Innovative Management in Cost Management Strategies

Advances in Finance and Accounting

Innovative Management in Cost Management Strategies

AMIN DANESHMAND MALAYERI Research Department, Amadgaran-e Andishe Ofogh Research and Development Institute Tehran, IRAN Also with World Wide Science Academy, School of Management KL, MALAYSIA Also with Research Department, INVENTORS CITY Academy Dubai, UAE [email protected] , [email protected] NIKOS E.MASTORAKIS WSEAS (Research and Development Department) http://www.worldses.org/research/index.html Agiou Ioannou Theologou 17-23 15773, Zografou, Athens, GREECE, www.wseas.org Also with Technical University of Sofia BULGARIA & Military Institutes of University Education (ASEI), Hellenic Naval Academy, Terma Hatzikyriakou 18539, Piraeus, GREECE [email protected] , [email protected] Abstract:- This study is examining the links between organizational culture and job cost management strategy to create value through the creation of cost-effectiveness and efficiency. The study examines the possible relationship between the two dimensions of organizational culture that is, organizational innovation and leadership in innovation, value orientation and the role of cost management strategies for value creation in the organization. The study includes a theoretical discussion about the links between explanatory variables and outcome. Based on theoretical knowledge through literature review is a model diagram developed to portray the present variables. The model provides insight into how innovative strategies can be an organization to create value influenced by culture. This model seeks to extend the literature on the relationship between observed variables. Under the proposed model, different hypotheses can be developed for empirical testing in different environments, to determine whether the model. The study has both theoretical and applied significance, because it provides a theoretical basis for further future empirical research in the same areas and Allied. Keywords: - organizational culture, cost management, innovative management

1. Introduction Until recently there has been commendable change in the way companies are managed ensure optimal

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allocation of economic resources to achieve costeffectiveness of creating value for business. Development and progress in technology and

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complexity of global companies that emerged from cross-border mergers and business combinations has created great pressure on companies to control the consumption of funds, ie the cost. In this stage, organizations need to be well integrated to ensure sustainable control in rapidly changing situations. Management accounting system used by aiding in the planning and decision making, and plans to ensure positive results and decisions. The system provides an innovative technology that is costmanagement strategies (CMS) in support of comprehensive financial planning process, set the path according to the company's financial goals for the coming years. Moreover, these practices encourage the creation of value by ensuring optimal utilization of economic resources to achieve efficiency and effectiveness of overall business. CMS help in adding value to control costs and achieve cost effectiveness and efficiency of research and development to sales service. 1.1 Evolution, development, decline and restoration of CMS Conventional CMS was established in the West and are based on a theory presented by Taylor, who stressed the importance of production efficiency with the minimum possible loss. Since this is a CMS developed in the West, and therefore has very deep roots in Western culture, through which Western organizations have been adopting and implementing the successful achievement of costeffectiveness and efficiency. In Western cultural organizations believe the competition, outstanding performance, and risk to be taken forward. The culture of competition and the risk is fully embedded in the CMS. Therefore, CMS is believed to be the solution, not only accounting, but also with the leadership of paragraph Zhuo, 2007). Historically, conventional CMS has developed substantially in the early 20th century, followed by slow growth in the coming years and faced stagnation CMS 1980 (Johnson & Kaplan, 1987). This situation led to the need for reviving the use of CMS to look again into the field of innovation management costs. This movement resulted in new technological innovations in cost management, such as, strategic cost management, the use of Balance Scorecard for cost management, Activity based costing, life cycle cost analysis, economic value added and Target Costing. At the same time, the various additional contribution of management

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accounting innovations in other areas such as business process reengineering, Kaizen. Total Quality Management, Six Sigma, etc. These events led to the increased importance of these strategies not only for accounting and cost management, but for the whole community action (Mersereau, 2008). These developments address the challenges facing the industry, trade and business in a way that cost control experts took as a catalyst to encourage the CMS to increase business efficiency. Despite the extensive benefits of CMS and the positive perception of the users of these strategies is less acceptance of CMS were observed over time. 1.2 The role of cost management professionals in the success or failure of CMS It is generally assumed that the factors responsible for less CMS acceptance for value creation is that CMS is not usually covered by the structure and organizational strategy, and because CMS does not provide the desired results due to the obstacles to the implementation of CMS. However, the problem lies not in the CMS itself, it lies in the action strategies. It is therefore necessary to improve the management of CMS. This improvement requires a change in the way they managed to cope with CMS. Generally, financial experts have been found willing to adopt changes to the conventional techniques and procedures (Mersereau, 2008). Therefore, to increase the effectiveness of CMS cost management professionals should be aware of current practices. Further changes are necessary in a functional organization structure and interaction between professionals, cost control and other professionals in the organization. These professionals manage costs to get a full acquaintance with people and organizations which foresee a run. They are considered by man to move the organization in achieving their goals. Again, this is the need for flexibility, willingness to change, proactive contributions, turned away from traditional methods and involvement in real problems. However, the success of this new role of cost management professionals must be prudent and creative. Therefore, cost management specialists are considered the most valued members of the organization because they understand and communicate how the organization managing the value chain affects cost, quality and value. It must therefore be able to communicate information,

