1. Introduction to Strategic Management Accounting (SMA)
Chathuri Senarath
Senior Lecturer- University of Kelaniya
MEcon(UOC), BCom Sp (Hons) (UOC), CIMA (UK) Passed Finalist, AAT (SL) Passed Finalist.

2. The term ‘strategic’ has become a very popular and attractive adjective among business practitioners and academics. It has become so fashionable to qualify their respective functional disciplines by this adjective that we have a series of ‘new’ subjects to teach and learn: strategic marketing, strategic human resource management, strategic finance, strategic operations management and also strategic management accounting.

3. Why SMA?
SMA is the response for the critique that conventional management accounting systems are inadequate for today’s environment
“Corporate management accounting systems are inadequate for today’s environment. In this time of rapid technological change, increasing customer bargaining power, vigorous global and domestic competition, and enormously expanding information processing capabilities, management accounting systems are not providing useful, timely information for the process control, product costing, and performance evaluation activities of managers”

4. Problems of Conventional/traditional MA
It is argued that conventional management accounting is excessively inward-looking and does not provide external market information, which is critical for strategic decision-making.
conventional management accounting is its detachment from the enterprise’s strategies and strategic planning exercises.
conventional performance measurement and control systems, which are largely responsibility accounting systems based on budgeting and variance analysis, including standard costing, exclusively concentrate on operational results, and do not measure the relative success of a firm’s strategic moves.
Conventional performance measurement and control systems are financial-biased

5. What SMA does?
Generates external market information critical for strategic decisions.
Carries out ‘strategic cost analysis’
Releases management accounting from factory floor and ‘product costing’
Makes top managers informed about the potential and actual environmental and market consequences of their strategic decisions
Links performance measurement systems with corporate vision, mission and strategies, and also strikes a balance between financial and non-financial measures

6. Conventional vs Strategic Management Accounting

7. Integrative Role of SMA

8. The extension and integration of management accounting with other management disciplines has mainly taken three paths.
First is the integration with strategic management themes of vision, mission and business strategy, etc., so that SMA would gain a capacity to link short-term actions and performance measures with the future ‘dreams’ of the corporate leaders or strategists.
Second is its move towards market analysis by integrating with marketing that deals with segmentation and positioning the company’s products/brands in final markets.
The third is the move towards manufacturing by integrating with operations management.