From Management Accountant to Business Partner
A study into the role of the management accountant in controlling
marketing activities
May 2012, Groningen
Author: Wicher Stolwijk S1571931
University of Groningen, Faculty of Economics and Business Msc International Financial Management
First supervisor: dr. S. Tillema Second supervisor: dr. W. Westerman
Procter & Gamble Netherlands, Finance Department Managers: P. van der Wal & O. van der Heijden
1.
Abstract
This paper reviews the role of the management accountant in controlling marketing activities. Previous literature has indicated that management accounting has been in transition. The literature suggests that management accountants have become more business oriented. In day-to-day practice it seems that management accountants do not have the right tools to execute this new role. The action research performed in this study develops a tool that enables the management accountant to generate timely, practical and complete information, to gain more control of the marketing activities. Moreover, the research revealed that academic accounting literature needs to provide management accountants with better interfunctional knowledge. Finally, a better mutual understanding is gained by more involvement and collaboration between the management accountant and the marketing manager.
Key words:
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Preface
This thesis is written to complete the Master of International Financial Management at the University of Groningen and the University of Uppsala.
For you this is the very beginning of my thesis, for me these are the last words finishing up my research. Writing these last concluding words, make this a special moment. I look back on a great period of my life. I am very grateful for all the opportunities I got. The exchange programs which were offered by the RUG, but also all the experiences and friendships I gained during past years.
I would not have been able to write this thesis and complete this master without the help of several people, therefore I would like to thank them and show my gratitude here.
First of all, I would like to thank my supervisor Sandra Tillema. All the coaching, guidance, critical remarks, and inspiring conversations really helped me writing this thesis. Every time I walked out of your office, fresh idea's and directions gave me energy to improve my work.
Then, I would like to thank P&G Netherlands for giving me the opportunity to do an interesting internship and providing me with all data I needed. Big thanks to Otto and Peter, my financial managers. I had a great time, the combination of all the things I learned and the fun we had, made the internship a valuable contribution to my thesis. Finally, I would like to thank my family and friends for all their support during this period.
I believe that conducting this master thesis project was the most instructive experience during my studies.
May 2012
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1. Introduction
This master thesis presents the results from a research to the involvement and ability of management accountants to control marketing activities. In general, approximately 70 percent of the marketing budget is allocated towards sales promotions (Srinivasan et al. 2004). Sales promotions have become increasingly important due to increased competition, declining brand loyalty and consumer awareness (Mittal & Sethi 2011). Even though promotions are popular and high amounts of money are being invested, their results are hardly ever evaluated. For instance, Van Heerde (1999) observes that less than one percent of all sales promotions in the Netherlands are evaluated. However, a critical evaluation and coordination of marketing activities is essential in order to continuously improve the effectiveness of a company’s marketing strategy (Gedenk et al. 2006). Moreover, marketing teams often do not know on what activities to focus (Heerde et al. 2002).
6 knowledge in mind, I looked into the several existing tools that could help to develop a more suitable tool.
Revenue Management (RM) is an example of a tool that is used in several industries to assist the management accountant in the decision-making process and controlling the departments. Studying the revenue management methods will help to build a tool that can assist the management accountant in controlling the marketing activities. Every commercial company sells its products or services in order to make a profit. If products are not sold or the sales go down, what decision could a company make? Simply put, RM supports this decision-making process (Yeoman and Ingold, 2000). RM research originates in the airline industry, but, nowadays RM is being applied to much wider range of industries. Bain (2008) defines RM as a technique to improve profits by controlling the prices and availability of products. In this context, Lippman (2003) applies RM to the consumer goods industry by introducing Retail Revenue Management (RRM). RRM is a methodology that can be used as a guide leading to the most efficient price and promotion.
To verify my findings and test what aspects in the company’s marketing activities a management accountant needs to control, I performed an action research at Procter and Gamble (P&G). With revenues of $ 79 billion per year P&G is one of the world’s largest companies in consumer goods (Data monitor, 2011). Nowadays, business is challenging. With the increasing economic uncertainty, rising commodity prices and fierce competition, the margins are under pressure and according to P&G’s annual report, effective revenue management is essential.
In the past decade, P&G launched the Multi-Brand Commercial Innovations (MBCI), a promotional strategy that combines several brands in a sales promotion in order to gain a scale advantage. While the MBCI strategy in some parts of the world is quite successful, in the Netherlands P&G is struggling to get the best out of it. I used the developed tool at several stages during my action research in order to test the application on the promotional effectiveness of the MBCI promotions, and to study the effects of the tool on the outcomes.
7 The objective of this research is to develop a tool that assists management accountants in controlling their company’s marketing activities. This model will enable the management accountant to better understand, measure and evaluate the effectiveness of promotions. As the tool stimulates inter-functional contact it drives the management accountant towards a more business oriented position. Furthermore, it will take an international perspective to compare the role of the management accountant in the Netherlands and the United Kingdom.
Main research question
How can the management accountant gain more control over the organization’s marketing activities?
Sub questions
1. What is the role of the management accountant and how has this role changed over the past decades?
2. What tools does the management accountant have in order to assess the effectiveness of the company’s marketing activities?
3. How can these tools be applied to sales promotions?
4. What were the findings of previous empirical studies into the effectiveness of sales promotions?
5. What information does the management accountant need to control the marketing activities
6. To what extend are the existing tools regarded as useful, which adjustments are required, and does their application lead to similar results as in previous studies?
7. How can a management accountant enhance its role within multifunctional teams?
8 the results will be discussed. Finally, in chapter 6 the conclusions from this research are drawn and suggestions for further research will be presented .
2. Theoretical Framework
2.1 Development of AccountingManagement accounting seems fairly easy to define: It is 'the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that assist executives in fulfilling organizational objectives’ (Macintosch & Quattrone, 2009 p. 5). Whereas financial accounting focuses on external reporting, management accounting is considered to be an integral part of the management process and more internally focussed. In this context, it is necessary to identify, generate, present, interpret and use information that is relevant for: formulating a business strategy, planning and controlling activities, decision making, efficient resource usage, performance improvement and internal control (Bhimani et al. 2008).
According to Zimmerman (2010), management accountants can be considered to perform three important functions: Scorekeeping, attention direction and problem solving. One can see this as a process of accumulating data and reporting results, visualize opportunities and problems and execute comparative analysis to identify the best alternatives.
