Management accounting in local businesses

Today's Impact of Global Competition on Local Businesses

Today, local businesses are feeling the effects from foreign competitors more than ever. Increased international competition is the result of the globalization process. Globalization occurs through shortening distances that facilitate access to foreign markets.

Technology Transfer and International Competition

One of the telltale signs of international competition for local businesses is their use of cutting-edge technology to enter new markets. International competition is driving rapid technology transfer around the world. The Internet is very important for businesses to explore new opportunities.

Knowledge Transfer and Global Competition

A precious production factor in the modern business environment is knowledge. Global competition leads to the transfer of knowledge from one country to another. If a company utilizes the information, it will have the capacity to withstand global competition. Global competition plays an important function in enhancing the productivity and expanding the economy. Where competition is stiff, productivity is high (Shuman, 2007).

Enhancing Productivity through Competition

A company should be efficient, manage expenses, and manufacture goods depending on the needs of consumers. If companies fail to up their productivity, they stand a chance of losing customers. Competition improves productivity through boosting efficiency, eliminating barriers to entrance and exit other businesses in the market, and promoting innovation. Global competition has benefits for consumers by lowering prices and ensuring quality products (Ahn, 2002).

Efficiency and Effectiveness

Efficiency refers to the duration, funds, and other resources required for achieving desired results. For instance, if a company achieves the desired level of production with minimum resources, that is efficiency. Effectiveness is what a machine produces compared to the potential it has to produce (Färe & Lovell, 2013).

Pricing Strategies and the Role of Management Accountants

A pricing strategy is a technique companies use to estimate the value of their goods and services. There are various pricing strategies companies utilize to value their goods and services. First, there is premium pricing which is selling goods and services at a cost higher than that of rivals. Then there is economy pricing which aims to attract the lower end consumers by setting the prices below that of competitors (Hinterhuber & Liozu, 2014). Other pricing strategies include bundle pricing and psychology pricing. Management accountants help a company face the challenges of global competition by monitoring the internal cost of the business. Tracking Cost assists a company in making decisions on issues regarding production and market investment. Firms require management accountants to determine the cost of operations and then set aside money for production and investment (Kaplan & Atkinson, 2015). They help a company set prices of goods and services at a level that will ensure they are competitive.

Driving Quality and Quantity through Global Competition

Global competition is a factor driving quality and quantity of production. Companies have to improve if there are to compete in a now dynamic and competitive business environment. The onset of global competition has not helped matters as business is moving beyond the national borders.

References

Ahn, S. (2002). Competition, innovation and productivity growth: a review of theory and evidence.

Färe, R., Grosskopf, S., & Lovell, C. K. (2013). The measurement of efficiency of production (Vol. 6). Springer Science & Business Media.

Hinterhuber, A., & Liozu, S. M. (2014). Is innovation in pricing your next source of competitive advantage?. Business Horizons, 57(3), 413-423.

Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.

Shuman, M. H. (2007). The small-mart revolution: How local businesses are beating the global competition. Berrett-Koehler Publishers.