Management, uncertainty, and accounting case studies, theoretical models, and useful strategies

Akira Nishimura Management, Uncertainty, and Accounting Case Studies, Theoretical Models, and Useful Strategies Management, Uncertainty, and Accounting Akira Nishimura Management, Uncertainty, and Accounting Case Studies, Theoretical Models, and Useful Strategies Akira Nishimura Beppu University Oita-City, Oita, Japan ISBN 978-981-10-8988-6    ISBN 978-981-10-8989-3 (eBook) https://doi.org/10.1007/978-981-10-8989-3 Library of Congress Control Number: 2018944442 © The Editor(s) (if applicable) and The Author(s) 2019 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Cover illustration: © Johannes Hulsch / EyeEm Cover design by Ran Shauli Printed on acid-free paper This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Preface and Acknowledgments “What is accounting?” has been my research theme for a long time, ever since Professor T. Okabe, my dissertation advisor, posed this question to me at the graduate school of Kyoto University This question has extended to an inquiry into the essential nature of management accounting and management since I made management accounting research my career As part of this inquiry, I wrote Management Accounting: Feed-Forward and Asian Perspectives (Palgrave Macmillan, 2003), in which, based on the practical connection between the creative control function of management and the cognitive control function of accounting, I defined the function of management accounting as cognitive control for business value creation From this, I analyzed new management accounting practices and theories in the 1970s and their future directions from a feed-forward viewpoint and through comparative studies of Western and Asian management accounting, after clarifying the fundamental development of traditional management accounting Coinciding with major global changes in the political economy over the 14 years since this publication, business management and accounting systems have undergone great changes and become more complicated As the essential natures of these systems become more intangible and incomprehensible with greater uncertainty, it is increasingly necessary to examine them in relation to uncertainty and risks from the well-honed feed-forward viewpoint The present book examines the relationship of management and management accounting with uncertainty and explains the contemporary situation and structure of management accounting based on this examination v vi   PREFACE AND ACKNOWLEDGMENTS This book thus aims to clarify this relationship fundamentally through a historical and global examination of contemporary management accounting and to understand both their positive features (harmony and social creativity) and negative applications (discord and private manipulation) To clarify the thesis of this book, it is desirable to sketch the position and point of each chapter briefly in the context of the overall conceptual framework of the book In reference to the relationship of management and management accounting with uncertainty, Chap introduces basic concepts such as workmanship, emulation, control, scientific management, and standard costing through the advanced early twentieth-century theories of Taylor, Harrison, Veblen, and Knight Following these theories, this book presupposes uncertainty as an unavoidable phenomenon in human society, while remaining convinced of the human intelligence and power to control it Neither firms nor human beings can escape uncertainty because the human instinct for workmanship and a propensity for emulating each other in efficiency easily become negative work habits (“irksomeness of labor” in Veblen) and wasteful and inefficient competition in a competitive ownership society Firms cannot avoid uncertainty as long as their subsistence relies on competitive production However, they also have instinctive intelligence and power to control risk and uncertainty through workmanship and emulation for efficiency Management and management accounting take the form of measurement, evaluation, and control to transform conflict and discord into harmony and stability, and their development represents the process by which humans and society have endeavored to cope with risk and uncertainty to secure reasonable production and