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BA (Hons) Accounting Essay


In “Cost Transparency in Supply Chains: Demystification of the Cooperation Tenet” article, the authors would like to deliver the message about studies on open-book accounting to rivet on mainly on the functions and difficulties, determinants and consequences, and of interorganizational cost management. To offer a new direction, authors seek to detect and systematize applications of open-book accounting. They follow a qualitative approach to analyze why and how open-book accounting is being used in practice. Data were obtained from 59 interviews conducted with purchasing experts and analyzed through content analysis.

Authors find that being used for interorganizational cost management, open-book accounting is used in price management. This includes increasing negotiation pressure on a supplier. Based on this finding, we develop a framework to systematize different open-book accounting uses according to both underlying motives for cost transparency and purchasing strategies. The research finding the following to show that cost transparency can be used to achieve to support price management and that it does not necessarily require a trusting and cooperative customer supplier relationship.

The background of cost transparency

A qualitative research design supplemented by quantitative analysis. Set up a three-tiered design that allows us to evaluate all of the aspects indicated above. Using an online questionnaire that was designed to either affirm or contradict the results obtained from the interviews and to allow for certain quantitative analyses. From a total of 59 interviewees, and received 46 completed questionnaires. Take into account the reverse perspective. To support the results, especially for data manipulation, authors conducted 18 interviews with sales experts. Use the data retrieved from the three step to analysis and explanation on Open-book accounting uses and the article “Cost Transparency in Supply Chains: Demystification of the Cooperation Tenet”


Cost transparency in the supply chain is the ability to discover how much a particular stock costs, treatment costs or service costs, preferably before receiving the stock, treatment or service. The cost of suppliers is mostly unknown to buyer. We have no way to price in an any services or the cost of a stock, nor do we find pricing published anywhere that helps us compare prices to make better consumer decisions. Cost transparency uses are difference methods in many difference area reform efforts to understand if supplier price increases are justified. We don’t want to pay too much, but you don’t want to knock him down either Literature Review

In the world, India is the fourth largest economy and expected to become the fastest growing greater economic in the next few decades. To achieve its economic and development goals, the Indian government targeted the economic growth rates of about 8-10 percent a year for the next few decades. (Rastogi, 2011)

The balanced scorecard is a strategic planning and management tool that helps an organization understand and work towards, and allows monitoring the indicators. A completed scorecard system aligns the organization’s picture, with business strategy and daily operation, the fulfillment of the strategy developed by the direction. Strategic performance measures are the better way to notify the decision-making and show progress toward the desired results. The organization can focus on the most important areas that they are needed to achieve its vision, at the same time it helps an organization make effectiveness objective. (Sharma, 2009)

At present, the balanced scorecard is used as strategic analysis system, which indispensable within the strategic management field for future organizations and the competitive business environment. Although balanced scorecard is widely used, but the model has some issues are unable to supply the quantitative indicators and measure the relative important weights for each perspective contribution. The problems associated with the operations using long term strategy has difficult to found by a good number of firms.

Firms as well as knowledge of its picture in the future requires more information, compared to financial operational standards that evaluates the strategies and long term view of the firm as well as strategies in operational achievement. Balance scorecard has used for designing and determining strategic operation. The model of balanced scorecard provides the artifice for comparison to obtain many kind of perspective on the strategic decisions taking into consideration for the impact on customers, employee learning, finances and customers. (Sorooshian, 2014)

Research Methodology

The balance scorecard approach is to improve the firm performance. From previous research, Kaplan and Norton (1992) developed an innovative corporate performance scorecard that provides a framework for selecting multiple key performance indicators that supplement traditional financial measure short term operational controls to the long term strategy of the business. The research suggested mixed results, however, the results confined only to Europe and North America. (Kothari C.R., 2004)

To provide evidences to support the balance scorecard is a widely accepted tool for management to achieve different kinds of balance between short and long run operational purposes, Anand et al. conducted a questionnaire on performance scorecard and sent out to chief financial officer (CFO) in India for response. The questionnaire sent to all 579 companies included multinational corporations from a major constituent of Indian corporate sector, however, only 9% response rate from CFOs. Based on the responses, about half of the responses using balance scorecard. (Kothari C.R., 2004)

Anand et al. used field research that they mail questionnaire to each company’s chief financial officer for response. They identified the social and economic background of respondents; however, there are limitations for the methodology. According to the response rate, the survey was likely that the firm does not respond on time and may have non-response bias, which occurs in statistical surveys if the answers of respondents differ from the potential answers of those who did not answer. For example, the chief financial officer with a high workload may not answer the survey because they do not have enough time to answer it, and/or those with a low workload may decline to respond for perceive them as unnecessary. If they found is not necessary or not favorable to the firm, they will definitely ignore the survey. Therefore, non-response bias may make the measured value for the different effects of the above biases happen to offset each other. . (Kothari C.R., 2004)

Data Collection

The balance scorecard approach is an attempt to arrive different kinds of balance between short run and long run, different perspectives of the of the scorecard, between measuring change and the present position, and between market image and internal focus. It is useful for both strategic and operational purposes. To implement it successfully, it must enjoy widespread support from the company.

The questionnaire sent to all 579 companies included multinational corporations from a major constituent of Indian corporate sector, however, only 9% response rate from Chief financial officers. It does not directly reflect those companies actual status. Chief financial officers are the most understanding to the financial situation of a company. If the questionnaire replies from an assistant, clerk or other non-important staff, it would be no more truthfulness. The data impact this research authenticity. It would be more truthful if the questionnaire replies form an important person of company.

Table 7 on the research show that only 54.2 per cent of the respondents agree the initial choice of key performance indicators at the design stage of the balance scorecard has been substantially validated. Almost a half of the respondents just validates partly or validates to a limited extent. The validated of the research design stage was too low. Actually, in design stage can be change the visitor more validate to balance scorecard. It can let the research more to fit in with the purpose.

Table 1 on the research show that the visitor is major in 3 types of industry(15.09 per cent on other, 13.21 per cent on consumer durable, personal care and food product, and 11.32 per cent on engineering and capital goods). The distributed of industry was not average to Indian companies. It cannot impact the situation of balance scorecard in Indian companies.


The balanced scorecard is a set of measuring and managing the performance tool. It is focus on the processes and achieving the result. The purpose of the balanced scorecard is to manage and ensure the organizations strategy will be fulfill and achieve the objective. Based on the above article, we have some of the strength, weakness and limitation of using balanced scorecard in the organization. Benefits include align the action to strategy effectively. Balanced scorecard is a powerful system through strategy map, less strategy will align with the financial perspective. By using the balanced scorecard which helps the organization achieves the target and improves the level of management. