Application of strategic management accounting by large manufacturing companies in Nairobi

Abstract

This study was conducted with the objective of finding out the types and extent to which strategic management accounting systems are applied by large manufacturing companies in Nairobi. Developments in strategic management accounting practices have tended to reflect business circumstances in developed countries. No study has been done in Kenya investigating the practices of strategic management accounting systems and therefore this was an exploratory study. The study had three main objectives - To establish the type and extent to which strategic management accounting System is used in the Nairobi manufacturing sector. To identify the factors that influenced companies to adapt to strategic Management accounting systems. To establish any benefits / problems associated with using strategic Management accounting systems. To achieve these objectives, primary data was collected. Data was collected through personal interviews with the financial controllers/management accountants in the manufacturing sector. questioners. The interviews had both structured and unstructured The data was analysed using simple description statistics. During the analysing the manufacturing sector was divided into three strata based on sub-sector classification namely; agro-based industries, mineral and industrial sector, and construction and engineering sector. The fmdings from this study revealed that principally, large manufacturing companies based in Nairobi have adopted strategic management accounting techniques. The most commonly applied techniques being target costing and strategic cost analysis. Other strategic management accounting techniques such as balanced scorecard and value - chain analysis did not appear to have taken root among large manufacturing companies in Nairobi. The factors influencing manufacturing companies to adopt strategic management accounting techniques were observed to be mainly due to the need of assessing business environment and the competitors performance. Inaccessibility to extemal strategic information was highlighted as the major challenge in implementing strategic management accounting systems.