter the available competition within the existing environment without hitches.
It enables the company to come with new technologies and methodologies that ensure that its products do not get duplicated by the competing firms.
It also creates the room for innovation, expansion, and fulfilling of the policies that will be applicable for countering the future unnecessary completions from the firms producing the same commodities or products in the market system (Rikhardsson, 2005).
3.3 How a Firm Can Acquire a Sustainable Competitive Advantage.
A firm can only attain the sustainable competitive advantages over her competitors through the implementation of the strategies that tries to analyze the internal strengths. However, the issues pertaining to the environment also come in place to the realization the set strategies for attaining the sustainable competitive business advantage for a firm. The issues, therefore in question are;
3.3.1 Restriction from the Internal Weaknesses within the Firm
A firm is only able to attain a sustainable competitive advantage when it has the necessary resources and also able to improve their efficiency and effectiveness in a manner that the competing firms are unable to do. Such resources may either be tangible or non-tangible, all which may have a competitive advantage in the firm.
3.3.2 Human capital resource
It creates the solution and strategies that assist the companies at the times of searching the employees’ skills and talents that may make the company meet its objectives in the long run. Human capital is an essential component in this case for the production to achieve its success. Most businesses these days would love to employ such people with the necessary skills and knowledge in the area they are applying for in the firm (Rikhardsson, 2005). The employees should have the knowledge and skills in their area of work. They should also be intelligent enough with good judgment. They should also implement the expected positive outcomes to the company.
Companies too should also play their role in providing excellent remuneration package to the employees so that they get motivated and deliver their best in the services they offer to the company. However, such attributes and the objectives of both the employee and the company may only come to success through a sustainable business environment (John, 2012).

