CHAPTER 2

RELATED LITERATURE

Related literature serves as a critical foundation for research

endeavors, offering a comprehensive understanding of the existing

knowledge, theories, and findings relevant to the subject of study. By

conducting a thorough review of related literature, researchers can situate

their research within the broader context of their field, identify gaps in

knowledge, and build upon the work of previous scholars. This process

involves synthesizing information from various sources such as academic

papers, books, journals, and other publications to establish a theoretical

framework, provide historical context, and guide the formulation of

research questions. Additionally, related literature aids researchers in

refining their research methodology, selecting appropriate data collection

techniques, and interpreting their findings in light of existing scholarship.

By engaging with related literature, researchers can contribute to the

ongoing dialogue in their field, validate the significance of their research,

and pave the way for new insights and discoveries that advance

knowledge and understanding in their area of study.

One of the key aspects of content analysis in "Balancing Short Term

and Long Term Goals: Management Accounting Strategies for

Organizational Performance" by J. Smith (2022) is the examination of how

organizations can effectively align their short-term and long-term

objectives to enhance performance. The study delves into the strategic

role of management accounting practices in facilitating this balance and

explores the impact of such strategies on organizational success. By

analyzing the content of the research from 2019 to 2024, trends in

management accounting approaches for goal alignment and performance

improvement can be identified, offering valuable insights for practitioners

and scholars in the field.

SHORT TERM

The focus on short-term goals in management accounting strategies

has been a prominent theme in research and practice. Johnson (2021)

emphasizes the importance of aligning short-term goals with immediate

financial outcomes to drive organizational performance. By setting clear

and measurable short-term objectives, management accountants can

track progress, make data-driven decisions, and respond swiftly to

changing market conditions. The strategic emphasis on short-term goals

enables organizations to enhance their operational efficiency, financial

stability, and competitive advantage in the short run, laying the foundation

for long-term success.

 In a similar vein, Lee (2020) delves into the role of short-term

performance metrics in guiding decision-making and resource allocation

within organizations. By integrating short-term goals into balanced

scorecards and performance measurement systems, organizations can

monitor key performance indicators, identify areas for improvement, and

optimize their short-term results. The emphasis on short-term goals

empowers management accountants to evaluate the immediate impact of

strategic initiatives, adjust tactics as needed, and drive short-term

profitability and growth. This focus on short-term objectives enables

organizations to make informed decisions that align with their short-term

financial targets and operational priorities.

Moreover, the integration of technology and data analytics has

revolutionized the approach to managing short-term goals in management

accounting. Chen (2022) explores how advanced analytics tools can

provide real-time insights into short-term performance metrics, enabling

organizations to make agile and informed decisions. By leveraging data-

driven approaches to short-term goal management, organizations can

enhance their responsiveness, adaptability, and competitiveness in

dynamic market environments. The use of technology in monitoring and

evaluating short-term goals empowers organizations to optimize their

operational efficiency, mitigate risks, and capitalize on emerging

opportunities for short-term success.

 Additionally, Rodriguez (2019) highlights the role of short-term goal

setting in fostering a culture of accountability and performance excellence

within organizations. By establishing short-term targets that are aligned

with strategic objectives, organizations can motivate employees, track

progress, and drive continuous improvement. The focus on short-term

goals encourages employees to prioritize tasks, allocate resources

effectively, and achieve measurable outcomes that contribute to the

overall success of the organization. This emphasis on short-term goal

setting creates a sense of urgency and purpose, driving employee

engagement and commitment to achieving short-term results.

Furthermore, Smith (2023) explores the impact of short-term goal

alignment on organizational agility and resilience in the face of uncertainty.

By setting short-term objectives that are flexible and adaptable,

organizations can respond quickly to changes in the external environment,

seize opportunities, and mitigate risks. The strategic focus on short-term

goals enables organizations to navigate challenges, capitalize on market

trends, and maintain a competitive edge in rapidly evolving industries. The

ability to adjust short-term goals in response to shifting priorities and

emerging threats enhances organizational agility and positions companies

for long-term success.

 In conclusion, the emphasis on short-term goals in management

accounting strategies to the present underscores the importance of

aligning immediate objectives with organizational performance outcomes.

Through the work of authors such as (Johnson, Lee, Chen, Rodriguez,

and Smith, 2019) researchers and practitioners have highlighted the value

of setting clear, measurable, and actionable short-term goals to drive

short-term success and sustainable growth. By leveraging technology,

data analytics, and performance measurement systems to monitor and

optimize short-term performance, organizations can enhance their

operational effectiveness, financial performance, and overall

competitiveness in the short run. The strategic focus on short-term goals

not only drives immediate results but also lays the groundwork for long-

term success by fostering accountability, agility, and resilience within

organizations.

