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HONG KONG GOOD FOOD COMPANY LTD. (A): ADOPTION OF STRATEGIC MANAGEMENT ACCOUNTING

Reference No. 15/006AC Publication Year 2015
Author(s) Joseph Yau
Company Hong Kong Good Food Company
Industry Food and Beverage
Geographic setting Hong Kong
Functional Area Accounting and Control

Synopsis

As a pioneer, in 1981, Ken Simmonds defined Strategic Management Accounting as “a form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information.”   Over the last 34 years, Strategic Management Accounting was widely adopted by large companies to develop and monitor business strategies by using management accounting data on both their own companies and their competitors.

Was strategic management accounting widely adopted in Hong Kong?  If not, what were the hurdles that hindered its adoption?  Could strategic management accounting be adopted in small and medium-sized Hong Kong enterprises?  This case will shed some light on these questions for accounting students and practitioners.

Learning Objectives

This case introduces the basic concepts, principles and applications of strategic management in a manufacturing, sales and distribution enterprise.  It also highlights the importance and relationship between the formulation of business strategy and employment of strategic management accounting.  To this end, the roles played by the management accountant and the establishment of companywide online enterprise resource planning (ERP), including management information, decision support and strategic information systems (MIS/DSS/SIS) are also emphasized in this case.

Student will learn

1. The basic concepts of strategic management accounting.
2. The relationship between management culture and a management information system.
3. How can strategic management accounting facilitate the formulation of business strategy?
4. How can internal and external financial and non-financial information become the databases for strategic management accounting?
5. Who are the creators and end-users of strategic management accounting systems and what are their doubts about employing strategic management accounting?

Suggested Questions:

1. Strategic management accounting concepts have been accepted by HKGF Company Limited.  What are the actual constraints in applying them?
2. What are the implications of this case study for the management accountants?

This case was substantially supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (UGC/IDS12/14).