3.3.3 Physical Capital Resources
Companies must put lot investments in the modern equipment, plants, and also sophisticated technologies (Hopwood, Unerman, & Fries, 2010). Such initiatives will be for the betterment of the production process which in turn would become much efficient in the long run. However, the company can only realize such technological changes when it has the necessary capital.
3.3.4 Organizational Capital Resources
The elements in question are the managerial issues of the enterprise. Administrative issues are planning, controlling, coordination, and organizing of all components within the organization in an efficient way. They form the basis of the business in achieving its desired objectives which must also lie within the environmental conservation.
3.3.5 Organizational Culture
Today, the introduction of globalization trends is bringing reformations in the business. It, therefore, calls for most companies to have the knowledge of the culture they operate. The culture of operation may be the government, society surrounding the company and the culture in general that exists in their area of operation (Chapman, Hopwood & Shields, 2007).
3.3.6 Corporate Entrepreneurship
It focuses on the innovativeness, and the aggressiveness of the company to continuously introduce new products within the market system. Such aggressions by the enterprise must be in line with the sustainability of the environment min place. On and on the introduction of the products on the market by a particular company falls under the corporate competitiveness that such groups show in the market systems Corporate competitiveness in the long run transforms the company into one of the formidable determinants of the market structure in the area they compete in with other firms (Schaltegger, 2008).
4.0 Ways That Sustainability Initiative Directly Impact upon the Profitability of Organization Sustainable Business Operations
A business only operates in a sustainable environment that is conducive. The environment also ensures that the process of manufacturing, production and the processing of its said activities adequately. The firm achieves these objectives by following the environmental concerns in place while maintaining profit (Mitchell, Nørreklit & Jakobsen, 2013).
Sustainability business operations, therefore, entails the process of assessment of the design products that will utilize the present environmental situation. It also requires the evaluation of the best products of that particular company will fit the market structure about the available renewable resources.
4.1 Sustainability Initiatives towards Business Operations
In order for a business to realize profitability through the laid down sustainability initiatives, it must, therefore, consider the below factors;
4.1.1 Environmental Sphere
Any Business Company should strive towards the elimination of the effects that may pollute the environment under which the firm operates. The company should eliminate all forms pollution that may occur as a result of their production processes. Excessive pollution of the surrounding environment by company may cause a lot of expenses that may reduce its accrued profits from the production process. Therefore, the company should operate with the least pollution effects so as to limit or reduce the costs incurred in the conservation processes, thereby maximizing the profits earned from its production activities.
4.1.2 Triple Top-Line Value Production
It consists of three essential and simultaneous requirements for sustainability towards the realization of the profitability of the business. They include the financial benefits of the company and allowances to the community. It also includes the social benefits that the employees of the enterprise. The three measures are the same to the firm, of which all deserve equal attention of the enterprise for the realization of its profitability.
4.1.3 Nature-Based Knowledge and Technology
It involves the application of the modern world technologies which operate with the uttermost efficiency so that the production process occurs with the least cost involved mad also less adverse impacts on the environment at large. With the elimination of such expenses, the business would be operating along the conscious of profitability margins.
4.1.4 Products of Service to Products of Consumption
In this case, it entails recycling of the already used products in a bid to save the costs of acquiring the new raw materials which may be expensive. As such, the company will maximize the profits with also environmental conservation process taken into consideration too.
4.1.5 Solar, Wind, Geothermal and Ocean Energy
In this case, there is the advocating for use of the renewable resources that works towards the realization of a sustainable energy technology. Such forms energy like the solar, wind, geothermal and the tidal energy always fall in this category of the sustainable energy resources. They are easy to maintain and also have very minimal pollution effects to the environment. As such, the company realizes good profit when applying them in the production process.
4.1.6 Local-Based Organizations and Economies
It includes all the partners that work with the form in the environment where it operates for the realization of its success in its operations. Retailers, wholesalers, and the distributing agent are the principal players in this scene of ensuring the efficient distribution of the company’s goods and services. Efficient and reliable operation from these partners will ensure that the company operates with the least cost and also conserve the environment in place of the service (Hopwood, Unerman, & Fries, 2010).
4.1.7 Continuous Improvement Process
The success of any company must also entail continuous improvements and upgrading of its services to meet the present trend in the change of the market structure in place and also the requirements of the existing environment. The company should, therefore, adjust to such changes through upgrading of its existing resources of the production (Bebbington, 2007). The company in the end will find itself in the position of making real profits and also realizing the conservation of the environment in place.
5.0 Conclusion
The implementation of a sustainable business environment has both positive and the negative implications for the profits that the firm gets and also the entire financial impacts it comes with too. It is a challenge that must be given a lot of considerations since it determines the stability of the company in the financial scope. However, the considerations for the environment in place should also form part of such plans when a company draws its financial plan for the period it intends to operate. The firm should involve all the stakeholders including the employees, the community, and the management in place to realize the conservation of the existing environment. The stakeholders would be helpful in the plantation of trees in such areas where there are effects of the land dereliction due to the impacts of the company’s activities. The activities may include effects of dumping of wastes and garbage disposals by the manufacturing and the processing companies.
Through the involvement of the employees and the communities, the company will ensure that the stakeholders appreciate the need for the conservation of the environment. The company will also spend less in the process since it will involve the use the employees’ services and the free services of the community too (Schaltegger, 2008).
A company that carries out sustainable business operations does accrue a lot of profits due the advantage of the sustainable revenue opportunities. Therefore, other firms that have not adopted the initiatives of sustainable operations within their management should do so before late so that they can also realize the same benefits.

References
Bebbington, J. (2007). Accounting For Sustainable Development Performance. Burlington: Elsevier.
Burritt, R. (2011). Environmental Management Accounting And Supply Chain Management. Dordrecht: Springer.
Chapman, C., Hopwood, A., & Shields, M. (2007). Handbook Of Management Accounting Research. Amsterdam, NL: Elsevier.
Hopwood, A., Unerman, J., & Fries, J. (2010). Accounting For Sustainability. London: Earthscan.
John Y. Lee.,. (2012). Advances in Management Accounting. Emerald Group Pub.
Mitchell, F., Nørreklit, H., & Jakobsen, M. (2013). The Routledge Companion to Cost Management. Hoboken: Taylor and Francis.
Mudacumura, G. (2005). Sustainable Development Policy and Administration. Hoboken: CRC Press.
Rikhardsson, P. (2005). Implementing Environmental Management Accounting. Dordrecht: Springer.
Schaltegger, S. (2008). Environmental Management Accounting For Cleaner Production. [Dordrecht, Netherlands?]: Springer Science + Business Media B.V.

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