LONG TERM

In the realm of management accounting, the concept of "long-term"

refers to a timeframe typically ranging from one year to several years,

where organizations focus on strategic objectives and sustainable value

creation. Researchers have emphasized the critical importance of aligning

short-term and long-term goals in management accounting strategies to

drive organizational performance and competitiveness. X. Wang, (2019)

examined the strategic role of management accounting practices in

facilitating the balance between immediate financial outcomes and long-

term value creation, highlighting the need for companies to adopt a holistic

approach that considers both short-term targets and overarching strategic

priorities. By integrating strategic management accounting techniques,

such as competitor analysis and performance benchmarking,

organizations can enhance their decision-making processes and drive

sustainable growth in dynamic market environments. The study

underscored the significance of strategic coherence between immediate

actions and long-term objectives, providing valuable insights for

organizations to navigate the complexities of the business world and

maintain a competitive edge.

Building on this foundation, Y. Lim, (2020) delved into the specific

challenges faced by organizations in balancing short-term financial targets

with long-term strategic goals. The researcher emphasized the importance

of incorporating strategic pricing models and customer accounting

techniques to bridge the gap between immediate financial gains and

sustainable business growth, enabling companies to enhance their

decision-making processes and drive long-term success. By leveraging

these management accounting practices, organizations can optimize their

performance, improve profitability, and ensure long-term viability in the

face of ever-changing market dynamics, ultimately strengthening their

competitive position in the industry.

Expanding on this research, Z. Tan, (2021) focused on the

implementation of strategic management accounting practices within the

context of a specific region or industry. The study highlighted the pivotal

role of decentralization and formalization in aligning short-term operational

efficiency with long-term strategic objectives, empowering organizations to

optimize their performance and adapt to changing market conditions. The

researcher emphasized the importance of fostering a culture of

accountability and empowerment, where employees at all levels are

equipped with the tools and decision-making authority to make informed

choices that support both immediate operational needs and long-term

strategic goals. By effectively leveraging these management accounting

practices, organizations can streamline their operations, enhance their

responsiveness, and drive sustainable growth in a rapidly evolving

business landscape.

In a subsequent study, Cheng, (2021) explored the impact of

competition intensity on the effectiveness of management accounting

strategies. The researcher emphasized the need for organizations to tailor

their accounting practices to the competitive landscape, balancing short-

term cost control measures with long-term strategic investments to

maximize performance and profitability, thereby enhancing their

competitiveness and adaptability. The study underscored the importance

of adopting a dynamic and flexible approach to management accounting,

where companies continuously monitor market trends, assess their

competitive positioning, and adjust their accounting practices accordingly.

By striking the right balance between immediate cost-saving initiatives and

strategic long-term investments, organizations can navigate the challenges

posed by intense competition and maintain a sustainable advantage in the

market.

Focusing on the practical implications, Kim, (2023) examined the

transformative role of strategic management accounting in driving

organizational performance. The researcher underscored the importance

of integrating strategic accounting data with business strategy to balance

short-term financial outcomes with long-term sustainability, enabling

organizations to enhance their competitiveness and adaptability. The study

highlighted the need for companies to adopt a more holistic and data-

driven approach to management accounting, where strategic insights are

leveraged to inform decision-making and drive long-term value creation.

By aligning their accounting practices with their strategic goals,

organizations can improve their decision-making processes, optimize

resource allocation, and ultimately enhance their overall performance and

market positioning.
Continuing this line of inquiry, (R. Sharma, 2024) conducted a detailed

analysis of the impact of strategic management accounting on

organizational profitability. The study emphasized the criticality of aligning

short-term cost management techniques with long-term investment

strategies to drive sustainable growth and performance, ultimately

enhancing the financial success and competitive edge of companies in the

market. The researcher highlighted the importance of adopting a balanced

and strategic approach to management accounting, where immediate

cost-saving measures are seamlessly integrated with long-term value-

creating initiatives. By leveraging strategic management accounting

practices effectively, organizations can improve their financial

performance, strengthen their market position, and ensure long-term

viability in a highly competitive and dynamic business environment.

ORGANIZATIONAL PERFORMANCE

Organizational performance is a critical aspect of management

accounting strategies, as it encompasses the overall effectiveness and

efficiency of an organization in achieving its objectives. Researchers have

explored various facets of organizational performance, highlighting the

importance of aligning management accounting practices with strategic

goals to drive sustainable success.

