A Synergistic Approach to Planning and Control Using a Stakeholder Based Strategy

Abstract

No tool embodies the key role of management accounting in the activities of planning, organizing and control as the budgeting function. Yet, a dissonance between strategy and budgets handicaps organizations when responding to the changing environment (e.g., Gray 1986; Hope and Fraser 2003) and particularly the needs of stakeholders. Increasingly, management accounting has found a role in supporting the implementation of operational management techniques and strategy, particularly with the emergence of the BSC and developments in information technology. This paper integrates strategic mapping with ABC and EVA to provide an alternative to the traditional budgets for planning and control using stakeholder management as a sensory system to monitor and adapt to changes in the environment. Specifically, principles underlying stakeholder theory of management combined with the management accounting tools results in a synergy that complements the features of the tools while addressing the weakness of discrete application, thus supporting strategy in an evolving environment. This generalized representation of an integration approach can be more responsive to the changing environment that is consistent with the literature in management accounting developments. The paper illustrates this approach using a case study where a stakeholder engagement approach enables the firm to monitor and adapt to the environment and changing needs of stakeholders. The integrated approach complemented with the stakeholder feedback enables the firm to overcome some limitations of the applying the techniques individually; for example, for example, the “Cause-effect relationships in the BSC is more effectively managed with appropriate stakeholder feedback. Additionally, it enables the optimal use of information technology.

Keywords: BSC, ABC, Technology, Strategy