The Basic Function Of Strategic Management Accounting Essay

The Basic Function Of Strategic Management Accounting - Essay Example In terms of capital investment decisions, Tesco Plc should set up more grocery outlets in other communities. Based on prior feasibility studies done on a prospective new location, Tesco will use both investor funds (retained earnings reserved for branch expansions), and long-term borrowings to finance another big Tesco grocery outlet. In terms of the evaluation of multidivisional companies, Tesco Plc should conduct classify each multi-divisional company as cost and revenue centers. Each company will generate its own financial statements. Thus, the financial statements will indicate the number of a multi-divisional company under Tesco Plc that generates profits. Likewise, the same financial statements will vividly indicate the number of multi-divisional companies generating net losses (Garrison, 2003). The strategic management accounting system of Tesco Plc focuses on ascertaining if the company’s final reports conform to international accounting standards.The strategic managem ent accountant of Tesco is a driving force to develop a global accounting system is the desire to underwrite securities in any, or all, of the world's capital markets using a single set of financial statements. Currently, the Tesco Stocks are listed in the stock exchanges. A positive incentive for a capital market to support a global accounting system is the enhancement of its volume of business by being able to participate in underwritings in other capital markets.   Reinforcing the positive incentive is the realization that a capital market, which ignores the development of a global accounting system, may find itself with a unique set of accounting standards while the rest of the world relies on a common set of accounting standards. This would lead to an irretrievable loss of business (Brigham & Houston, 2002). Heely (1993;25) emphasized â€Å"the globalization of corporate activity, coupled with