distribution for their existence However, emulation for efficiency has become the emulation for the perpetual ownership of wealth beyond harmony and stability, causing intensified uncertainty This also results from human propensities Management and accounting are abused in this case, and accounting in particular is improperly used to deceive society in the form of window dressing accounting These behaviors degrade business value Society thus asks accountants to secure business value through harmony between management accounting and financial accounting and to make trustworthy disclosures of the corporate financial situation Enterprises must organically manage opportunity and risk, and managers should equip themselves with virtuous ethics through regulation, which plays an important role in controlling the enterprise’s risks and uncertainty   PREFACE AND ACKNOWLEDGMENTS     vii Accordingly, Chap examines the contemporary situation of e­ nterprise governance and internal control systems and their meanings, with reference to enterprise risk management This examination is closely related to the contemporary function of management and accounting—transforming conflict and discord into harmony and stability In this case, how does the special cognitive control function of profit relate to uncertainty? When management and accounting must plan for and control opportunity, risk, and uncertainty for strategic management, profit management becomes more significant; even if profit is measured by a feedback method, its planning must be practically founded on the feed-forward recognition of opportunity and risk that is finally incarnated as accounting income Under present global and forward-looking business strategies, enterprises must forecast and control profit opportunities and risk or invisible value that is transformed into profit or loss If managers cannot recognize this transformation of business value from opportunity and risk to accounting income, they cannot properly make strategic decisions to create business value Regarding this, Chap discusses the concept of business value Simultaneously, opportunity is qualified as profit opportunity in terms of business strategy from the same viewpoint of probability as risk Both profit opportunity and risk hold important positions in strategic profit management I thus adopt business value as a concept that connects profit opportunity and risk with accounting profits in business management This examination raises the next subject: the meaning of accounting (cognitive control function) that plans, measures, analyzes, and evaluates their intricate relations To address this, Chap first defines the concept of uncertainty, and then profit opportunity and enterprise risk, referring to representative scholars in the fields of business management and accounting This clarifies how management and accounting recognize and control uncertainty in business planning, implementation, and evaluation This discussion obtains the important meanings of Demski’s ex post programming model in accounting control of uncertainty, in which the senior managers’ forecast ability and the control ability of middle and lower management can be measured and evaluated through forecast profit (or opportunity) variance and opportunity cost variance by using linear programming and profit variance analysis This model is forward-looking in controlling uncertainty and enterprise risk, even though it is structured on feedback control This book considers the epoch-making idea of this model on risk management in comparison with traditional management accounting and, with viii   PREFACE AND ACKNOWLEDGMENTS c­ ontinual reference to this model, analyzes the features and structures of contemporary enterprise risk management Chapter practically examines profit opportunity and risk management in connection with the strategic innovation and organizational structure (i.e., resources and organizational capability) of an enterprise that innovates, because the probability of profit opportunity and enterprise risk cannot be predicted, regardless of innovation and organizational structure This book thus pays special attention to Simon’s “opportunity space” and to Haynie’s concept, which considers the relation between opportunity and resources This chapter examines the exploitation