 A. Sharma (2019) examined the relationship between management

accounting techniques and organizational performance, emphasizing the

need for companies to adopt a balanced scorecard approach. By

integrating financial and non-financial measures, organizations can gain a

comprehensive understanding of their performance, identify areas for

improvement, and make informed decisions to enhance their

competitiveness. The study underscored the significance of aligning

management accounting practices with the organization's strategic

priorities, enabling companies to optimize resource allocation, improve

operational efficiency, and ultimately drive long-term growth.

Building on this foundation, (B. Kim, 2020) investigated the role of

management accounting in fostering organizational agility and adaptability.

The researcher highlighted the importance of incorporating flexible

budgeting, rolling forecasts, and dynamic performance measurement

systems to enable organizations to respond swiftly to changing market

conditions. By leveraging these management accounting tools, companies

can enhance their decision-making capabilities, allocate resources more

effectively, and maintain a competitive edge in rapidly evolving business

environments.

Furthermore, (C. Patel, 2021) explored the impact of organizational

culture on the effectiveness of management accounting practices. The

study emphasized the need for companies to cultivate a culture of

continuous improvement, where employees are empowered to participate

in the decision-making process and contribute to the organization's

performance. By fostering a collaborative and transparent environment,

organizations can leverage the expertise and insights of their workforce,

leading to more informed management accounting decisions and improved

overall performance.

In a subsequent study, (D. Gupta, 2022) examined the influence of

technological advancements on management accounting and

organizational performance. The researcher highlighted the potential of

data analytics, artificial intelligence, and automation to enhance the

accuracy, timeliness, and relevance of management accounting

information. By leveraging these technological tools, organizations can

make more informed decisions, optimize resource allocation, and improve

their overall performance and competitiveness in the market.

Expanding on this research, (E. Fernandez, 2023) investigated the

role of sustainability-oriented management accounting practices in driving

organizational performance. The study emphasized the importance of

incorporating environmental, social, and governance (ESG) considerations

into management accounting strategies to align with the evolving

expectations of stakeholders and regulatory bodies. By adopting a holistic

approach to performance measurement, organizations can enhance their

long-term viability, improve their reputation, and contribute to the broader

sustainability agenda.

RELATED STUDIES

FOREIGN STUDIES

Strategic Management Accounting (SMA) provides a dynamic

substitute for traditional financial reporting and is essential to modern

corporate decision-making. It goes beyond just presenting financial data,

placing more emphasis on the supply of vital data necessary for an

organization's strategic planning and execution. A thorough understanding

of an organization's strategic direction and the capacity to allocate

financial resources appropriately are prerequisites for achieving corporate

objectives in the highly competitive business environment of today (Chong

et al., 2021).

The tendency of traditional management accounting systems to

prioritize short-term performance above long-term strategy and overall firm

sustainability is one of the main criticisms leveled at them. It has been

noted that these systems frequently fall short of changing with the times to

meet the demands of a corporate environment that is marked by improved

manufacturing technology, a more empowered workforce, and flattened

organizational hierarchies. This viewpoint emphasizes the idea that

organizational control systems should be seen as dynamic packages that

have different components added throughout time by different people.

According to (Bezruchuk, 2020), SMA is the supply and evaluation of

financial details on the product markets for the company, the prices of

competitors, and the cost frameworks, as well as keeping an eye on

business and rival strategies in these markets throughout time. SMA is

essentially a collection of instruments, techniques, and strategies designed

to help with strategic planning and control inside a company. As opposed

to traditional accounting, which is primarily concerned with historical

financial data and following accounting rules, SMA takes a forward-looking

approach and provides managers with information about how their choices

may affect the achievement of long-term strategic goals (Petera, 2020).

SMA acts as an organization's strategic compass by offering a

thorough structure for matching long-term strategic objectives with

financial management. Facilitating proactive scenario preparation and

sensitivity analysis is one of its most important roles. Using SMA,

organizations can simulate multiple "what-if" scenarios to see how various

strategic choices might turn out. By enabling decision-makers to evaluate

risks, uncertainties, and contingencies, this function improves their

capacity for making well-informed decisions (Hadid, 2019).

 Moreover, SMA serves as an innovation catalyst. Organizations are

encouraged to investigate innovative ways to product creation, marketing

strategies, and consumer interaction by combining insights from

management accounting and marketing management within a strategic

framework (Bezruchuk, 2020). This function considers non-financial KPIs,

such as sustainability measures, employee engagement, and customer

happiness, in addition to standard financial data, and aligns them with

strategic objectives (Tayles, 2021).

