Managerial accounting plays an essential role in improving the organization’s management process. Management accounting is a core function of organizations and therefore, companies need to focus on their management strategies and policies (Noreen, Brewer, & Garrison, 2011). This document shall study the role of managerial accounting in the management process in context of one of the leading Smartphone manufacturing companies – HTC. HTC is one of the leading Smartphone and tablets manufacturers in the world. The company has reinvented its strategies and management policies to attain a better position in the market (HTC, 2012). The company strives hard to reinvent and transform its market image. The achievement of its competitors (i.e. Samsung, iPhone, etc.) has forced the management to alter its managerial policies. This document shall further study the management process of HTC and improvements in the organization that can be made by managerial accounting (HTC, 2012). Organizations use managerial accounting in order to trace records and financial information. Companies modify their management process for improving their performance and profitability. One of the major objectives of an organization is to maintain sustainable profits and performance in the fluctuating economical conditions and increasing competition.
Management Process: The Improving Phase
Organizations are always learning through experiences, competitors’ moves and strategies, and outcomes of their own performance (Kloot, 1999). This organizational learning transforms into their future development and brings sustainability in their operational performance. The concept of management process, which broadly includes five dimensions or phases aimed at directing organizations to manage their respective operations effectively and efficiently, include “Improving”. The “Improving” phase in terms of managerial accounting connotations refers to bringing improvement in overall management of operations and organizational processes while considering information produced and distributed through managerial accounting. The ultimate expectations or outcomes from the improvement in the management process are of course improvements in earnings and profitability (Stavenuiter, 2006; Noreen, Brewer, & Garrison, 2011).
Continuous Process Improvement
Continuous process improvement refers to efforts of an organization to improve its business process in order to enhance its performance and profitability. This philosophy further states that organizations shall measure their effectiveness and performance on a regular basis. Business organizations’ processes are not steady and companies should constantly measure their performance. It further states that the business must bring changes in its process and policies according to stimuli. The philosophy states that continuous improving is an ongoing effort by the organization to enhance its performance, profitability, services, quality and product. Organizations are in a continuous process to grow and improve its efficiency, whereas the organization’s performance is highly stimulated with its external and internal factors. Internal factors may include problems relating to labor unions, management, and employees etc. Contrary, external factors are may involve global economical conditions, market structures, and government policies etc. Within these circumstances an organization shall determine the performance of its management, employees, and products / services. According to the continuous process improvement philosophy, organizations are in a continuous state of reinventing and transforming themselves (Noreen, Brewer, & Garrison, 2011; Stavenuiter, 2006).
Continuous Improvement Life cycle
The company under consideration that is HTC can further improve its business operations and efficiency by way of incorporating certain key elements of continuous improvement, which are then expected to yield useful information which may be used by the management for the purpose of bringing improvements in the managerial accounting and resulting information which can be further used for effective and efficient decision making. The continuous improvement life cycle is based on five main phases, which include:
- Define and plan
According to the philosophy, the initial step is to assess the performance of the organization. The organization shall gather its input and output information. It may further carry out surveys at all levels of the organization to acquire information including product details, customer’s feedbacks, employees, and competitors etc. HTC shall assess the performance of its workers, managers, and product. HTC One by the company was one of the major achievements, but Samsung S3 and S4 have again affected the success of HTC’s technology. Analyzing the performance of HTC products in comparison to its competitors, the company’s developers must make more changes in their models and speed up the pace of innovation. To assess its performance, HTC should conduct surveys to assess its internal and external performance. These surveys provide platform for determining prospects of the organization’s products and its support services. Through gathered information (surveys and research) the organization should compare its performance with its competitors and established goals.
Define and Plan
After assessing and evaluating internal and external factors of the organization the management should set its objectives and goals. Therefore, steps must be undertaken for developing new budgeting plans which must be introduced with defined objectives. Though competitors of HTC have been more efficient it is essential for the company to make different plans and budgets to deal with the unexpected changes in the market and be prepared for unforeseen competition that may arise in the future. According to the published news, HTC has been facing major issues related to the management which are negatively affecting its performance and innovation. This is due to numerous reasons including ineffective of the company’s workers who lack understanding of the company’s objectives and lack of support and ability to manage issues by the company’s higher management. These plans should be simple and clearly defined for the company’s stakeholder, employees, and management.
The most challenging stage of the continuous improving process is its implementation. The organization shall follow a rollout plan which allows open communication between the management and employees. The strategies, policies and goals of the company should be clearly defined to its workers, organizers and stakeholders. HTC should make considerable measure to ensure implementation of these plans and budgeting targets. Therefore, it may involve teams to ensure that workers achieve these goals and are making sincere effort. In order to ensure the implementation the organization may engage teams for enhancing performance. A strong communication among workers and the management would result in elimination of several obstacles.
The organization should frequently evaluate its performance against initiative goals and objectives. It should take strict qualitative and quantitative measures to incorporate the progress. These measures allow the organization to determine the progress of its workers and employees. HTC should evaluate its internal performance against that of its competitors, pace of development, and technology. Evaluation of the organization’s workers within the organization and in light of the external environment would allow HTC to grow.
The process of assessing and reassessing should not be stopped. The organization should make assessments from time to time in order to determine its performance. Business organizations have certain capacity to modify and update their technology, product quality and services. The organization performance plays an essential role in creating a market image and generating profit margins. Reassessing evaluates the progress of an organization against defined objectives.
Continuous Improvement Process in Eliminating Problems
Continuous improvement process provides a rigid understanding about the company’s performance and problems faced in the achievement of established goals. Therefore, surveys and researches carried out by the organization identify core problems. The information gathered allows organization to locate the main source of problem and formulate its strategy accordingly. This may allow the organization make measureable efforts to eliminate these obstacles. Moreover, the philosophy allows a sense of growth and progress. According to the theory, the business process is dynamic and not stagnant therefore if the organization is in a crisis then there is always a way out. This is because changes in the organization’s policies and strategies can be varied with changes in circumstances. This allows a sense of growth and greater scope in the organization’s activities. For example, Samsung was almost negligible in the cellular industry but after its certain efforts it has become a strong competitor and challenger to the leading smartphones company – Apple, Inc.
Managerial accounting provides detailed understanding about the management of an organization. This may allow the organization to locate its problem and undertake considerable measures to omit these problems. Analyzing HTC managerial performance depicts that the company has been a leading smartphone manufacturer, but the pace of its innovation and technology development should be made more effective. This is because of the reason that its competitors have become more effective and efficient to launch new and advanced technology in the market. The philosophy of continuous improving process allows the organization to grow and provides hope to cope up with the crisis and its challenges.
HTC. (2012). 2011 HTC Annual Report. Taipei: HTC.
Kloot, L. (1999). Organisational learning and management accounting systems: a study of local government. London: University of New South Wales Press.
Noreen, E. W., Brewer, P. B., & Garrison, R. H. (2011). Managerial Accounting for Managers. New York: McGraw Hill.
Stavenuiter, J. (2006). Product Design and Life Cycle Assessment. New York: Baltic University Press.