of profit opportunity and the elimination of enterprise risk in the three latest innovations in production and management: the lean production method, agile supply chain systems, and global innovation The chapter simultaneously elucidates the function of management accounting and profit design systems as an expansive form of cost design, linking these with innovations and continuous improvements (Kaizen in Japanese), in terms of profit opportunity/risk-based variance analysis and feed-forward control This examination leads to a strategic management control model that copes with uncertainty through opportunity/risk variance analysis and innovation or improvement under a cycle of feed-forward and feedback control Moreover, the present meaning of comprehensive opportunity/risk management must be studied from the perspective of the strategic management accounting model The strategic management accounting model plays an important role in preparing proactive information and providing managers with variance information to exploit profit opportunities, transform risk into profit opportunity, and minimize risk Previously, some accounting scholars have described the gap between strategic and organizational requirements and financial accounting information as a defect in traditional management accounting From this, they have developed activity-based costing (ABC) and balanced scorecard (BSC) based on nonfinancial information However, even if an accounting system measures nonfinancial information, as long as it depends on feedback control, there will be a critical gap between information and forward-looking strategies, and the system will be useless for strategic and forward-looking organizational management Considering these gaps, strategic management accounting must be forward-looking, globally cognitive, and comprehensively control oriented (Chap 6) Thus, Chaps and clarify the direction and problems of contemporary management accounting   PREFACE AND ACKNOWLEDGMENTS     ix Chapter examines cost design as a recent strategic management accounting method from a forward-looking, global viewpoint As consciousness of environmental protection and health and safety deepens, some Japanese companies spatially and temporally introduce risk management into cost design, for example, transforming it into an environmentally conscious cost design system that includes supply chain and product life cycle costing This transformation aims at reducing risk in the production process from suppliers to their own factories and exploiting profit opportunity through synthetic risk management, based on the integration of high quality and low cost This chapter introduces an environmentally conscious type of cost design seen in Japanese enterprises and examines the situation of Japanese enterprises in supply chains and environmental protection from the viewpoint of cost and risk management Chapter touches upon a comprehensive profit opportunity and lost opportunity control (COLC) model into which profit opportunity/risk management and feed-forward control are integrated, after summarizing the cognitive control of uncertainty in existing management accounting and reevaluating and extending the meaning and structure of cost design with reference to the theoretical and practical development of management and accounting This COLC model, as well as unified management of profit opportunity and risk, represents a framework of contemporary management accounting that copes with uncertainty in pursuit of sustainable business growth The chapter examines the risk recognition of Japanese firms and suggests the application of the model to risk management and its disclosure (accountability) Chapter applies this model to foreign exchange risk management, which uses the COLC model to plan for profit opportunity and risk, encourage proactive measures (i.e., Kaizen, continuous improvement) against financial risks, and provide protection against unmeasurable change in derivatives and hedge accounting Integration of the COLC model with a profit design system allows wider application of management accounting as a result of its strong strategic direction and proactive cognitive control function In the next chapter, before turning to the examination of Chinese business management and enterprise risk management, it is