5.

Discuss the challenges of the SMA techniques

Definition of Strategic Management Accounting is information for the purpose of
supporting the strategic decisions of the organizations, which include long-term and foreign
elements (Drury, 2000, 924). In developing SMA techniques, most company need to understand
how consumers define quality in both goods and services offered. If a company pays more
attention to quality in its production processes, fewer problems are bound to occur when the
product is really satisfied by the customers. Management should make a commitment to measure
the performance of a product relative which can help managers to identify bearing on the quality
of a product or service, and therefore provide an opportunity for continuous improvement. There
are a number of challenges that company will be facing by the implementation of SMA
techniques.

The main challenges in implementation of SMA technique is almost companies are still
using traditional management accounting in producing information for decision making. In
todays competitive environment, mostly younger managers are more likely to use strategic
management accounting comparing to older ones. It is because older managers find it difficult to
evaluate new and fresh ideas quickly and to integrate them effectively in decision making. In
addition, older managers have more traditional accounting education and mostly spend of their
career in a traditional function in which professional independence and bookkeeping were key
performance variables (Pavlatos and Paggios, 2009b). Eventhough the traditional management
accounting was not relevant for decision making but because of that barrier old managers are
refused to change their management style. Thus, to fit the new global environment, the adopted
strategic management accounting is needed. The adoption of SMA is one of the management
accounting techniques that may be used to meet the new challenges facing by companies
(Simmonds, 1981).

Next, Malaysia still has not been fully adopted the practices of SMA compared to the
other countries. Factors such as risk avoidance by most managers, conservative firms and
expensive implementation are the examples why certain companies are still afraid to accept the
changes (Cadez & Guilding, 2008). The most common challenge faced by the companies are
both middle-level managers and subordinates will try to resist the new practices that company
decide to adopt. Fear of failure is possibly one of the strongest reasons why they are still
adopting an old technique. In others hand, the negative association between the managers
tenure and the use of SMA technique also contributes to this challenge. Some employer may feel
the need to stick to the past because it was a more secure; less risky. Hence, because of the
refusal to accept the implementation of new practices, it will make them less wanted by the
company (Sulaiman et al, 2004).


Furthermore, the lacking of expertise and knowledge in SMA areas such as just in time,
total quality management, target costing and life cycle costing will make some employees more
worried since it incurred the large amount of investment to be implement. Companies also need
to employ more people who are expert in those areas and give training to the existing staff so that
they can handle the new techniques more easily and quickly. Thus, it will cost the companies to
spend more expenses in order to applying the SMA technique (Sulaiman et al, 2004). The poor
education and training present a major obstacle in the development and implementation of a
quality program. For a company to produce a quality product, employees need to know how to
do their jobs. For SMA to be successful, organizations must commit to training employees at all
levels. Employees may against changes to new practices because the lack of sufficient
knowledge about the changes taking place in the organization or lack of expertise. They also do
not know much about the specifics of the changes, and no ones want to guide them for it.
Therefore they resist giving the chance to change (Newell and Dale, 2003).
Moreover, the challenges also arise from the regulation of the countrys government itself
as it might act as a trigger or barrier to the implementation of the SMA practices. Highly
protected economy might not encourage for any firms to adopting new changes. Some
companies are comfort on using the traditional techniques as they feel those techniques are still
relevance enough to meet the need and objectives of the company. The government might take
initiatives such as dropping protection schemes, if the firms in their need to be more competitive,
quickly acquire more recently developed and sophisticated accounting techniques. The absence
of governments effort might difficult the expansion of the new techniques (Chenhall &
Langfield-Smith, 1998). Political and pluralist bureaucratic environment factors also confronting
SMA technique implementation in the public sector. These factors refer to the environment of
the political system because success in government consists not just making the right decision
but also of mobilizing political support for the decision. Thus, to implement SMA technique in
public organization needs commitment and support of the top management who have real power
to change (Reyes, 2001).
Lastly, the challenge also comes from lack of awareness and support from top
management. After the company implemented a new technique, the top management has to
support and monitoring employees such as providing them with training. The reward systems
also need to be adapted for the employees as a symbol of appreciation. A quality implementation
program will succeed only if top management is fully committed beyond public announcements.
Most firms are not aware the importance of implementing SMA techniques which is it can bring
future economic benefits and having accuracy decision making for the firms. They have no clear
pictures on the differences between the management accounting field and financial accounting
areas which can lead to the lack of understanding concept. Therefore, top management should
embrace quality improvement programs no matter how far reaching the programs may appear the
monetary implications therein. Competition alone should not be considered as the single factor
that drives managers into implementing quality initiatives (Newell and Dell, 1990).
REFERENCES

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Mekonnen, N. (2011). Prospects and Challenges to Implement Business Process Reenginerring (BPR).
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Pavlatos, O. (2009). Strategic Management Accounting Techniques. The impact of CFO characteristics,
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Ratesh. (2012). Smart Investor. Barriers To Total Quality Management, 19.