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Globalisation and technological advancement

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EMBA 513: Management Accounting Journal of Accounting & Finance- Vol. 13, No.2
1
Introduction
In this modern era of globalisation and technological advancements, day in day out business
practices are transforming and evolving. Whether it is in the field of Management, Marketing,
Human Resource Management or Financial/Management Accounting, new techniques, tools,
process and methods are coming to light which are making business activities less complex and
easy to complete.
In this report, the major focus will be revolved around Management Accounting practices and its
successful usage in the growing Japanese nation. At the same time, the failure of the Western
accountants to implement these new techniques will be dealt with as well.
This report is going to be based the journal “Management Accounting Practices in Japanese
Manufacturing Firms: An Empirical Investigation” taken from the Journal of Accounting and
Finance written by Hema Wijewardena & Anura De Zoyasa. Many references throughout the
journal article has indicated that it is the Japanese management accounting practices that have
enabled Japan to be so successful in the global frontier and those references will be critically
analysed to show how they have helped Japan in achieving a dominant position in the global
competitiveness.
The major problem of this study, as in the limitations, will be the extensive dependency on the
article itself because the journal article on its own has a few limitations. The responses of the
survey based on which the article’s conclusion was deduced could have problems of question
bias and misinterpretation. At the same time, the sample size may not be effective and not give
the overall picture of the situation. And as for this particular report, other limitations include the
lack of understanding on Japanese and American current business environment especially in
terms of Management Accounting.
Main Issue
How effectively has modern management accounting practices enabled countries to
prosper in the global business world?
Theme of Study
The major objective of this report is to analyse the effectiveness Japanese management
accounting tools and critically assess how they have help Japan in transforming itself into a
successful nation with a dominant position in global market. Several tools and techniques that
Japanese companies use to carry out their management accounting needs will be looked into in

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EMBA 513: Management Accounting Journal of Accounting & Finance- Vol. 13, No.2
2
this report and the American management accounting practices will be compared to show how
the former is more effective in achieving the required goals that are needed.
Analysis & Interpretation
From the case study, it could be deduced that most Japanese companies consider cost planning
and cost reduction tools such as target costing and value engineering at the product planning and
design stage as tools and techniques of extreme importance and significance.
From the survey carried out, it was evident that the responses that were given by the 209
companies proved that heavy emphasis was given on target costing, cost-volume profit analysis
and budgets in comparison to activity-based costing and standard costing. Placing such high
significance and importance on target costing indicates that when it comes to the innovation of
new products, Japanese companies place their complete attention to reduce cost in the planning
and design stage which is the foundation stage of the product. In other words, they focus on
making amendments and corrections in the very primary stage so costs can be controlled from
the very beginning.
In contrast to Japanese, America tends to focus less on reducing cost during the primary stages
and instead puts their attention on reducing cost once the product has started all its major
operations.
As mentioned earlier, in Japan the target costing has been regarded as the most major
management accounting tool that companies use to compete against international competitions
because Japanese prefer simple methods. They tend to be interested in charging overhead costs
directly to product lines rather than using the sophisticated overhead allocation criterion of ABC.
Target costing is a system under which a company plans in advance for the product price points,
product costs, and margins that it wants to achieve. If it cannot manufacture a product at these
planned levels, then it cancels the product entirely. With target costing, a management team has a
powerful tool for continually monitoring products from the moment they enter the design phase
and onward throughout their product life cycles. It is considered one of the most important tools
for achieving consistent profitability (“Target Costings,” n.d., para 1).
By solely focusing on target costing, the Japanese companies are reaping a wide range of
benefits. This includes increased overall profitability, reduced manufacturing costs, meets or
exceeds customers expectation for the product, savings in raw materials costs due to Just-in-time
inventory, results in product features and functions that customers value, reduction in design
changes after production begins, short product life cycles.

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Introduction In this modern era of globalisation and technological advancements, day in day out business practices are transforming and evolving. Whether it is in the field of Management, Marketing, Human Resource Management or Financial/Management Accounting, new techniques, tools, process and methods are coming to light which are making business activities less complex and easy to complete. In this report, the major focus will be revolved around Management Accounting practices and its successful usage in the growing Japanese nation. At the same time, the failure of the Western accountants to implement these new techniques will be dealt with as well. This report is going to be based the journal “Management Accounting Practices in Japanese Manufacturing Firms: An Empirical Investigation” taken from the Journal of Accounting and Finance written by Hema Wijewardena & Anura De Zoyasa. Many references throughout the journal article has indicated that it is the Japanese management accounting practices that have enabled Japan to be so successful in the global frontier and those references will be critically analysed to show how they have helped Japan in achieving a dominant position in the global competitiveness. The major problem of this study, as in the limitations, will be the extensive dependency on the article itself because the journal article on its own has a few limitations. The responses of the survey based on which the article’s conclusion was deduced cou ...
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