The 30-year period from 1981 until now is marked as a period of change for the field of management accounting. New journals came into existence, other topics were investigated and different research methods were developed. In addition, there has been extensive debate about the changing role of accountants over the past decades. In 1954 Simon et al. began the debate with the introduction of the concept of a more decentralized controller’s department.
9 information for rational decision-making. However, since the 1990s the image became more adventurous and powerful.
It appears that the accounting role develops together with the rapidly changing and highly competitive environment. Granlund and Lukka (1997) describe this as the transition from being the scorekeeper and watchdog to being the active advisor of management and increasingly participating in decision making. Following this trend, Hopper (1980) found that the manager’s desire for accountants was to act more in a service-oriented role, as opposed to being a bookkeeper. Indeed, accountants can live up to demands for a more pro-active role, that is, if they possess a learning goal orientation (Coad 1999).
Also Jarvenpaa (2007) describes the change of the role of the accountant as a new way of business orientation in which the willingness and ability of the accountant to provide more added value to the management strategy is key. The deepened decentralization of the business controller function, combined with the effective and increasingly centralized basic accounting systems are of great value in establishing the new business orientation. New accounting techniques support business decisions and take control in a sophisticated way. In this framework the tools suggested are: The balanced scorecards, non-financial measures, strategic management accounting, strategic cost management, added economic value and target costing have been suggested (Jarvenpaa, 2007).
Hesford et al. (2007) analyzed 916 management accounting articles by topic, method and source, and found a shift over time from budgeting and organizational control to performance measurement and evaluation topics. It demonstrates that when organizational structures are developed and rearranged, the business orientation might develop through more indirect ways.
10 is known, integration in day-to-day business seems still missing.
Management accounting activities perhaps also take place elsewhere in organizations, and not only in accounting departments (Scapens & Jazayeri, 2003). According to Granlund & Lukka (1997) modern accountants are required to have more than only financial knowledge. For instance, they need a good understanding of the organization, fluent communication skills and the ability to run change projects, too. Working across functional and departmental borders is nowadays regarded as one of the key success factors (Granlund & Lukka, 1997). However, in order to possess a business orientation, accountants need to gain knowledge of different departments. One of these departments is the marketing department. Why is the inter-functional role still missing, even though management accountants are aware of the demand for more involvement? Could it be that management accountants simply do not get the right education? To find an answer to this question the accounting literature will be reviewed in the next paragraph.
2.2 Marketing in the Management Accounting Field
In light of the absence of the right tools and understanding of management accountants in the marketing field, the integration of marketing subjects in the accounting literature is studied.
Five leading management accounting works have been studied for this research (Drury, 2009; Oliver et al., 2010; Weygandt et al. 2002; Zimmerman, 2010 & Bhimani et al. 2008). These work are currently used in the advanced management accounting courses of three Dutch universities. I analyzed the marketing involvement of the works by using two standards: Firstly, I analyzed if there was anything explicitly written about the subjects ‘marketing and promotion’, secondly I studied subjects or tools related to one of the four marketing P’s (Price, Product, Promotion, and Place).
11 is absent in all works.
Studying the four P’s, there is extensive material on ‘Price’; most books describe several price setting techniques and different strategies for the short run or the long run. ‘Product’ also gets some attention; product mix decisions explain how to calculate whether to add or drop products and how to deal with limiting factors.
In the last chapter of three books 'strategic management accounting' (SMA) is introduced. Roslander and Hart (2003) define SMA as 'an attempt to integrate insights from management accounting and marketing management within a strategic management framework'. This definition comes across as a possible solution for the current control issue between accounting and marketing managers. However, the chapter only briefly deals with the balanced scorecard and the 'tableau de bord'. The practical application of SMA and how to use it in the day-to-day operations is missing. The consequences of the limited practical information can be found in prior studies. For instance, the findings of Roslander and Harts (2003) exploratory field study of practices at the interface between management accounting and marketing management affirm SMA’s limited impact on practice in the UK.
Overall, the studied books demonstrate that there is little attention for the inter-functional activities between management accounting and marketing in the accounting literature. It appears that some literature identifies the need for better tools and with SMA a first step is taken towards a more integrated platform. Nevertheless, the practical implications are currently still missing.
2.3 Management Accounting in the Marketing Field
The previous two chapters pointed out that there is a gap between management accounting and marketing practise. Management accountants are aware of this gap but have not yet found the right tools to bridge this gap. It raises the following question: What do marketers themselves write about the control of management accountants? To find an answer to this question, I studied what is written about management accounting in marketing literature.
12 generally recognized as a fundamental business activity. Contrarily, management accountant issues have received relatively modest attention in marketing management literature (Jaworski, 1988).
In their work, Kirpalani et al. (1999) discuss several profit-oriented aids to decisions making and control. They identify two major forms of promotional control that are heavily dependent upon the use of financial data. The first form that they identify is control over the efficient allocations of marketing effort. In their view, most attempts to improve efficiency are computer based, but much can be accomplished solely by the intelligent rearrangement of available accounting records. A proposed solution is to involve the past profitability data for each area as a standard against which to evaluate proposed future promotion expenditures. The second type of control involves a comparison of planned and actual performance. Information systems should not only alert the management accountant to any differences between actual and expected sales but also reveal the reasons that have caused such differences (Mossman & Worrell, 1996).
The literature implies that marketers are aware of the importance of good working control and decision-making aids. In this context, Kirpalani et al. (1999) even suggest a tool how to control the marketing activities: Revenue Management (RM) is an example of a tool that is used in several industries to assist the management accountant in decision making and controlling the departments. The idea is that studying the revenue management methods will help to build a tool that can assist the management accountant in controlling the marketing activities.
2.4 Revenue Management
13 to Cross (1998) it is clear that RM can be successfully applied to every kind of business.
RM enables managers to gain a deeper understanding of the buying behavior of customers. As a result, managers can better tailor their price and product availability to achieve revenue gains. When used in its high-tech mode, RM is a disciplined process that enables companies to use large amounts of customer data to dynamically forecast customer behavior at the micro-market level. RM focuses on revenue growth, not on cost-cutting and downsizing (Chase, 1999).
