(BQ) Part 2 book "Accounting an introduction" has contents: Costing and pricing in a competitive environment, budgeting, accounting for control, making capital investment decisions, financing the business, managing working capital. | 7/08/2007 11:44 CHAPTER Page 372 11 Costing and pricing in a competitive environment Introduction n recent years we have seen major changes in the business world, including deregulation, privatisation, the growing expectations of shareholders and the impact of new technology. These have led to a much more fast-changing and competitive environment that has radically altered the way in which businesses are managed. In this chapter, we consider some of the management accounting techniques that have been developed to help businesses maintain their competitiveness in this new era. We begin by considering the impact of this new environment on the full-costing approach that we considered in Chapter 10. We shall see that activity-based costing, which is a development of the traditional full-costing approach, takes a much more enquiring, much less accepting attitude towards overheads. We shall also examine some recent approaches to costing that can help lower costs and, therefore, increase the ability of a business to compete on price. Management accounting embraces both financial and non-financial measures and, in this chapter, we shall consider the increasing importance of non-financial measures in managing a business. These include the Balanced Scorecard approach, which seeks to integrate financial and non-financial measures into a framework for the achievement of business objectives. We shall go on to consider the idea of shareholder value, which has been a ‘hot’ issue among managers in recent years. Many leading businesses now claim that the quest for shareholder value is the driving force behind strategic and operational decisions. In this chapter we consider what the term ‘shareholder value’ means and we shall look at one of the main methods of measuring shareholder value. Lastly, we shall see how, in theory and in practice, a business can use costing information to aid pricing decisions. This will pick up some of the points on relevant cost .