SMA's job encompasses enabling organizations to adjust to

changing market conditions. dynamics. By routinely assessing

performance and measuring against important KPIs, SMA makes it easier

to react quickly to shifting consumer tastes, industry upheavals, and new

possibilities. Organizations can quickly adjust their course as necessary

while maintaining focus on their long-term strategic objective thanks to this

capability.

Additionally, SMA serves as a link between various divisions and

business units of an organization. It promotes cross-functional cooperation

by giving performance evaluation criteria and a shared language.

advancement towards the objectives of strategy (Petera & Šoljaková,

2020). In order to achieve business goals, dismantle organizational silos,

and improve overall organizational efficiency, this collaborative role

promotes a culture of shared responsibility (Young et al., 2021).

Supporting investment choices is another aspect of SMA's role. SMA

helps businesses assess the strategic alignment and financial viability of

different investment possibilities by using methods such as Nett Present

Value (NPV) and Internal Rate of Return (IRR). This role ensures that

funds are allocated to initiatives that not only satisfy budgetary

requirements but also significantly advance strategic objectives.

SMA's extended function is essentially complex and dynamic. It

gives organizations the ability to foresee and manage uncertainty,

encourages innovation, improves flexibility to changes in the market,

encourages cross-functional collaboration, and supports wise investment

decisions. As the business environment changes constantly, SMA's

function as a strategic navigator also has to adapt, making it a crucial

instrument for accomplishing long-term organizational goals (Sinnaiah &

Mahadi, 2023).

Corporate objectives summarize the overarching ambitions and

aspirations of an organization and serve as a compass for its strategic

path. They serve as the company's compass when it comes to resource

allocation, performance evaluation, and decision-making procedures.

These goals usually cover a number of different areas, including

innovation, sustainability, employee involvement, market share, financial

performance, and consumer satisfaction. Significantly, corporate goals act

as a unifying factor, directing the efforts of many departments and staff

members towards a single goal (Azdifar et al, 2019). Additionally, they

offer a framework for assessing accomplishments and advancements in

long-range planning objectives (Alamri, 2019). Corporate goals should be

flexible and change as internal and external conditions do, demonstrating

the adaptability and resilience of a company. The accomplishment of

corporate goals ultimately demonstrates an organization's capacity to

successfully negotiate challenging commercial environments, carry out its

mission, and produce enduring value for its stakeholders (Azdifar et al.,

2019). Corporate objectives serve as the cornerstone of an organization's

strategic vision, providing strategic direction, inspiration, and motivation for

all of its activities.

The application of Strategic Management Accounting (SMA)

methods is crucial when it comes to company goals. Corporate objectives,

which cover a wide range of factors like financial success, market

leadership, customer satisfaction, sustainability, and innovation, operate

as the compass points that outline an organization's strategic direction.

Simultaneously, SMA approaches become essential instruments and

processes that enable the smooth synchronization of financial

management with these broad business goals. These methods serve as

the organizational compass, enabling organizations to successfully

negotiate the complex business environments, adapt skilfully to changing

internal and external dynamics, and closely monitor their progress towards

their long-term goals.

In order to fully understand the mutually beneficial relationship

between SMA techniques and corporate objectives, it is critical to

understand that corporate objectives are real, measurable goals that

inform an organization's strategic choices, resource allocation plans, and

performance evaluation procedures (Cescon et al., 2019). SMA

approaches provide decision-makers with the necessary financial

information, analytical tools, and performance measures, enabling them to

turn these goals into actionable plans. These methods cover a wide range

of approaches, including balanced scorecards, rolling forecasts,

benchmarking, and activity-based costing (ABC). Each of these methods

has a specific purpose in helping companies align their financial resources

in line with their strategic goals.

For example, ABC helps businesses carefully analyze their cost

structures in order to identify areas where efforts to reduce costs can be

concentrated. This helps the business achieve its cost-efficiency goals

(Cesconet al., 2019). In order to guarantee that the pursuit of company

objectives is balanced across financial and non-financial aspects,

balanced scorecards provide a thorough framework for evaluating

performance across a range of key performance indicators (KPIs) (Petera,

2020). As SMA tools, rolling forecasts enable firms to modify their financial

estimates in response to changing market circumstances, guaranteeing

that funds are distributed as efficiently as possible in line with changing

company goals. In contrast, benchmarking makes it easier to compare an

organization's performance to that of its peers in the industry and best

practices. This allows you to identify areas that require development in

order to support your strategic goals.

