Abstract
This chapter outlines and discusses the framework of contemporary management accounting known as ‘value-based management accounting’. At present, under the severe competition in the international markets, short-lived consumer sentiment and rapid change in technology, the management should enhance not only the effective and efficient value of product but also enterprise value for competitive advantage. This value management should look so forward and be so proactive as to be not swung around risk and uncertainty, while management accounting should also serve the management as a supplier of useful information on risk and opportunity.
Therefore, this chapter focuses on profit opportunities and risks, or what lies behind profits and losses, and tries to build models which are suitable for applying variance analysis, and to do so with specific reference to Japanese management practice in order to clarify the characteristics of value-based management accounting. At the same time, these analytical models are also based on the integration of quick feedback and reliable feed-forward controls and support the visual and virtual management system. This chapter begins by conceptually examining the relationship between value and a company, clarifies the structures and features of value-based management, and tries to establish a theoretical model of proactive variance analysis, which would go forward to the formation of a practically analytical model.
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Notes
- 1.
Adam Smith also pointed out that “The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use’; the other, ‘value in exchange’” (Smith, Adam, Inquiry into the Nature and Causes of the Wealth of Nations, 1776 (Modern Library: New York, 1937, p. 28)).
- 2.
Andon is a lamp that lets other workers know the need for the cooperative resolution of a problem when it occurs on an assembly line. When a worker at the problematic line draws the switch cord, Andon goes on and off, and other workers know the problem and cooperatively resolve it with hm.
- 3.
“Radio-frequency identification (RFID) is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders. An RFID tag is an object that can be attached to or incorporated into a product, animal, or person for the purposes of identification using radio waves. All RFID tags contain at least two parts, one is an integrated circuit for storing and processing information, modulating and demodulating a radio frequency (RF) signal and perhaps other specialized functions. The second is an antenna for receiving and transmitting the signal” (Wikipedia, http://en.wikipedia.org/wiki/RFID). “Ultra High Frequency (UHF) offers a greater communications range than other frequency bands. As a result, the use of the UHF RFID system for full traceability of products has been growing in the retail and logistic industries, UHF tags, however, are subject to multi-path interference, an inherent problem for electromagnetic signals, which can make a RFID tag unreadable even if it is within the range of the reader” (NE Asia Online 2006 March 30, http://neasia.nikkeibp.com/dailynewsdetail/003799?ST=English).
- 4.
- 5.
See Shiseido, ‘Development of Virtual Make-Up Picture System’: http://www.sankei.co.jp/enak/2007/jam/kiji/29lifemake.html.
- 6.
See Chopp and Paglia, ‘Build a Culture of Value Creation’: http://gbr.pepperdine.edu/021/print_vbm.html.
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Nishimura, A. (2019). Conceptual Analysis of Value-Based Management and Accounting: With Reference to Japanese Practices. In: Management, Uncertainty, and Accounting. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-10-8989-3_3
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