The Cost Drivers, Revenue Drivers, and Value Chain Analysis in Strategic Management Accounting

By Gang (Henry) Wu.

Published by The Organization Collection

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Article: Print $US10.00
Article: Electronic $US5.00

Strategic management accounting provides financial information and analysis regarding product markets, competitors’ costs, cost structures, and monitoring of firm strategy and competitor strategy (Bromwich, 1990). It assists the management team with better strategic decisions and organizational effectiveness by identifying, gathering, choosing and analyzing accounting data (Hoque, 2002). The role of accountants in strategic decision-making is crucial for the sustainability of corporate strategy, and accountants should consider the cost structure of both their own firm and competitors (including existing competitors and potential entrants). Moreover, instead of focusing on cost information only, accountants must adopt a holistic view of strategic information. Since many cost and other market characteristics of product attributes are intertwining, accountants need to incorporate all these characteristics into strategic management accounting consideration (Bromwich, 1990). In this paper, I empirically investigate the following two research questions. First, what are the essential dimensions of cost drivers and revenue drivers in strategic management accounting systems? Second, is the performance of strategic management accounting contingent on a balance between cost drivers and revenue drivers (including relevant costing, operating, R&D, and marketing activities) in value chain analysis?

Keywords: Cost Drivers, Revenue Drivers, Strategic Management Accounting

International Journal of Knowledge, Culture and Change Management, Volume 9, Issue 2, pp.69-78. Article: Print (Spiral Bound). Article: Electronic (PDF File; 1.203MB).

Gang (Henry) Wu

Lecturer/Assistant Professor, Department of Accounting and Business Information Systems, The University of Melbourne, Melbourne, VIC, Australia

Dr. Gang (Henry) Wu is a Lecturer/Assistant Professor in accounting at the University of Melbourne, Australia. He received his Bachelor of Management from Peking University in 2003. Before completing his doctoral study at The University of Melbourne in 2008, Dr. Wu was a research assistant at China Europe International Business School (CEIBS), a leading business school in the Asia-Pacific region. Henry served as a doctoral fellow at the 2006 AFAANZ Doctoral Consortium and a discussant at the 2006 AFAANZ Annual Conference. His papers have also been presented at the 2007/2008 ANCAAR Audit Research Forum at the Australian National University. He has been frequently involved in teaching (BCom and Master) and research projects in his department/faculty, and has experience as an auditor and technical staff at Pitcher Partners, Melbourne, Australia. His research interests include auditing, management accounting, and business information systems. Dr. Wu appreciates the support from Anne Lillis, Jennifer Grafton, Collin Ferguson, John Lyon, and Paul Coram on this study.


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