2.5 RM in Consumer Goods Industry
Retailing is a complex business, as grocery retailers have to continuously adapt to the increasingly critical consumers. Today’s consumers base their choice of where to buy what product on a combination of factors, such as price, product availability, location, image and among others (Lippman, 2003). Whereas previously growth was enforced by opening more and larger stores, nowadays the focus is on making store space and product mix work as hard as possible to maximize return from every square foot and every promotion. As a result, retailers and manufacturers are challenged to make sure that every product in the store is on sale at a price that brings about profits, preserves market share and builds customer loyalty. According to Bain (2008), there has been a first move towards integration of the retail channel into RM. He introduces the revenue management retail style; which is a business strategy that enables all functions of business behavior to deliver value for a consumer, whether it is internal or external.
Another methodology is Retail revenue management (RRM) which is engineered to have a positive contribution to a company’s financials and to assist in decision making, as it guides one towards the use of the right price and promotion on a product, at the right time and in the right place (Lippman, 2003). Since consumer goods manufacturers are involved in the sales process and promotion planning, the RRM methodology can be applied throughout the industry.
The large amount of products, prices and markets create many possible combinations to drive business. RRM can analyze this data and make it understandable for the management accountant (Lippman, 2003).
14 marketing managers in their decisions-making process. However, before an effective tool can be developed, the challenges of the marketing department have to be clear. Since Srinivasan et al. (2004) argue that in the consumer goods industries approximately 70 percent of the marketing budget is allocated towards sales promotions, this study will use sales promotions as a test case for the development of the tool. To gain a better understanding how sales promotions work, the instruments and effects of sales promotions will be discussed first.
2.6 Sales Promotions
A sales promotion is defined as ‘an action focused marketing event whose purpose is to have an impact on the behavior of the firm’s customer’ (Blattberg and Neslin, 1990). Sales promotions adapt short term, non-recurring methods in order boost sales by offering incentives that increase the perceived value of the product.
Since the early 1970s, research on sales promotions has accelerated and commercial use has become an important part of the marketing mix (Srinivasan et al. 2004). In addition, Kotler (2003) argues that sales promotions consist of a diverse collection of incentive tools designed to stimulate faster and/or greater purchases of particular products or services by consumers or trade. Looking at those tools, Gedenk et al. (2006) argue that advertising in classic media is becoming less effective, instead communication through promotions have proven to be a more effective tool, as it reaches the consumer at the place and time where most purchase decisions are made.
Figure 1: Instruments for promotions
15 Figure 1 depicts the different instruments available to execute a promotion. The first distinction can be made between price and non-price promotions. Within price promotion, temporary price reduction (TPR) is most often used. The other price promotions are in essence also a TPR, but the communication with the consumer is different. This can be in a promotion pack (buy 1 get one free), through a loyalty discount (earn your discount by collecting points eg.) or a rebate (collect your discount afterwards).
Supportive non-price promotions are communication instruments that are used to alert the consumer to the product or to another promotions instrument. These can be features, banners, displays or other ‘eye catchers’. A combination of a price promotion and an in-store non-price promotion is often used. As will be discussed in the generalized findings, several studies pointed out that this combination causes a boost of the retailers' sales volume (Neslin et al, 1996). The last instrument is the ‘true’ non-price promotions, which are for example: events, premiums and sampling, and are used to promote a brand or store in particular (Gedenk et al. 2006).
To control the promotional activities, one has to understand how the promotions work and what instruments there are to execute a promotion. For a management accountant the costs accompanied with the instruments play an important role in controlling the activities.
2.7 Promotional Costs
16 awareness. Concluding,, the expenses of display development or the premiums often have to be paid for by the manufacturer.
2.8 Effects of Promotions
To control promotional activities, evaluation is often based on the promotional effectiveness of a marketing activity. The effects that promotions have on sales can be decomposed in different ways and by different definitions. All these decompositions provide information about how sales is affected and who benefits most of this gain. In their work, Narasimhan et al. (1996) argue that promotions have five main effects. Gedenk et al. (2006), in turn, makes a decomposition of even more effects, which I will discuss briefly. A first distinction can be made between short-term effects and long-term effects. The short-term effects occur during the promotion. There can be several reasons why promotions increase sales. Promotions can induce consumers to pick different products, either the same product of another brand (brand switching) or an actual different product (category switching). Promotions can also induce consumers to switch to another store from the store where they normally shop. This can be just for once (store switching), but it can also be the beginning of a new shop preference (store loyalty). An increase in store traffic is one of the reasons for a retailer to do promotions. The promotion pulls the consumers into the shop and induces them to buy other products next to the promotions as well (Narasimhan et al. 1996).
A promotion can persuade people over the line to try a product for the first time; these consumers are the new users. It can also push a consumer to buy more, either to consume more of the same product or to stockpile the products (Blattberg & Neslin, 1990).
17 Figure 2: Effects of sales promotions
Source: Gedenk et al. (2006)
Long-term effects are harder to analyze and decompose. What the manufacturer ultimately wants, is to build brand loyalty. However, promotions may not always lead to a long-term effect, such as brand loyalty, they could also have a negative effect. For instance, Ehrenberg et al. (1994) argue that price promotions can cause a lower reference price in the long run. Moreover, many studies have found that the sales effect of a promotion is limited to the time period of the promotion itself (Mittal & Sethi, 2011). This to say that after a promotion, sales often go back to their original level. In addition, Mittal & Sethi also argue that promotions just bring the purchase moment forward and promotions cause competition retaliation. The long-term result of such retaliation could be a move towards a point where profits are eliminated. It is a complicated situation for the manufacturers and retailers, because ‘If you do not, someone else will and the consumer is gone’ (Gupta, 1988).
18 the generalizable findings of promotions. In the light of my research, the most important generalizations are summarized below.
Temporary retail price reductions produce strong positive effects in sales. In most research findings the first dependent variable that is studied is sales volume. A temporary retail price promotion causes a significant short-term sales pike (Moriarty, 1985 & Blattberg 1987). However, van Heerde et al. (2001) found that there is a threshold effect: discounts below 10 percent often generate sales levels that differ little from baseline sales. Moreover, there is a saturation effect: discounts above 25 percent often provide minimal sales increases relative to sales obtained at a 25 percent discount. There is a discussion among the several scholars about how this sales increase is caused. Gupta (1988), for instance, showed that the increase in sales is caused for 84% by brand switchers. Bell et al. (1999), in turn studied 13 product categories and found that 75% of short term effect of price promotion was brand switching and 25% was purchase acceleration. Contrarily, Chintagunta (1993) argues and proves that incremental sales are mainly caused by category expansion, which means that they are selling more of the same category. These findings imply that volume is not gained at the expense of other brands. Heerde et al. (2003) also demonstrate that the percentage of sales increase, due to brand switching is only 33%. Display and feature multipliers show strong effects on sales. Supportive non-price promotions can be used to enhance the effect of price promotions by drawing the attention. Neslin et al. (1996) argue that a 15% stand alone price cut generates an average sales increase of 34%, whereas a 15% price cut supported by a feature or display yields an increase of respectively 161% and 293%. These results demonstrate an enormous increase in effectiveness. Few empirical results have been generated regarding the synergies between feature advertising, displays and price discounts (Blattberg, 1995).