helpful for further development of management and management accounting to describe the synthetic relationship between value, environment, risk, cost design, and profit design as its extended figure to which this book refers in connection with uncertainty x   PREFACE AND ACKNOWLEDGMENTS As described above, this book clarifies the meanings of strategic ­ anagement accounting under strong economic uncertainty by shifting m the examination process from enterprise governance through the relation between uncertainty and management accounting to the COLC model and the unified management of profit opportunity and risk The remaining two chapters describe changes in management accounting and contemporary enterprise risk management in Chinese enterprises, because no planned economy or state-controlled society can be immune to uncertainty or risk, as long as there are negative labor habits (“irksomeness of labor” in Veblen) and wasteful, inefficient competition Chapter 11 depicts changing management and accounting systems in Chinese firms It describes expanding strategic businesses in the global economy, progressing from Chinese domestic markets to Asian, African, and Western markets by means of governmental support and price strategies, as well as modular production and cheap labor costs In relation to these businesses, I refer to the reorganization of state-owned enterprises through absorbing social capital and private enterprises Correspondingly, as competitive Chinese enterprises have grown in the international market, a gap has also expanded between these global state-managed enterprises and small- to medium-sized enterprises The business model of global enterprises using cheap labor, modular production, and agile supply chains to increase competitive power internationally has overtaken the Japanese style of selfdeveloped technology and management in the international market in terms of short-term price strategies However, this method cannot also escape risks and uncertainty Thus, Chap 12 investigates characteristics and structures of governmentbased enterprise risk management in contrast to the COLC model As governmental strategy in China shifts from ‘absorbing foreign power’ to ‘going global’, enterprise risk intermingles deeply with political risk, and it becomes more difficult to recognize and control enterprise profit opportunities and enterprise risk proactively by using accounting information and methods Governmental support and the evasion policy of bankruptcy in the securities market obscure the relation between profit opportunity and risk, simultaneously expanding, for 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Enterprise Management, 11, 28–30 ZTE Corporation Annual Report (2004, 2006, 2007, 2008, 2010, 2012, 2014) http://zte.com.cn/global/about/investorrelations/corporate_report/ Annual_report Index1 A Absolute truth, 14, 191 Absorbing foreign power, x, 260, 290–292 Accountability, ix, xi, 32, 42, 150, 203–208 Accounting department, 12 education, 48 in Japan, 52 manipulation, 42 scandals, 24 Accounting profit, vii, 21, 74, 97, 113 Activity based-costing (ABC), viii, 54, 63, 134–138, 148 Activity-based standard costing, 114 Allowed cost, 119 Anthony, Robert N., 81–84 Arrogance and sycophancy, 87, 138 ASOBAT, see A Statement of Basic Accounting Theory A Statement of Basic Accounting Theory (ASOBAT), 14, 82–83 Attribute costing, 132 B Balanced scorecard (BSC), viii, 43, 131, 134–138, 218, 267, 272 with risk management, 218 Bankruptcy and corporate governance in Japan, 37–41 Becoming large, 288 Becoming strong, 306 Behavioral science, 14, 26 Berle, Adolf A., 76 Berlin, S., 154 Big data, 22 Bipolar diversity in the cellular phone industry, 272 Bodao Company, 261–263, 280n3 Bottom-up learning, 134 BSC, see Balanced scorecard Bubble economy, 38 Budgetary control, 5, 129 Budgeted profit, 120 Buffett, W., 225 Build to Order’s system, 279 Built-in cost and quality, 155 Bureaucracy, 36  Note: Page numbers followed by ‘n’ refer to notes © The Author(s) 2019 A Nishimura, Management, Uncertainty, and Accounting, https://doi.org/10.1007/978-981-10-8989-3 341 342   INDEX Burnham, J., 76 Business culture, 92 enterprises, 53, 121, 144 governance, 41 opportunity, 103, 189 uncertainty, 9, 289 value creation, 143, 189 Businessmen, 7–9, 11, 24 C Canon Electronics