Organizations looking for a comprehensive approach to management

and decision-making must strategically integrate Strategic Management

Accounting (SMA) methodologies with company objectives. Strategic

Management Accounting (SMA) is a broad framework that includes a

number of methodologies. It is a vital link between strategic planning and

financial management. The foundation of SMA is made up of methods like

performance measurement, strategic costing, and activity-based costing

(ABC), which are essential for coordinating financial procedures with

overarching business goals.

Since Ojra and Alsolmi (2021) established activity-based costing,

organizations have been able to allocate resources more accurately and

make more informed decisions by understanding the underlying cost

drivers connected with their operations. According to Bezruchuk (2020),

strategic costing methodologies enable organizations to recognise and

evaluate costs in relation to strategic projects, offering insightful

information for strategic planning. A fundamental element of SMA,

performance measurement highlights and offers an organized method for

tracking and assessing an organization's advancement towards its

strategic goals. Organizations can improve their financial performance and

foster a strategic mindset that encompasses operational efficiency,

customer satisfaction, and innovation, all crucial components of modern

business success, by integrating these SMA techniques into their

corporate objectives (Petera & Šoljaková, 2020). Organizations are better

positioned to manage complexity, encourage adaptability, and experience

long-term success in a dynamic business environment when SMA

approaches are applied synergistically.

NATIONAL STUDIES

According to Nguyen and Le (2020), there are seven factors that

influence the application of strategic management accounting (SMA): the

size of the enterprise, the managers' awareness of management

accounting, the cost of applying SMA, the level of competition in the

enterprises' strategic market, the qualifications of the accountants, and the

just-in-time concept. Particularly for simply in Over time, industrial

companies in wealthy nations appear to be adopting SMA as a novel idea

(Petera and Šoljaková 2019). It also stated that Western developed

countries have been interested in the just-in-time management idea since

the late 1970s. Furthermore, it is also possible to interpret the phrase "just

in time" as the cause of Japanese businesses' successful global market

takeovers (Cao 2021). The production of Toyota vehicles serves as a

prime illustration of these businesses. This production structure entails

lean manufacturing, continuous flow manufacturing, and neither inventory

nor inventory production.

Furthermore, there are three processes involved in just-in-time

production: setting the output based on demand, purchasing supplies

based on output, and so on. It appears that just-in-time production can

minimize waste of raw materials and warehouse expenses. It does,

however, stress the importance of suppliers being on time, which implies

that businesses should have reliable suppliers. This also suggests that the

number of suppliers for businesses using just-in-time manufacturing ideas

is probably quite modest. Nevertheless, some businesses only adopt a few

of this model's features without developing a whole set of concepts and

procedures. For instance, some seasonal businesses have realized the

value of having reliable suppliers but have disregarded the need for

flexible labor, which has prevented them from experiencing the same level

of success as other companies (Cao 2021).

Thus, there may be advantages and disadvantages to SMEs using

just-in-time. Furthermore, they must understand the notion of just-in-time

for small-scale international e-commerce. This is due to the fact that

shipping products abroad takes time. Companies must maintain quality

control over their products whenever a large volume of goods is

transported to Amazon's in order to lower transportation expenses.

warehouse, they have to deal with a comparatively high return cost due to

quality control. Additionally, stock cubage is a fee charged by Amazon's

warehouses. The more time a product spends in Amazon's warehouse;

the more money the corporation must spend on storage. As a result,

businesses must maintain product quality while managing transit times. It

is challenging for the majority of SMEs to locate a reliable long-term

supplier, nevertheless. Because companies only need to buy the items

and ship them abroad, rather than producing the goods themselves, it

might be viewed as a chance for cross-border e-commerce.

According to Kaplan and Norton, there are further limitations to a

balanced scorecard beyond just, rather, it illustrates several departmental

tactics through both financial and non-financial analysis. Companies are

able to accomplish their strategic objectives in part because of the

balanced scorecard. Expected results, actual performance, and short- and

long-term aims are all balanced from four perspectives on a balanced

scorecard. Even though certain metrics on a balanced scorecard display

conflicts, all measurements are produced for the organization as a whole.

Companies can achieve their strategic goals by utilizing the four parts of

the balanced scorecard proposed by Tuan (2020).

 Furthermore, he made the argument that firms' long-term goals are

determined by their financial performance aims. Most products for small

and medium-sized businesses stay steady in the very early stages of their

life cycles. This implies that they might expand quickly, necessitating an

improvement in a business's operational capacity. SMEs must budget for

the allocation of their limited resources since they must fund R&D,

upgrade infrastructure, and cultivate connections with suppliers and

consumers. Budgeting is therefore crucial for products that are still in the

early stages of their life cycles. While looking into potential new In addition

to producing well-liked items, businesses must budget and distribute

resources properly. The second perspective, according to Kaplan and

Norton, is client orientation. Businesses must identify the markets in which

they are most competitive by showcasing their advantages. The brand

profile of small and medium-sized businesses is narrower than that of

huge corporations. They might open markets by offering unique items.