Concluding, Foekens et al. (1999) found the higher the frequency, and the deeper the most recent promotion, the lower the price discount elasticity. When the frequency increases, consumers do not have to stockpile anymore.
2.10 How to Measure Promotional Effectiveness?
19 use of experimental design. For the manufacturer, the retailer and the analyst it is essential to understand why, how and when a consumer purchases a product. These purchase dynamics will show that a promotion will work only under certain conditions and at certain times (Adler, 1963). This knowledge provides the ability to assess and control the major variables influencing the effect of sales promotions. Several studies have been conducted to include a wide range of measures and to track promotion effects in the long run. For instance, in order to measure the long-term effects Zililani (2005) included individual customer information, collected via loyalty cards, and Narasimhan et al. (1996) used survey data to include consumer motives to the effectiveness measurements.
Mauri (1998) defines promotional effectiveness as ‘the degree of fulfillment of the goals pursued by the company by means of a specific promotional action over a given period of time’. Ziliani (2005) describes several reasons why measuring the ‘degree of fulfillment’ is challenging. It is hard to capture all factors influencing the promotional output, examples are: The execution of in-store visibility, other marketing activities run in the same period and the leading and lagging effects of promotions. In the end, all have a possible effect on the effectiveness. Given the complexity, measuring effectiveness is often solved by limiting the analysis to those variables that can be measured. Two methodologies are used to measure the ‘sales effect’: a measurement of the incremental sales and the variation of the market share. The incremental sales can be either expressed in terms of volume or sales revenue. The incremental sales of a promotion is calculated by subtracting the regular sales or the sales of a similar promotion.
However, Scrinivasan (2004) argues that for managers, sales volume is only part of the equation. The more relevant measure is incremental sales revenue and profit generation. To assess the financial attractiveness of promotions, all costs have to be taken in to account. As discussed in paragraph 2.8, besides TPR (discount) costs of all other promotional instruments (figure 1) have to be included. One has to assess whether the incremental revenue is large enough to compensate all the incremental costs (Scrinivasan, 2004).
20 estimating the stream of future revenues associated with alternate levels of advertising. The management accounting books also reflect on this topic. Drury (2009) argues that the ROI highlights the benefits that managers can obtain by reducing their investments in current or fixed assets. However, to measure the promotional effectiveness, revenues and costs are the critical variables.
For effective control of marketing activities, single projects have to be evaluated and compared. Weetman (2006) elaborates on the profitability index (PI) as a measure to compare an investment's benefit to its cost. The index is the present value of the future cash flows divided by the initial investment. It is a useful tool for ranking projects because it allows one to quantify the amount of value created per unit of investment. In theory, a higher PI will get a higher rank and a lower PI will get a lower rank. Thus, when the budget is constrained, the highest ranked projects will be accepted for execution. When calculating the PI of a single promotion activity occurred in the past, profit has to be divided by the costs: PIp = profitp/costsp (p = promotion)
However, the absolute size of the project is not considered with this technique. Therefore, the incremental sales volume or revenue has to be included in the evaluation as well. As discussed before, Kirpalani et al (1999) argue that the past profitability data should be used to set a standard to evaluated future promotions against.
Researchers have come up with different measures and perspectives to determine the promotional effectiveness. This research develops a tool that combines three measures discussed above to evaluate the effectiveness of the marketing activities: the ‘increase in retailer sales volume’ (uplift in units sold); the ‘increase in net outgoing sales’ (calculated by deducting all promotional costs of the manufacturers sales revenue) and finally the ‘Profitability Index’.
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3. Methodology
The goal of this research is to improve the control a management accountant has over the organization’s marketing activities. To improve this control a tool is developed and tested. First of all the research method is described and then the different steps in the research are explained.
The research is based on a case study in which a tool to measure promotional effectiveness is evaluated. For this study I have chosen to use the action research method. According to Kemmis (2006), this method is a reflective process of progressive problem solving, led by individuals working in teams. Simply put, action research involves the process of actively participating in an organization whilst conducting research. In larger organizations action research can be used with the aim to improve strategies, practices and knowledge of the internal and external environments within their company (Dick, 2006). In the process of collecting information from action research, the researcher enters a real-world situation and aims both to improve it and to acquire knowledge (Checkland & Poulter, 2006)
Because action research requires close involvement of the researcher there are some potential disadvantages. Since the researcher has to participate continuously, it is a time consuming method (Marshall et al. 2010). Another
disadvantage is that field subjects may be less open and honest when the researcher is perceived to have different goals. In this study the research was conducted by a participant who was perceived as a real team member, and not as a researcher. The dynamic character of action research makes it an effective method to immediately test and evaluate research plans (Dick, 2006).
In terms of method, Kemmis (2006) describes this as a self-reflective spiral of cycles of planning, acting, monitoring and evaluating. This repetitive cycle is central to the action research approach (figure 3).
Within the turn of the action research spiral, thought guides action, which in turn guides thought. In this manner,
22 experience of action. Action then puts the understanding to the test. Several authors have drawn attention to this dialectic between theory and practice (Cassell & Johnson 2006, Whitehead & McNiff 2006)
To find out how the management accountant can gain more control of the marketing activities, I conducted an action research at the consumer goods company ‘Procter & Gamble’. I carried out my research by participating in two customer teams for a period of 5 months in total. The participants of the research are: Two management accountants and four marketing managers. All participants are on the same level in the organzational hierachy.
To study the role of the management accountant in controlling the marketing activities, I analyzed the current communication and evaluation process within the team at the moment I arrived. Besides the information received while working within the team I conducted an informal interview with each participant. Open questions enabled the participants to reflect on the current process and obstacles evaluating and controlling the marketing activities.
In order to quantify the data, the participants were asked to rate the perceived quality of the existing tools and the information produced by these tools.
With the information of the interviews and questionaires in mind, and based on the measures discussed in paragraph 2.11 a tool to evaluate the effectiveness was designed. The next step was to test this tool by evaluating a large promotion: ‘Project A’
The research is responsive to the situation, and is done step by step. The evaluation output of this promotion was discussed, with this feedback the evaluation tool was improved.
To enhance the process of controlling the marketing activities an inter-functional action team was formed. With this team the obstacles were discussed and solutions were implemented. With this feedback the tool was enhanced and tested on a new promotion: ‘Project B’. The management accountants and marketing managers were interviewed to evaluate the succes of the new tool.
23 benchmark. The UK is an accounting-orientated country, many highly qualified people are active in the accounting profession (Ezamel et al. 2003). The organizational structure of P&G in the UK is similar to that in the Netherlands. However, their accounting department is bigger. The interviews with two management accountants in the UK are performed by telephone.
Two types of data have been used for this research. Firstly, quantitative data for the analysis of promotions, which was either provided by the retailer (scan data) or from P&G’s own database. Secondly, to test the perceived quality of information provided by the management accountant, all participants filled out a questionaire. Based on a five-point-Likert scale the managers had to indicate how useful they perceive the following notions: practical learning, timing, relevance, flexibility and completeness of measurements. The qualitative data were collected through informal interviews. Since I had the opportunity to work with the teams for a longer period, I became part of the team and communication barriers disappeared.
4. Results
To formulate an answer on ‘how management accountants (MAs) can control marketing activities’ better, two main issues need to be known: what information do the marketing managers need to perform better and what information do the management accountants need to evaluate the effectiveness of marketing activities (Granlund & Lukka, 1997)? If the management accountants provide and analyze this information, control will automatically improve as a result (Granlund & Lukka, 1997).
4.1 The Current Evaluation Process
24 This number is compared against the retailer’s base volume, the volume that is sold when products are not in promotion. Then P&G’s sales revenue of all promoted brands during promotion period are taken from P&G’s database, the incremental sales revenue is calculated by deducting the sales revenue of a comparable promotion. A table with these results is send by email to the team. The management accountant try’s to evaluate all large promotions. However, due to limited time he admits that less than half of the large promotions are evaluated.
To collect feedback on this current evaluation process, the four marketing managers and two management accountants are interviewed. The interview was performed using open-ended questions and had an informal character. The marketing managers were questioned about the information they receive from the management accountant and the involvement of the management accountant when it comes to marketing-related activities. The management accountants were asked to reflect on the same topics. The findings of the interviews are structured around the themes that came back in most interviews. These themes are illustrated with several quotes. In summary, marketing managers seek information that is more timely, includes costs and benefits in absolute and relative format and includes more practical and non-financial information. Therefore, the themes elaborated on are: Timing, Measures of marketing
effectiveness and Practical learnings.
4.2 The Marketing Managers' Perspective
Timing
There is evidence that timing is an issue for the marketing managers. More aspects can use some improvement, but when (promotion) analyses do not come in timely, they lose their effectiveness:
‘A large obstacle is the time it takes before I get an analysis of the activities I have been working on’
25 The management accountants provide some data in a shorter period of time, but this does not include enough information for the marketing manager to react in time:
‘I can check with the sales managers if the shipments are on track, but this information alone only gives me an idea. I need additional information, on costs for example, to base my strategy on’.
‘Business happens as we talk, to be effective we need to analyze and take action as the business happens’.
‘Twice a year we get a fancy presentation about all market trends, the development of our market share and all other information. Twice a year! That means, it takes us half a year to find out we are not doing the right thing’.
Measures of marketing effectiveness
As already became clear in the previous quotes, data should be extensive or more detailed in order to assess the effectiveness of marketing activities. Currently, information is incomplete and difficult to interpret:
‘An uplift in retailers’ sales volume might be good news for the retailer, but is the uplift large enough to cover all our costs? Currently we only get an overview of the costs at the end of the period’.
'Several different costs are involved in marketing activities, I need total costs to assess whether the activity was effective. When the costs seem the problem I need more detail on this measure’.
‘Retailers are tough negotiators, the numbers have to be crystal clear to have an effect on their position’.
Some managers note that they are having difficulties to compare the actual performance with other activities and to put the numbers in perspective:
26 ‘Every week several products are in promotion, all aberrant in instruments used and quantity sold. There are so many different promotions and even more products, that a good relative measure is essential to compare activities’ effectiveness’.
Practical learnings
All marketing managers interviewed identify practical learnings as a key area in which improvement is desirable. The marketing managers describe the term ‘practical learnings’ as information that is actionable. The data should give information what provides the marketing manager with an answer on: ‘What actions to take to improve results’? There is an overall consensus that most management accountants limit their contribution to a narrow focus on bottom line financial numbers. Some quotes to illustrate:
‘The MA often tells me that a promotion did not achieve the results framed in the pre-analysis. A couple of key numbers indeed show that the results are disappointing. To improve the results in the next promotion we need to know WHAT was disappointing and not THAT it was disappointing’.
Another comment of several managers is that the information supplied should be more flexible. There is a desire to get information that is relevant on that particular moment. When results are down, a marketing manager wants to have detailed information to find out by what activity this was caused:
‘As soon as we know what was successful in the past or what we can do better next time, we can adjust future plans and strategies’.
‘I cannot improve my strategies by hearing that my revenue was 10 % under target, I need more detailed information. Moreover, we should start sharing our findings throughout the whole organization; Success or failure, both can be very helpful for future plans.’
27 ‘MAs have loads of information, but towards us, they just compare actuals vs. targets. When we are off track the MA will let us know, but there is no interaction how to get back on track’.
‘I guess one of the problems is caused by the fact that different reporting styles are required. It might be hard to switch from formal standardized reporting to the headquarter to more flexible and practical reporting towards us'.
‘I don’t think it is an issue of unwillingness to adapt, it is more an inability of MAs understanding the need of practical information’.
4.3 The Management Accountants’ Perspective
The main obstacles of the marketing managers are expressed above. Now the two management accountants are asked to give their opinion about the information supply and the control over the marketing activities. It is interesting to note that in their answers the same three themes are put forward:
Timing
The management accountants both perceive timing as the major problem. They complain about a workload that is too high and they have difficulties to complete all their tasks.
‘My main issue is timing; team members often want their business updates right after an event. I have more to do than just controlling the marketing activities. Besides the two marketers, I have 8 sales managers to support, and a country manager and the headquarter to report to. Time is limited’.
‘Not all information is readily available, sales managers often need to update their data sheets. Without this information, I am not able to give all detailed information to the marketers’.
Measures of marketing effectiveness
The inability to get a complete overview of all costs related to a promotion causes many problems. In order to provide a complete evaluation, all costs and revenues need to be included. Without the costs it is impossible to calculate a profitability index number to compare and rate promotions:
28 ‘We often do not have an overview of all the costs; the current system does not work. Currently it is too time consuming to specify all costs. With no clear cost allocation it is also not possible to calculate a relative index number’.
‘Since many promotions differ in size and content it is hard to compare promotions. Due to budget cuts, I sometimes have to cancel several promotions. I miss the right measures to assist me in these choices’.
Practical learnings
The management accountants know there is a demand for actionable information. However, limited time and ignorance are two big obstacles for the management accountant to provide the right information:
‘The marketers often want me to tell them how to improve their results. I provide my team members with the information I have. I am not a marketing or a sales manager, the development of marketing activities is their responsibility. That is what they are here for’.
‘I think, already a lot has been changing over the past years, since we are physically placed within inter-functional teams and have weekly team meetings, we have become more cooperative. However, our workload is high and weekly reports have to be delivered. I work here as a management accountant and I am specialized in the financial reports and financial control’.
‘I wish to provide everybody with the right actionable information, but even the management accountants are not almighty’.
4.4 Perception of Quality
29 perfect, while a score of five indicates perceptions that the current tools are useless in today’s business.
The perceptions were compared by subtracting the score of the management accountant from the score of the marketing managers. A positive score indicates that the marketing manager gave a higher quality ranking than the management accountant; a negative score indicates that the management accountant perceives the quality higher than the marketing manager and a difference of zero indicates total agreement. In table 1 the average score of the two marketing managers (MM) per customer team is compared with the score of the management accountant of the related customer team. The results are summarized in table 1.
Table 1: Perceptions of quality tools compared
MM 1 MM 2 Average MM MA Difference
Team 1 12 11 11.5 16 -4.5
Team 2 10 12 11 15 -4
MM: Marketing manager MA: Management accountant Score:
5: Current tools are useless in today’s business 25: Existing tools are nearly perfect
The two negative differences indicate that, compared to the marketing managers, the management accountants overstate the quality of information supplied.
30 Table 2: Perceptions of quality tools compared per criteria
Average ∆ MA MM MA & MM MA-MM Summary output: 1 2 1 2 3 4 Practical learnings 3 4 1 1 2 1 2.0 -2.25 Timing 2 2 2 2 1 2 1.8 -0.25 Relevance 5 4 3 3 2 3 3.3 -1.75 Flexibility 4 3 4 3 3 3 3.3 -0.5 Completeness of measurements 2 2 2 2 2 3 2.2 0.5 Total 16 15 12 11 10 12 12.7 5: very useful 3: useful
1: not useful at all
In summary, the findings identify on some criteria substantial differences between management accountants' and marketing managers’ perception of quality.
4.5 Test Case: Tool Development
31 It speaks to a common target consumer in a way that drives profitable sales of each of the participating brands (P&G 2005). With the use of a ‘promotion theme’, the attention of the target consumer is drawn to several products instead of only one. The theme can vary from the world cup soccer championship to a cartoon movie. The brand cooperation within the MBCI’s drive economies of scale and with this cooperation the promotion can be more effectively communicated to the consumer. An MBCI is often backed up with radio and TV support. This particular promotional strategy has proven to be successful abroad. However, in the Netherlands, P&G experiences difficulties to benefit from it. For this reason, the management accountants want to know if the MBCI strategy is one to hold on to, or if it is a strategy that is just not effective in the Netherlands.
As part of the action research this case is used to develop and test a tool that helps the management accountant to overcome the current control problems.
As discussed in paragraph 2.5, RRM can analyze data and make it understandable for the management accountant. RRM could be the key to an automatic evaluation process. However, in this stage the technology and databases are not yet in place to use RRM in the evaluation process of the marketing activities at P&G.
As van Heerde (2002) argues, it is important that a tool or method can be used and understood by as many people as possible. Therefore, and in order to control all marketing activities efficiently, the method has to stay simple. The aim here is to develop a simple method that can assess and evaluate the effectiveness of a sales promotion. To measure the effectiveness of promotional activities, numerous short- and long-term effects have to be taken into account. To develop a tool that can be used on every moment the focus is on short-term effects. These effects can be measured using data that is continuously available and up-to-date on the database. By combining previous literature, a tool is developed that evaluates the effectiveness of a sales promotion based on three perspectives: the retailer, the commercial and the financial perspective. In order to put the effectiveness in perspective the results are compared with the average of alternative promotions during the past fiscal year. 1. The retailer perspective: This is the position of the retailer acting as an
32 effectiveness is measured with the relative and absolute uplift, versus regular sales, in retailer sales volume. The information is based on scan data.
2. Commercial perspective: This is the position of the consumer goods manufacturer. The local sales department measures their business results with Net Outgoing Sales (NOS). NOS is calculated by deducting promotional costs from the sales revenue during the promotion period of the manufacturer. To measure the effect of a promotion the incremental NOS is calculated; Increase of NOS of the promotion compared to NOS of an alternative promotion.
3. Financial perspective: Promotional effectiveness based on the Profitability Index (PI). Calculated by dividing promotion NOS with accompanied promotion costs: PIp = NOSp/costsp (p = promotion being evaluated) is perspective is based on the same input as the commercial perspective but the PI gives a relative number, what makes it possible to compare promotions. This is relevant to assist in decision making when promotion budget is limited and a priority of promotions has to be made.
4.6 Analysis Project A
The first MBCI promotion analyzed is project A: It was a large-scale promotion running for six weeks at a drugstore in the Netherlands. Seven product categories, consisting of eleven different brands cooperated in a theme during the summer of 2011. Brands were in sales promotion using either 1+1 or 2+1 discount mechanism. The promotion was communicated through two pages in the retailers’ folder, by in-store displays and by television support. In addition, the consumer got a free bracelet when buying two action products. The costs to execute this MBCI are € 300.000, paid by the manufacturer to the retailer.
The interviews have pointed out that the current evaluation process can be improved when the tool delivers: timely results, absolute but also relative numbers, costs specification when costs seem too high and practical learnings.
33 management accountant with financial data timely. Besides costs, retailers’ sales volume and manufacturers’ revenue are available on the internal database.
Table 3 provides the results of the promotional analysis of project A, in the format that originally was used by the management accountants. The uplift (vs no promo sales volume) of retailers’ sales volume is given in units and in percentage.
Table 3: Analysis MBCI project A
Uplift Incremental NOS (A) in retailers' sales volume
vs alternative promo 973.000 units 292% € 363.000
To test the quality of the information rolling out of the tool, the marketing manager responsible for this promotion was asked to give his perspective on the table 3:
‘… ok, for the retailer the promotion was a great success. An uplift of almost 300% and nearly a million extra products is good news. From our perspective: 363.000 euro incremental NOS looks pretty good as well’
The MBCI promotion seemed to be a success. However, when analyzing the results into more detail, the promotion is less successful than assessed by the marketing manager. Table 4 shows that the incremental costs, compared to an alternative promotion, are higher than the incremental NOS. As a result the PI of the promotion is worse compared to an alternative regular promotion (1,4 vs 1,7).
Based on this analysis one can conclude that the sales effect of the promotion was successful, but the effect was generated at a cost level that was too high for the manufacturer.
Table 4: Extended analysis MBCI project A
Uplift Incremental NOS (A) Incremental costs (A) PI alt. retailers' sales volume vs alt. Promo vs alt. Promo PI (A) promo 973.000 units 292% € 363.000 € 520.000 1.4 1.7
34 The costs of the MBCI are compared to an alternative promotion. This is a scenario with similar promotions but no MBCI promotion. An average of different promotions is used to create a reliable benchmark, appendix 2 gives the details of this benchmark. Table 5: Detailed costs project A
x 1000 €
Folder TPR Instore
Participation
costs Total costs
MBCI 439 1148 30 300 1917
Alt. Promo 323 1074 0 0 1397
Table 4 and table 5 show the output of the evaluation model that I suggest so far. The data processed by the tool provides information and learnings that might be used to adjust future MBCI promotions. The volume uplift shows that the promotions have stimulated consumers to buy (more of) the promoted products. However, participation in an MBCI should cause savings (for the manufacturer) on fixed folder costs. Therefore, either the participation costs must be lower or the costs should be compensated through a ‘discount’ in folder and in-store fees.
Project B
With the learning’s of project A in mind we made a small action team, consisting of two marketing managers, a management accountant, a sales manager and myself. The team came together three times for half an hour; 3 months before the promotion to brainstorm, 2 months before the promotion to go through the pre-analysis, and 2 weeks after the promo to evaluate the post analysis.
Project B was linked to an anniversary of a drugstore. The promotion ran for 4 weeks in the same drugstores as project A. The MBCI promoted 4 product categories, consisting of 7 different brands. In addition to a (smaller) discount, consumers got a free scratch-card when buying action products. With these cards the consumer could win several prices. Promotion was communicated through the front page of the folder, TV support and extensive in-store displays. The participation costs for the manufacturer in this MBCI were € 192.000.
The extended analysis of project A gives a complete insight of the promotional effectiveness, therefore the same structure is used for the analysis of project B.
Table 6: Analysis MBCI project B
35 Reflecting on the results (table 6), project B can be qualified as an all round success. Good uplift for the retailer, relative high incremental NOS vs. the incremental costs and as a result a higher PI than the alternative promotions.
In order to improve the PI, the team had to keep its incremental costs low while boosting the sales effect. Marketing managers have a good overview of the results of the previous promotion, this can be used in the negotiation of future promotions with the retailer.
Table 5 shows that the investment of € 192.000 is compensated with a discount in folder costs. Better negotiation with the retailer and lower promotion costs resulted in positive results.
The alternative promotion benchmark is an important part of the evaluation process. To ensure the validity of this number it is calculated with care. For every participating brand the result of an alternative promo is based on several promotion weeks (appendix 2).
Table 7: Detailed costs project B x 1000 €
Folder TPR Instore
Participation
costs Total costs
MBCI 164 530 0 192 886
Alt. Promo 281 495 0 0 776
The MBCI promotions as described in projects A and B are two practical examples of the application of the developed tool. Project A being the first and project B being the second promotion I analyzed. After I presented the results of project B, I asked the team members about their opinions on the way we worked on promotions and especially on the role of the management accountant in this process. I collected the quotes that illustrate their opinions best:
The marketing managers
Clear and timely evaluations of the promotions enables the marketing managers to learn from past mistakes and better negotiate with the retailer. Besides the better output of the tool, the marketing managers find it very helpful to work in inter-functional action teams and to have a more integrated management accountant.
‘It was very helpful to have a person from outside, with a blank mind, working with us. The findings seem sometimes so obvious, but because we are trapped within our own habits it is hard to take an objective point of view’.
36 'The three sessions were great to have, very efficient and effective. The sales manager and management accountant came with ideas we as marketers might not have thought of. The management accountant has financial knowledge of all business parts and because of his experience in other teams he had some great ideas. We will do these meetings next time as well’.
‘The management accountant should deal with more practical activities, we have seen the potential within the MBCI evaluation’.
Management accountant
Time pressure seems to be one of the main obstacles for the management accountants. However, ones they get some space in their agenda, they enjoy to work with other disciplines. The role of the sales managers, updating the costs sheets, is essential in creating this space. With the costs specified, more actionable information can be provided.
‘I have always enjoyed to work together with the team members. This has already improved a lot since we are physically positioned within the retailer teams’.
‘Time pressure is my greatest obstacle, we have experienced ourselves how two extra hands can make a difference’.
‘The tool provides everybody with the right information. As long as I get the costs data from the sales managers I can deliver timely results. Now I have all the costs specified, it is possible to find the reason behind past failures and successes. These learnings are especially welcomed by the marketing managers'.
Linking prior research in promotional effectiveness
37 Interview with the UK management accountants
To analyse if the marketing control issues differ per country two interviews were conducted by phone. With open questions, the three themes from the Dutch interviews were crosschecked. The interviewees describe the marketing control as follows:
'In the UK we have six customer teams, every team has a management accountant and an assistant controller. The sales and marketing managers are physically positioned within the teams, all management accountants are positioned on the fourth floor at the finance department'.
'We meet every Monday with the multidisciplinary customer teams to discuss the business'.
'The promotions are planned by the sales managers, marketing managers support the sales managers with the promotion style, instrument and mechanism. However, big promotions, like the MBCI's, are developed by the marketing managers.'