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interpretations and recommendations effectively, otherwise the use of CMS is not beneficial to the organization. 1.3 The cost of management research Cost management is a discipline used, which creates and provides a sound theoretical foundations, applications and solutions in a practical context. Scientists management accounting, differential view of how cost management research should be conducted. He believes that through the intervention approach to conducting research in management costs, improve the relevance of the research carried out for practical purposes. In intervention studies, researchers may be restricted to key issues of cost control. They examine factors that affect cost management features. These studies will facilitate a deeper look into the issue open for new ideas and Jakkula Suomala, 2006). 1.4 Organizational culture and strategy of cost control This study explicitly addresses one of the possible factors responsible for the achievement of costeffectiveness and efficiency through the CMS. Although knowledge of the fruitful effects of these procedures, organizations are still not able to adopt and successfully implement this strategy, the desired results. Even organizations adopting practices are to some extent, do not get the desired Presenter Sudarwan & Timothy

Year 1996

Roxas & Stoneback Ittner & Larcker

1997 2001

Ittner & Larcker

2001

1.5 The importance of the study The study has both theoretical and applied significance. Provides insight into the likely impact of organizational culture on CMS to create value for the organization. The study helps to explain any differences in CMS results from the interaction of variables. It provides a theoretical basis for further empirical research in the same field and related disciplines in the future. It provides an opportunity to determine the strength of the impact of organizational culture dimensions on the effectiveness of innovative CMS. 1.6. Innovative CMS chain

Findings An empirical relationship exists between the change in cultural values, as conceived by Hofstede's theory of the five dimensions of cultural values and the change in accounting values as captured by Gray's four dimensions. Accounting systems adopted by countries reflect culture. Empirical findings from studies related to budgeting and financial control practices are giving way to research on a variety of new techniques such as activity-based costing, the balanced scorecard, strategic accounting and control systems, and economic value performance measures. Apart from the traditional emphasis on financial decisional analysis and budgetary controls, managerial accounting has evolved to encompass a more strategic approach that emphasizes the identification, measurement, and management of the key financial and operational drivers of shareholder value.

2. Research Methodology This section contains the research methodology of the study. The above discussion emphasizes the need to examine the links between variables,

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results. The number of factors are responsible for less acceptance and lack of successful implementation of these practices. One major factor is the organizational culture of individual and organizational aspects, which ultimately prevents the adoption and successful implementation of these practices. The previous discussion highlights the need to study the role and importance of organizational culture and CMS achieve cost efficiency and effectiveness. The current research is to explore the connection between these variables. This leads to the objective of the study to examine the effects of interaction variables, organizational culture and CMS.

organizational culture and success of CMS on value creation through cost control and efficiency. The study includes a theoretical discussion about the links between independent variables and output variables. Based on theoretical knowledge through

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literature review is a model diagram developed to portray the presentation of possible synergies between variables. Further studies may be performed to test the model and empirically verify links between the proposed relationships between variables in different settings. 2.1. Variables and their relationships 2.1.1. The strategy of cost control I used content management system for value creation in the organization, from research and development to the stage of sale of services, strategic cost management, resource management, Balanced Scorecard, Activity Based Management, Functional analysis, target costing Activity Based Costing, key performance indicators and Zero Based Budgeting. 2.1.2. Organisational culture Conciliation (1983) classified organizational culture as external and internal. This study deals with the organizational culture from the inside perspective. Two internal dimensions of organizational culture, organizational innovation represent an individual level, size, and value orientation in innovation management is the organizational level dimension are taken into account.

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2.1.3. The value orientation of management innovation and CMS The degree of value orientation towards innovation management is the importance of innovative activity is the management of the organization (O'Reilly et al., 1991). Therefore, a higher level of value orientation towards innovation management in the organization will mean that management appreciates innovative favorable. This suggests a positive relationship between the variables leadership value orientation towards innovation and CMS. 2.1.4. Organizational innovation and CMS Since individuals take action in accordance with their ideas, is so variable organizational innovations expected impact on innovation strategy in the organization. If the organization innovation is perceived as less innovative, less people will be motivated to adopt this innovation. This will result in lower chances of success of this innovative technology. In an organization where members are highly participatory and involved in the development and promotion of innovation, results will vary from organizations to which members are less involved.

3. Development of model Based on the above discussion of possible relationships between the variables studied, the model has been developed:

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Fig 1. Cost Management Strategies value cycle

4. Conclusion and Recommendations The model suggests the possibility to influence the effects of variables of interest in value creation in the organization, through cost-effectiveness and efficiency. The model intends to provide insight into the effects of variables affect the thinking can be as innovative strategies in the organization be affected by variables of interest. This model seeks to extend the literature on the relationship between culture and CMS. The model sheds light on the

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complex nature of interactions between variables that can help the organization plans to adopt several innovations to achieve cost competitiveness. It can help them deliver more relevant information to control and manage costs effectively. Under the proposed model, different hypotheses can be developed for empirical testing in different environments, to determine whether the model. Similar conditional relations should be explored, which can be found between variables. The organization of choice of innovation strategy must take into account the effects of cultural dimensions to the desired benefits. Studies must be

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interpreted within the theoretical problems. Information is recorded in this study should be further investigated. References: [1]

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