Inc., 60–61 Cash flow discount, 53 Central enterprises, 284, 306 CEO, see Chief executive officer Certificated public management accountants (CPMA), 47 CFO, see Chief financial officer Chandler, Alfred D. Jr., 76 Chief executive officer (CEO), 22, 88, 145 Chief financial officer (CFO), 22 Chief information officer (CIO), 22 Chinese cellular phone manufacturers, 258–260 Chinese multinational enterprises, 255 Chinese production and management, 266–272 Chinese type of management accounting, 257, 271, 277 CIO, see Chief information officer Cloud computing, 22 COLC, see Comprehensive profit opportunity and lost opportunity control Collective company, 275 Collins, J., 89, 138, 186 Combined or modular management system, 268 Committee of Sponsoring Organizations of the Treadway Commission (COSO), 34, 65, 187 Commodity price risk, 215 Comparison of net expected loss among projects, 139 Competitive advantage, 52, 104, 129, 157 Competitive strategy, 16, 62, 119, 159, 194–196 Comprehensive product design approach, 154 Comprehensive profit opportunity and lost opportunity control (COLC), ix–xi, xxi, 21, 189, 196–208, 217–220, 232–238, 252, 307–309 and hedge accounting, 224–231 Comprehensive risk management, 48, 140–146, 284 effectiveness, 287 Comprehensive Risk Management in Central Enterprises, 283 Concurrent engineering, 15, 156 Conformance, 31, 42 Consumers satisfaction, 158–169 Contemporary management accounting, v, viii, ix, 97, 137, 186, 216 role and function, 31, 216 Contemporary strategic management, 143 Controllability, xi, 19, 42, 74–77, 120, 207 Cooper, R., 113, 137 Corporate culture, 41, 207 Corporate governance and business governance, 31, 42 international development, 32 through the transparency and controllability of enterprise risk management, 140  INDEX     COSO, see Committee of Sponsoring Organizations of the Treadway Commission Cost design in comparison with the standard cost system, 155 in Japan, 113–116, 148 variance analysis, 86 See also Genka Kikaku Cost design model, 16, 197, 249 Cost improvement, 147, 193–195, 218, 234, 249 Cost leadership, 130, 263 Cost management strategy, 153 Cost reduction and the shortening of lead time, 114 Cost table, 62, 156, 176n3 Cost-variance analysis, 5, 86, 193 Country risk, 142 CPMA, see Certified public management accountants Crowd wisdom, 109 Culture, 56, 92, 114, 278 D Databases and cloud computing, 21 Debt-ridden enterprises, 304 Decision-making process, 2, 43, 77–86, 105, 132, 144, 199, 307 Dell, 108, 279 Demski, J. S., vii, 14–16, 84, 85, 116, 190–193 Demski’s model, 20, 84–86, 191–193 Denso Corporation, 165 Derivatives and risk management, 224–225 strategy, 215 Design for environment (DFE), 154, 161–163 Differential benefit, Differential profit, 9, 116 Differentiation of business, 130 343 Double-loop feedback and learning process, 136 Double-loop feedback process, 136 Drury, C., 131–133 E ECCD, see Environmentally conscious cost design ECM, see Environmentally conscious manufacturing Eco-procurement (EP), 161–163, 170–174 ECPs, see Environmentally conscious products Efficiently and effectively, 55, 168, 251, 307 Efficient management, 4, 103 Emulation, 7, 25 Enron, 32, 185, 283 Enterprise, vi, 3, 130, 185, 215 Enterprise governance, vii, x, 31–45, 186, 277 Enterprise Internal Control Standards, 283 Enterprise risk management, 65, 147, 185–209, 243, 283–311 and profitability, 297–305 Enterprise-self management, 285 Entrepreneur, 6–15, 76–80, 98–102, 227 Environmental consciousness, 153–155, 246, 277 costing, 153 cost management, 153 costs, 153, 175 efficiency index, 167 impact, 153, 167–170, 177n5 impact reduction performance, 165 impact reduction targets, 164 management, 153–155, 245, 256 protection, 3, 23, 45, 150, 174–176 protection risks, 290 344   INDEX Environmentally conscious cost design ECCD), 153–176, 200, 248–251 Environmentally conscious manufacturing (ECM), 161–169 Environmentally conscious profit design, 23 Environmentally friendly cost design, 155 Environmentally friendly products (ECP), 161–163, 171, 177n5 Estimated cost, 20, 62, 119, 146, 156, 193, 249 Estimated profit, 21, 85, 119, 146, 194, 220, 234 Evaluation, vi, vii, 2, 15, 55, 65, 85, 100, 132, 192–197, 238, 244, 292 Ex ante optimum profit, 15 Ex ante process, 66 Excess capacity, 302 Exchangeable properties, 53 Executive, 6, 77–81, 