'The marketing manager and management accountant meet each other during the general team meetings and, if necessary, on another moment to discuss the financials of a promotions' pre-analysis. However, this often goes by email.'
'Ones a month the management accountant provides the team with an overview of the business results. These results give 'NOS actual vs target' and 'total promotional spending' per product category. The MBCI promotions are analysed separately, the post analysis is based on total NOS and ROI, the high number of promotions forces us to keep the measures as simple as possible'.
'Detailed specification of all costs is too time consuming. However, we do have a MBCI project owner who collects the results of all MBCI's company wide and shares the learning’s on general company meetings'.
'There have also been several brainstorm sessions about the MBCI best practices. I attended a session two weeks ago, but apart from one accounting colleague, the session was mainly filled with marketing managers'.
38 The two management accountants at P&G in the UK describe a situation, which is similar to that in the Netherlands. They seem to have the same obstacles; time pressure, no simple promotion evaluation tool and no detailed insight in promotion costs. Even though the UK is more accounting oriented, they are not able to evaluate all promotions. A remarkable difference is the use of total NOS and ROI in the UK instead of incremental NOS and PI in the Netherlands for the evaluation of promotions. Another difference is the physical position of the management accountants. In the UK the management accountant is still positioned separated from his team. The MBCI brainstorm sessions can be seen as a sign that managers are aware of the need to share learnings between different departments. However, it seems that management accountants in the UK have not made the step towards integration yet.
5. Discussion & Conclusion
This chapter provides a discussion and the conclusions that resulted from the research. In this paper the role of the management accountant, controlling the marketing activities is studied. The findings produced consistent evidence of current challenges that management accountants have, when aiming to control promotional activities. This research studied the current accounting literature and developed a tool that enables the management accountant to generate timely, practical and complete information, to gain more control of the marketing activities and stimulate inter-functional interaction.
The literature review pointed out that the leading management accounting text books do not succeed to provide future management accountants with a basic understanding of different disciplines they have to work with. The inter-functional understanding is something many management accountants miss. In addition it would be good to dedicate a chapter to the evolving role of the management accountant. This creates awareness of management accountants' current obstacles and possible practices to overcome those obstacles.
39 The time it takes before data is evaluated and communicated, the right measures to evaluate the marketing activities and the absence of actionable information.
The questionnaire pointed out that, compared to marketing managers, management accountants overstate the quality of the information they provide. This discrepancy may be caused by the limited interaction between the management accountant and the marketing manager.
Previous literature suggests that to improve control, the management accountants have to become more integrated in the marketing activities, the tool developed in this research can help them with this transition.
During the test cases the new tool was implemented but also immediately tested, allowing us to adopt the tool while we were working with it. In order to evaluate the effectiveness of a promotion for all stakeholders, the managers indicated that it is important to evaluate activities from different perspectives. The retailers’ perspective is covered by the absolute and relative uplift in ratailers’ sales volume, the commercial perspective is given by the incremental NOS versus an alternative promotion and the PI vs alternative PI is used to reflect on the financial success. The time-consuming cost allocation, which was the main cause of the reporting delay and the inability to calculate the PI, was solved by a change of responsibility. In the renewed process the sales managers have to allocate all costs and provide the management accountant with structured information. This enables the management accountant to calculate all measures. Moreover, this creates time that enabled the management accountant to participate in a promotion action team.
The first promotional analysis showed positive results. However, because these results did not include all information the results are considered biased. To reflect accurately all the information, the incremental costs and the PI of a similar promotion have to be included. Including those measures, the results of project A were now perceived as less successful. A detailed costs overview gives the management accountant the ability to provide marketing managers with practical learnings.
40 The first meeting had an immediate effect on the interaction between management accountants and marketing managers. The informal ‘brainstorm session’ brought the different disciplines closer together.
The learnings of project A were used for formulating and communicating the plans of project B to the retailer. As a result, the tool allowed the managers to formulate a clear argument for a better deal towards the retailer. Since the numbers are easy to understand and present a complete picture of the previous promotion, it helped the marketing manager to convince the retailer in negotiating lower costs.
During this research the action team was used to develop a tool. However, as a side effect of the three contact moments, communication between management accountant and marketing manager increased. The three contact moments have become a standard for the development of every large promotion.
The results of the interview with the UK departments show that management accountants' control issue is not only present in the Netherlands. The interview describes a similar situation in both countries. A difference is that in the UK the management accountants are not physically positioned with the team they are responsible for. This is a sign that the management accountants are even more focused on their own core business and spend less time with inter-functional activities. Contrarily, the brainstorm sessions show that the UK department stimulates that teams learn and benefit from each other. The management accountants in the UK would welcome a tool that helps them to control the marketing activities.
Consistent with prior research (Granlund and Lukka, 1997; Jarvenpaa, 2007; Johnston et al., 2002), it became clear that the awareness and the importance of good and complete information through a more integrated role of the management accountant are present. However, the practical transition and actions towards this situation were not yet in place. Whereas Johnston et al. (2002) found that the involvement of management accountants in change programs is rather low, this study finds that management accountants are aware of the absence of the right information but do not take action to improve this issue.
41 the modern accountant role (Granlund & Lukka, 1997). However, this action research shows there is potential for further improvement.
The new tool assists the management accountant in tracking and controlling the marketing activities. Due to the growing importance and size of sales promotions, it is crucial to keep good control over these marketing activities (Mittal & Sethi 2011). To develop a tool which assists the management accountant in day-to-day practice we chose to keep the tool simple to understand and easy to use. Even though the long-term effects of marketing activities are also important, this study found that there is mostly a need for short-term results that enable the managers to make fast adaptations.
The findings of this research highlight the challenges that management accountants of a consumer goods company encounter when aiming to control the marketing activities. As a result, marketing managers miss the evaluation, coaching and cooperation of the management accountant in the development of marketing activities. How well do we do? What decisions should we take? And how can we improve our effectiveness? These are all questions which dominate day-to-day practice.
Previous studies have indicated that the role of the management accountant is in transition towards a more integrated and business oriented function. The combination of obtaining inter-functional knowledge and adopting a pro-active role need to bring back the management accountants’ control. However, previous works only talk about the changing role of a management accountant in theory. Nothing is written about how the management accountant can actually make this transition. Therefore, this study provides the managers with practical insights and a tool that assists in becoming more integrated in the business as a whole.
42 The improved data output of the tool helps the management accountants to understand the business and stimulates interaction between departments. This development drives the business orientation of the management accountants.
