The role of a Cost Accountant is management accountant. The role under the new changing economic and volatile macros opens up more opportunities for the professionals. This is not restricted to the ones who do the job but also to those who are entering into the practicing field. Since your client can be SME or Micro SME but may not be over a couple of years. Hence your strategic advice is key to their success.
Strategic cost management is obsolete in these changing business times. Reduction of cost and management of cost is no longer a subject of survival for the business. It’s time for strategic sustainable growth models where business decision-making is not calculated based on business growth on numbers and cost efficiency. Cost efficiency theory has also become obsolete with volatile interest rates and economic phases. The business atmosphere has become complex and the operating business process has become unpredictable.
We are just around another phase of increased M&A rising from wrong strategic decision of expansions and growth, deviating from the core strength of the business and last but not the least little strong wrong management strategic decisions. The role of a Cost Accountant and its expectation from the profession has changed dramatically in the last 2 years. Cost Accountants need to play the role of scenario analysts assisting the key strategic decision of business expansion, process, and growth.
Rising Inflation, Rising interest cost makes business scary particularly post covid -19. The sustainable business model has now become the key survival ingredient for every business. The strategy model of the business becomes obsolete in these quick successive changing climates of business. In these changing times of business and geo-political relationships, strategic cost management needs to go beyond cost and get into strategic sustainable growth models. The reason is, that only squeezing on cost will not be sufficient for getting business towards the sustainable growth path. It will bring down the business hence we need sustainable growth models. Cutting down costs and laying off manpower and reducing the cost of operating is traditional old-fashioned business model where once the market share is lost it will never
Today’s business needs to fight and realign every moment with changing macro volatilities. Scenario analysis is a big tool to ride over the changing macros. Mostly when good times come we often forget and rather stop scenario analysis and we head towards expensive expansion under the disguise of diversification of business. The same organization under the downward cycle of the economy triggers the sale of the diversified business, mass layoff, and finally loss in enterprise value. This does not mean that companies are not going to head for expansion or growth. What they need is a strategy before the decision of buyout and diversification of business. Scenario analysis helps an origination to ride over the waves of these volatile times.
Business models and human manpower needs a relook and realign with the core strength of an organization. Careful expansion of business, and careful early disinvestments help an organization to fight and rule over the changing macro volatilities. This identification and deviation from the core is the biggest factor behind sustainable business growth. If you do significant scenario analysis then you can be at the buyer's table when the macroeconomics and business scenario becomes unfavorable. Key strategic visions can achieve exponential growth just by timing using scenario analysis within the strategic decision-making process.
The strategic sustainable growth model is not restricted to a particular vertical or department. It is applicable for every function of the business and a Cost Accountant needs to identify and implement the same. In the coming series, we will be discussing more elaborately on these subject lines.
Posts