120, 202 Expected loss, 67, 139, 187 Expected or target profit, 219 Exploitation, viii, 99–102, 187, 295 Ex post profit, 15, 84, 116, 191–192 programming system, 192 Ex post system, 84, 116, 145, 191–195 External improvement, 219 External innovation agile supply chain systems, 106–108 and governmental risk managements, 310 External reliance of supply, 106 F Fan-shaped market strategy, 268 Feedback (reflective) control, 13, 44, 121 Feed forward (proactive) control, 20, 137, 146, 333 and feedback control loop, 20, 137, 146 integrated cycle with feedback control, 117 integrated loop, 20 Feed-forward strategic management accounting system, 121, 146 Finance company, 292–294 Financial crisis (2008-2009), 140, 205, 215, 277 Financial reporting, ix, 58, 144, 205, 238 Financial risks, ix, 58, 144, 205, 238 Flexible innovation, 106 Flexible supply chains, 110 Ford, 87 Forecasted information and the variance, 80 Forecast future, 77, 103 Foreign exchange earnings, 221 Foreign exchange risk, ix, 16, 215–218 Four levers of the control, 100 Fujitsu, 59, 109, 248 Fuji Xerox Company, 115 Futaba Industrial Company, 62 G General Motors (GM), 87–89, 186 Genka Kikaku, 113, 146 Global Automotive Declarable Substance List, 174 companies, 108, 115 innovation, viii, 108–113, 136 network, 106 posting system (GPS), 110 warming prevention, 160, 246 Globalization, 51, 257–266 Going concern, 52 Going global, x, 288–290 Governmental administration, 284  INDEX     Govindarajan, V., 109 Grameen Bank, 110 Green, 154 cost design, 155 procurement, 161, 246 Purchasing Guidelines, 171 and socially responsible partnership, 173 supply chains for environmentally conscious product, 247 target costing, (see also Cost design), 152 Group companies, 292–296 Guilding, C., 132, 133 H Harmony, vi, vii, xi, xii, xxiv, 4–6, 24, 57, 139, 238, 310 Harrison, G. C., vi, 5, 11–13 Haynie, M. J., viii, 99–101 Health safety and environmental protection risk, 290 Hedge accounting, 215, 238 and the COLC model, ix, xxiii, 224–232 Hedge trading, 222 Heding accounting, xi, 224–227 Hedging and the comprehensive profit opportunity and lost opportunity (COLC) model, 225–227 Heuristic computer programs, 81 problem-solving techniques, 81 Hilton, W. R., 54 Hino Motors, 222 Honda, 87, 172 Horváth, P., 154 Huawei, 260, 272–276 technology strategy, 267 Hybrid accounting, 133 Hybrid control system, 173 345 I IBM, 110 Japan, 166 Imai, K., 258 Imai, N., xii, 215, 227 Increased environmental consciousness, 153 Industrial engineering, 16, 195 Information science, 14 Information strategy and the COLC model, 6–13, 26 Ingrassia, P., 87, 122, 186 Innovation process, 102, 147, 209n2 Integrated cycle of feed forward and feedback control, 117 Integrated Product Development Plan, 167 Interest rate risk, 215, 291 Internal auditing, 32, 284 Internal check system, 41 Internal control, vii, 24, 41–44, 140, 283–288, 292, 307–309 Internal Control-Integrated Framework, 34 Internal improvements, 219, 224 International accounting standards, 225 International Federation of Accountants (IFAC), 31–33, 137, 143 International Financial Reporting Standards (IFRS), 202, 226 Internationalization, 256, 270 International Material Data System, 174 Investment risk, 270, 290 Invisible risks, 305 Irksomeness of labor, vi, x, 8, 25 Ito, T., 222 346   INDEX J JAMS, see Japan Association of Management System Researchers Japan Association of Management System Researchers (JAMS), 155, 163 Japanese Ministry of Economy, Trade and Industry (MITI), 154 Japanese strategic management, 46 Japanese-style management accounting, 148 Just-in-Time (JIT), 89, 141, 194 production, 15 K Kanban systems, 59, 89 and Andon, 15, 59 Kaplan, R. S., 63, 117, 134–137 Keiretsu system, 157 Knight, F., 77 comparison of key concepts from Veblen theory, 10 theory, 9–10, 77–80 Kobayashi, T., 132, 158 Komatsu, 110 L Langlois, Richard N., 75 LCC, see Product life cycle costing Lean production, viii, 104–109 Leisure class, Liabilities to capital stock, 38–40 Life cycle cash flow accounting, 113 Life cycle costing (LCC), ix, 2, 16, 114, 131, 154, 174 Linear programming methods, 15, 19, 85 Lost opportunities, 14, 86, 186, 217, 297 M Mckinesey, J. O., 5, 13 Management development, 279 and management accounting, 1–7, 11–26, 81, 148, 217–218, 251–253 Management accounting first wave, 267 in China, 255 new