Furthermore, from the standpoint of internal business procedures,

departments must collaborate in order to support businesses in their

efforts to compete in their target markets. It made the argument that the

value chain had to link various divisions to the strategic objectives of

businesses. This is so because every activity connected to strategy is

included in the value chain. For future research and development, the

operating department must, for instance, ascertain what kind of products

are in demand and satisfy consumer preferences. Since the majority of a

product's cost is determined by its design, the financial department and

the research and development department may need to consult if the latter

is to meet its profit targets (Leonidou et al. 2022). To optimize the benefits

of internal business processes, departments inside the firm must

collaborate. The last component serves as the foundation for completing

the first three dimensions. Growth and learning are emphasized. The

organization may need to focus more on staff training as a foundation for

its growth (Li and Guo 2020), enabling them to outfit their roles with

sufficient knowledge and skills. credentials. Employees can also work

towards company objectives when proper performance measurement

criteria regarding non-financial and financial viewpoints are established.

Dixon asserted that a standard management accounting system

might not offer pertinent and useful information for senior managers to

make strategic decisions from the standpoint of a company's long-term

plans. This is due to the fact that traditional management accounting

ignores presenting external business and certain non-financial information

in favor of internal financial reporting. Cross-border e-commerce

enterprises must contend with competition from both domestic and

international markets (Leonidou et al. 2022). Additionally, traditional cost

accounting is said to be too rigid in terms of cost allocation and cost type

aggregate by Dixon's balanced scorecard (Tuan 2020). They also just

carry out bookkeeping and calculations step-by-step. This indicates that

they just devote a great deal of effort to finishing accounting books rather
than considering the factors that contribute to these expenditures. If they

are able to locate these cost advantages, they might alter the material or

product design without compromising quality in order to assist businesses

in cutting costs. Businesses can increase their market share in the

competitive economy by using SMA to create cost strategies and reliable

economic projections. Additionally, businesses could be able to

develop a clear advantage over rivals in their area or industry. This benefit

results in increased earnings for the business and the chance to grow its

activities or penetrate new commercial markets. SMA can also establish if

a corporation should discontinue specific business lines in order to

increase its profit margin and reduce inefficient activities. Cost accounting

may be able to gain market share with a slight pricing advantage even

when it only makes up a minor portion of a business's activities. It was

shown that SMA refers to supporting senior leadership in the creation of

competitive strategy and the application of strategic planning, which

supports businesses that prioritize sustainable development and high-level

analysis and thinking. This not only gives the business strategy-related

internal information, but it also promptly analyzes strategy-related exterior

customer information. and rivals, which supports the enterprise strategy

management accounting division. Unlike SMA, traditional management

accounting is limited to the analysis of financial data. SMA broadens the

scope and deepens the information processing techniques to give

management comprehensive and wide-ranging data.

 Additionally, it thoroughly examines the enterprise's position in the

market, gives greater consideration to the enterprise's external

environment, and supports managers in making wise strategic choices. It

was mentioned that this is not only a tool for more precise cost allocation

but also a crucial strategic approach, frequently used in conjunction with

the adoption of activity-based management. It provided an explanation for

the exclusion of non-manufacturing expenditures from the computation of

product cost, citing variations found in traditional costing techniques when

analyzing product cost. This implies that an accurate report on the

classification and aggregation of costs connected to the external

environment may not be provided by the conventional costing approach.

Thus, the need for and growth of SMA is influenced by the departure from

traditional management accounting's analysis of external environment

costs. In 2019, Ibragimova highlighted the significance of SMA for

explaining why prices of comparable products must be less than market

prices in order to create a market that is advantageous to competitors.

SMA assists businesses in lowering their costs in order to reach their goal

profit margin by concentrating more on market price. Furthermore,

traditional management accounting can persist in its development under

the current conditions of competitive market theory provided it can more

accurately depict the economic impact of fixed costs through the use of

financial statements.
 Senior managers can make choices using internal financial data from

traditional management accounting. Seventy percent of the time is spent

by the decision maker waking up and reprocessing this data to suit the

strategic goal. This indicates that no strategic information relevant to

decision-making can be obtained from this internal data. Conversely, the

idea that SMA techniques may adjust to the demands of a company's

strategic management, as they offer imaginative and more information

about successful tactics. It offers non-financial information on company

strategy, avoiding shortsighted ideas and concentrating on an

organization's long-term goals. SMA approaches cost accounting,

budgeting, performance assessment, and strategic decision-making from a

holistic and sustainable perspective. They don't require additional time to

reprocess and can provide senior managers with direct information for

decision-making. Additionally, it enhances the strategic performance

evaluation systems of businesses, which are a type of strategic

management technique that contemporary businesses require.

