Advanced management accounting

The role of management accountant in every organisation is to provide support in making competitive decision and this is through collecting and processing information and then communicating the information to management who will use it in planning, controlling and evaluating the processes and strategies for the company (Keith, 2012). In the case of Air New Zealand, the management accountant should assist the management to come up with a strategy by which they will be able to add the number of passengers to the airline in the at a time when the company is facing stiff competition and prospects of low profits. The likelihood of low profits can be attributed to the falling oil prices that means that the airfares have to drop driven by the same. Thus the manager’s initial responsibility is to help the organisation to set a goal and determine the way in which fulfilment of the goal will be achieved. Having increased its capacity by 12 percent the accountant has to assist in laying a strategy that will ensure that, the capacity is fully utilised by lowering the fare prices through discounting and at the same time maintaining and improving the company’s profitability.

After formulating the strategy, the accountant should assist the management with ways of implementing it. Implementation process involves integrating the strategy into the company’s goal, putting control measures in place and directing the efforts of the strategy towards gaining a competitive advantage (Keith, 2012). Thus the management accountant should assist the company on how to follow the guidelines of the budget to ensure that the efforts to fill the vacant seat does not lead to big discounts that will lead to loss making. The manager should also ensure that the discounts offered is significant enough to allow for competitive airfares both domestically and internationally and it can be adjusted in accordance to the changes in the fuel prices.

 The evaluation process involves cost accounting. The management accountant should carefully do the cost-benefit analysis, in order to provide to the company financial information on the progress of the set strategy. Thus the company will be able measure the impact of giving discount on the capacity of the airline in terms of additional passengers. The manager should also provide data on the benefits arising from the strategy so that the company can know whether it has been able to increase the sale of services to both domestic and international passengers.

 

Reference

Keith, W. (2012). Strategic Management Accounting: Routledge.9-10