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Topic 3 Reading Bhimani Management Accounting And Digitization Notes

Accounting Notes > Strategic Finance, Digitization and Extended Enterprises Notes

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AC310: Topic 3: Reading: Bhimani - Contemporary Issues in Management Accounting (Management Accounting and Digitization)

Topic 3: Bhimani - Contemporary Issues in Management Accounting (Management Accounting and Digitization) Summary: Discusses the links between digitized technology deployment and management accounting. Bhimani argues that 'in digitized organizations management approaches have to be reconsidered'. Digitization and Economic 'newness'

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Technologies do not just influence the particular function of products o Extends to "what could be produced, how, where and by whom" o Railroads: Shipping options and economics of transportation
? Enabled department stores because consumers could travel into towns from suburbs o Motorcar: Consumer mobility
? Shopping centres expanded because consumers had access to motorized transportation o Electric lifts
? Construction of high-rise buildings Digital technologies mobilize far-reaching social and economic effects o Network effects
? Not common to all new technologies o "Knowledge creation, transfer, and processing take place faster today than has been possible with past technology usage" o "The new economy...favours intangible things - ideas, information and relationships" - (Kelly 1998) The term 'new economy' is "controversial" o Some support the idea - e.g. (Tapscott 2001) o Some don't support the idea - e.g. (Shapiro and Varian 1999) o Some say that lack of clear definition causes confusion - e.g. De Cock et al. 2005) o Existence or lack of existence does not matter - e.g. Bhimani
? "Beliefs [mobilizing] change" is more important When firms implement "a new strategy based on altered economic reasoning, financial controls and cost management priorities also change" Innovative business models lead to more profound changes in management accounting

The Economics of Change

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"Gap between the world and our understanding of it grows wider" Crash after dot-com boom signalled that the idea of the new economy was flawed (Tapscott 2001) - Characteristics of the modern commercial environment: o New infrastructure for wealth creation o New business models

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