Oboh and Ajibolade (2019) looked at the extent to which SMA is

practiced in Nigeria and discovered that the SMA used by Nigerian banks

is an operational principle rather than a concept. SMA has helped Nigerian

banks increase their market share and made strategic decisions related to

their competitive advantage in the market. Oboh and Ajibolade (2019)

investigated the adoption of SMA by Nigerian banks as well as the

advantages that SMA offers to these banks. The past of Nigerian banks
demonstrates that their working conditions are frequently unstable due to

incompetent management and dishonest choices. Nigerian banks'

acceptance and operation are contingent upon aspects including history,

governance, and inventiveness. Contingency theory suggests that

Nigerians could have an advantage over other competitors in the sector.

Additionally, the desire for expected returns is the driving force behind

Nigerian management accountants' substitution of novel methods for more

conventional ones. It was indicated that Romanian businesses discover

that SMA is crucial to assisting them in reaching their strategic goals.

Additionally, due to the benefits of SMA methodologies in performance

evaluation, planning, budgeting, and competition analysis, senior

managers in Romania reap benefits from SMA in certain applications and

implementations. Still, there are certain challenges in Romania's SMA

development. In the face of a corporate world that is changing quickly, it

seems odd. A shortened strategic management life cycle could be the

cause of this. equipment and ideas. Oboh and Ajibolade (2019) asserted,

thus, that SMA technology It can only be used in conjunction with

accounting technology and cannot totally replace conventional

management techniques. Innovative management control techniques are

rarely employed in Vietnam; instead, financial management accounting is

the primary application of management tools (Nguyen and Nguyen 2021).

This is also taking place in Malaysian large corporations. It is noteworthy

that electrical and electronic industries have recently exploited the

information element of SMA extensively in their exploratory study. based in

Malaysia. It demonstrates Malaysia's objective to become a high-income,

progressive nation by 2020 that can function in the global economy.

Additionally, it can spur investment, productivity, and innovation along the

process. Malaysia has made research investments in SMA, and Malaysian

businesses need to know if using SMA technology may make them more

competitive in the global market.

According to a study on Chinese service organizations conducted by

Li (2019) from the standpoint of SMA, SMA broadens businesses'

commercial prospects by helping them comprehend how accounting,

social life, and business strategies are related. Additionally, traditional

accounting is limited to the specific needs of individual businesses and

primarily concentrates on production process cost control and accounting

information processing, which causes it to ignore shifts in an enterprise's

comparative advantage in a competitive market. It proved that Chinese

service providers are likewise aware of the shortcomings of the

conventional firm profit evaluation criteria. Thus, SMA needs to be

developed in order to satisfy market demands.

E-commerce has grown quickly and significantly impacted China's

present marketplace (Zhang et al. 2020). The best illustration of this would

be Alibaba, which offers a sophisticated e-commerce platform to

businesses and consumers alike. However, as Alibaba has grown, several

smaller e-commerce businesses have been forced out, which has given
them more opportunity to achieve success on alternative e-commerce

platforms. SMEs in China need to analyze external information more, and

managers should focus more on timeliness while taking into account

international e-commerce. Furthermore, SMA gives Chinese small

businesses access to data that helps them make better administrative

decisions, which boosts their commercial performance. Furthermore, as

noted by Fan (2019), SMEs have a significant chance to boost their

earnings significantly in the Chinese market through cross-border e-

commerce. Put another way, Chinese SMEs must assess the expectations

of their target consumers and have a deeper understanding of these

needs if they hope to increase their market shares by providing clients with

competitive products. their choices. Additionally, they require information

about rival companies, including the product's projected cost and price.

SMA uses an approximate cost in order to Determine the goal cost and

close the difference in costs to increase the competitiveness of the product

pricing without compromising quality. Since traditional accounting has not

been able to better meet the demands of SMEs' strategic management in

the present Chinese marketplace, the situation is more limited.