wave, 262 second wave, 267 system, xi, 3, 17–20, 63, 147, 199 third wave, 261–267, 274–276 Management accounting science, 85, 238 Management control and operational control, 81 Management science, 13–16 Manufacturing flexibility, 158, 160, 172 March, J. G., 99 Market and production strategies, 267 Market risk management, 238 Marple, R. P., 39 Marx, K., 55, 74 Means, G. C., 76, 185 Measurable and controllable uncertainty or risk, 24 Merritt, G. M., 139, 143, 187 METI, see Japanese Ministry of Economy, Trade and Industry Modular production systems, 75, 106 Modular type, 267 Modules (parts), 260, 276 N National environmental awareness, 175 Nationality, 256 and internationalization, 256  INDEX     Neo-classical model, 36 Nintendo Wii, 109 Nissan Motor Company, 59 Nokia, 108 Non-financial information, viii, 48, 129–137, 217 Non-financial measures, 53, 131 Non-hedged derivatives, 222 Non-performing loans, 304 Norton, D. P., 63, 117, 134–137 NTT Data Corporation, 61 NTT Docomo, 109 O Objectives of accounting, 83 OECD, see Organization for Economic Co-operation and Development Olympus Corporation, 60 Opportunities and threats, 135 Opportunity, vi, 43, 73–93, 186, 251 with a certain probability, 82, 101 Opportunity and profit opportunity, 85, 98–103, 116–120 Opportunity cost, 14, 58, 84–86, 115–117, 191–195, 307 variance, vii, 20, 85, 145, 191, 236 Opportunity for gain, 139 Opportunity space, viii, 99–102, 138–146 Organizational attention, 100 Organizational structure, viii, 74, 80, 119, 134, 142, 203 Organization for Economic Co-operation and Development (OECD), 32 Overproduction, 305 Over-production capacity, 303, 308 Oversight management, 34 Ownership and management, 6, 37, 79 347 P PAIB, see Professional Accountants in Business Committee Panasonic Corporation, 222 Parent company, 123n1, 158, 293 PC3R recycle of PC, 174 reduce, 174 reuse, 174 PC3R Promotion Association, 174 Performances, 5, 15, 18, 31, 43, 52, 60, 85, 102, 134–137, 165, 189, 215–224 Plan–do–check–act (PDCA), 169, 295 Planning and control processes, 15, 227 Political factors, 289, 307 Porter, M. E., 53, 130 Posterior opportunity cost, 119 Post-opportunity cost, 85 Potential for loss, 139 Powely, H. E., 57 Preventive and proactive improvement methods, 119 Preventive cost design, 227 Price-competitive goods, 115 Price-oriented, 268 Prickett, R., 37 Principles of scientific management, 3–6, Proactive cost reduction, 155 Proactive kaizen (improvement), 156 Proactive management, 59, 145, 189, 297 Proactive manufacturing, 160 Proactive slack, 224, 231 Probability, vii, 9, 73, 101, 136, 143, 187, 230, 309 Product life cycle costing (LCC), ix, 2, 131, 247 Product recalls, 173 Product value, 52, 156 348   INDEX Professional Accountants in Business Committee (PAIB), 31, 42 Profit creation, 1, 97–99 design based on the COLC, 26, 197 design model, 16, 20 improvements, 215–238 information, 73, 98 Profit opportunity and risk management, ix, 200 and risks, 68, 200 Profit opportunity-based variance analysis, 98, 116–121 Profit opportunity management, 13, 187 Profits and costs, 54 Profit variance analysis, vii, 13, 26, 84, 119 Pull production method, 15 Purchase and absorption, 51 Q Quality costing, 131 R Ratio of net profit to revenue (RPR), 297–300, 304–306 Reasonable target costs, 175 Recall-related costs, 173 Recording, 5–6, 191 Reflation policy, 304 Relationship model, 36 Relative truth, 14, 120 Relevant information, 83, 134 Reliable feed forward control, 58, 62 Repetitive and programmed decisions and non-programmed decisions, 81 Residual profit, 53 Resources recycling, 160 Return-on-management (ROM), 100, 138 Reverse engineering method, 119 Risk and strategy management, 58 Risk-free operation, 295 Risk management, vii–xii, 2, 32, 41–44, 121, 137–143, 185–209, 224–227, 243 pyramid type of, 285, 296 Routine and operational internal risks, 291 Routine controllers, 79 Routine management, 9, 78 S Samsung, 109 Samuels, J. M., 116, 145 SASAC, see State-owned Assets Supervision and Administration Commission Scapens, R. W., 121 Scapens, W. R., 65 Scientific management, vi, 2–16, 24 Seiko Epson Corp., 115 Self-development and design of the production system, 268 Self-responsibility, 285, 308 Shank, J. K., 113, 130 Shareholder value, 54 management, 53 Shen Long Automobile Company, 294–296 Shiseido, 59 Simon, Herbert