Management Accounting Is Extremely Beneficial For Any Business Leader

813 Words Sep 22nd, 2015 4 Pages
Management accounting is extremely beneficial for any business leader. It is futuristic. The tools and techniques of management accounting give a lot of insights through which proper decisions can be made by maximizing the profits and minimizing the costs of the company. With the help of management accounting, managers will be able to do three major tasks – Planning, Controlling and Decision Making (Reference 20). These three are the most important tasks for any organization in order to run successfully. Looking at the current situation of Fonterra, there is a lot of scope for it to improve and do even better. Moreover, applying management accounting concepts will actually give a clear road map of what steps should be taken.
At this stage when there is surplus of milk in the market and the competition is getting higher, it would be advisable for Fonterra to get all the information of their competitors which is legally possible and develop strategies to stay ahead in the market. This is a very important aspect of management accounting. It is called Enterprise Risk Management (Reference 21).
Another very important concept of management accounting is ‘BUDGETING’. Budgeting is a key managerial accounting aspect that helps managers to properly allocate their cash and stay within the spending limits. The budget is generally made for the whole year and later the actual spending is compared to the budget made. As the dairy prices are not stable at this point in the market,…

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