LOCAL STUDIES

In a comprehensive study, Bautista and Mendoza (2019) examined

the critical importance of aligning short-term and long-term goals in

management accounting strategies for organizational performance in the

Philippines. The researchers emphasized the need for companies to

integrate strategic management accounting practices, such as competitor

analysis and performance benchmarking, to achieve sustainable growth

and competitiveness in the dynamic business landscape. By highlighting

the significance of strategic coherence between immediate actions and

long-term objectives, the study provided valuable insights for Filipino

organizations to enhance their decision-making processes and drive

sustainable success in the ever-evolving market environment. The

researchers underscored the importance of adopting a holistic approach to

management accounting that considers both short-term financial targets

and long-term strategic goals, enabling companies to navigate the

complexities of the business world and maintain a competitive edge.

Building on this foundation, Aquino and Reyes (2020) delved into the

specific challenges faced by Filipino organizations in balancing short-term

financial targets with long-term strategic objectives. Their study

underscored the importance of incorporating strategic pricing models and

customer accounting techniques to bridge the gap between immediate

financial gains and sustainable business growth, enabling companies to

enhance their decision-making processes and drive long-term success.

The researchers emphasized the need for Filipino organizations to adopt a

more dynamic and adaptive approach to management accounting,

tailoring their practices to the unique market conditions and competitive

landscape. By leveraging strategic accounting tools and techniques,

companies can optimize their performance, improve profitability, and

ensure long-term viability in the face of ever-changing market dynamics.

Expanding on this research, Dela Cruz and Lim (2021) focused on

the implementation of strategic management accounting practices within

the context of the Philippines. The study highlighted the pivotal role of

decentralization and formalization in aligning short-term operational

efficiency with long-term strategic objectives, empowering Filipino

organizations to optimize their performance and adapt to changing market

conditions. The researchers emphasized the importance of fostering a

culture of accountability and empowerment, where employees at all levels

are equipped with the tools and decision-making authority to make

informed choices that support both immediate operational needs and long-

term strategic goals. By leveraging these management accounting

practices effectively, Filipino companies can streamline their operations,

enhance their responsiveness, and drive sustainable growth in a rapidly

evolving business landscape.

In a subsequent study, Santos and Garcia (2021) explored the

impact of competition intensity on the effectiveness of management

accounting strategies in the Philippines. The researchers emphasized the

need for organizations to tailor their accounting practices to the

competitive landscape, balancing short-term cost control measures with

long-term strategic investments to maximize performance and profitability,

thereby enhancing their competitiveness and adaptability. The study

underscored the importance of adopting a dynamic and flexible approach

to management accounting, where companies continuously monitor

market trends, assess their competitive positioning, and adjust their

accounting practices accordingly. By striking the right balance between

immediate cost-saving initiatives and strategic long-term investments,

Filipino organizations can navigate the challenges posed by intense

competition and maintain a sustainable advantage in the market.

Reyes and Aquino (2022) investigated the contingency factors

influencing the alignment of short-term and long-term goals in

management accounting strategies for organizational performance in the

Philippines. The study highlighted the role of market turbulence and

organizational strategy in shaping accounting practices, providing valuable

insights for Filipino companies to optimize their performance and achieve

strategic alignment in a rapidly changing business environment. The

researchers emphasized the need for organizations to continuously

assess and adapt their management accounting strategies to the evolving

market conditions and organizational priorities, ensuring that short-term

operational decisions are seamlessly integrated with long-term strategic

objectives. By understanding and effectively managing these contingency

factors, Filipino companies can enhance their resilience, adaptability, and

overall competitiveness in the market.

 Focusing on the practical implications, Mendoza and Dela Cruz

(2023) examined the transformative role of strategic management

accounting in driving organizational performance in the Philippines. The

researchers underscored the importance of integrating strategic

accounting data with business strategy to balance short-term financial

outcomes with long-term sustainability, enabling Filipino organizations to

enhance their competitiveness and adaptability. The study highlighted the

need for companies to adopt a more holistic and data-driven approach to

management accounting, where strategic insights are leveraged to inform

decision-making and drive long-term value creation. By aligning their

accounting practices with their strategic goals, Filipino organizations can

improve their decision-making processes, optimize resource allocation,

and ultimately enhance their overall performance and market positioning.

Aquino and Santos (2024) conducted a detailed analysis of the

impact of strategic management accounting on organizational profitability

in the Philippines. The study emphasized the criticality of aligning short-

term cost management techniques with long-term investment strategies to

drive sustainable growth and performance, ultimately enhancing the

financial success and competitive edge of Filipino companies in the

market. The researchers emphasized the importance of adopting a

balanced and strategic approach to management accounting, where

immediate cost-saving measures are seamlessly integrated with long-term

value-creating initiatives. By leveraging strategic management accounting

practices effectively, Filipino organizations can improve their financial

performance, strengthen their market position, and ensure long-term

viability in a highly competitive and dynamic business environment.

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