A., viii, 81–84, 94n2 Simons, R., 99, 138 Simultaneous engineering, 156 Single loop feedback process, 135 Sipko, J., 225 Smith, A., 69n1 Smith, P. G., 139, 187  INDEX     Social and environmental costs, 175 Social embedded innovation, 109 Socially responsible design, 160 Social responsibility, 31, 56, 141, 186, 278, 286 Social systems, 25, 286 Soldiering, 4, 19 Sony Corporation, 164, 198 Speed economy, 257, 272 Standard cost accounting, 5, 11–16, 26 Standard costs, 12, 63, 103, 155–157, 176n4, 272 State-owned Assets Supervision and Administration Commission (SASAC), 283, 312n1 State-owned corporation, 276 Strategic competitive advantage, 130 Strategic cost design, 116 Strategic cost management, 63, 129–133, 268 Strategic decision-making, 22, 57, 63, 144, 267, 307 Strategic innovations, 97–122, 143, 209n2 Strategic management accounting, viii–x, xix, 117, 129–150 new, 121 Strategic oversight gap, 43, 137 Strategic planning and feed-forward management, 189 and the organizational structure, 81 and profitability, 81 Strategic risks, 43, 291, 308 Strategic Scorecard, 43–45, 144 Strategy, vii, x, xx, xxiii, xxiv, 16, 19, 21–23, 41–44, 57, 129–131, 133–139, 142–147, 173, 194–196, 262–264, 288–293 Stratified supply groups, 158 Strong governmental leadership, 267 Superior judgment, 80 349 Supervisory board, 36 Supplier contracting system, 158 Supply chain networks management, 107 supply chain, viii–x, 2, 14, 104–111, 157–160, 170–175, 244–247, 292–296 Sustainable competitive advantage, 159 Sustainable growth, 3, 44, 135, 196, 272 Sustainable value-creative strategy, 45 Synthetic loop of feed forward and feedback control, 137, 146 Systems-thinking approach, 176 T Takeover bid or merger, 51 Tanaka, M., 16, 54, 113, 156, 195 Tanaka, T., 59, 156 Target cost, 13, 86, 104, 154–156, 193–195, 220, 236 and preparatory improvements, 16 See also Cost design Target profit opportunity, 66 Taylor, F. W scientific management, 2–6, 12 TCL group, 270, 280n2 Third wave in international management accounting, 267 Three gaps between information and organizational needs, 140 Top-down decision making, 134 Total profit management, 156 Total quality control, 16, 104, 194, 256 Toyota Motor Corporation, 148, 155, 164, 224 Toyota-style performance management accounting, 224 350   INDEX Trade-off thought of cost and quality, 104 Trade-off relation, 14 Traditional management accounting, v, 18, 63, 121, 131–134, 272 U Uncertainty, v, 2, 10–11, 46, 82, 133, 185, 243, 286 and risk, v, xi, 7, 266 Unforeseeable uncertainty, 75, 266 Unified management of profit opportunity and risk, 21, 129–150 Unlimited opportunity space, 139 Unmeasurable uncertainty, 9, 23–25 Un-programmed activities, 82 User and disposal costs of a product, 158 V Valuable economic opportunity, 100 Value added, 52–54, 172 chain, 53, 130, 272 chain costing, 131 chain management, 256 concepts, 54–56, 163, 249 creation, v, 17, 42, 52–54, 100, 143, 185, 226 creation and performance, 42 creation management, 53, 188 engineering, 16, 62, 156, 232 production and value formation, 56 Value-based leadership, 56–58 Value-based management (VBM), 52, 67–69, 256 Value-based management accounting (VBMA), 52, 62–67 Variance account system, 12 Variance analysis, viii, 5, 12, 63–68, 120, 145–147, 191–193, 216 Variance-analytic models, 52 VBM, see Value-based Management VBMA, see Value-based Management Accounting Veblen, T., vi, x, 2, 5–11, 27 comparison of key concepts from Knight, 10 Virtual management, 58 Visible and Virtual Management, 58–60 Visible management, 15, 104 Visible risks, 305 Visible system, 61 Visual and virtual management, 59 W Weick, E. K., 58 Workmanship, vi, xi, 2, 7–9 WorldCom, 32, 185 Y Yamaha Motor, 222 Z Zero inventory, 15, 194 Zombie enterprises, 305 .. .Management, Uncertainty, and Accounting Akira Nishimura Management, Uncertainty, and Accounting Case Studies, Theoretical Models, and Useful Strategies Akira Nishimura... items, and periodically analyzed and evaluated Furthermore, in management accounting (standard cost accounting and budgetary control), all standardized times are converted into standard costs and. .. 4 Uncertainty and Management Accounting: Opportunity, Profit Opportunity, and Profit  73 5 Profit Opportunity, Strategic Innovation, and Management Accounting   97 6 Strategic Management Accounting and Feed-Forward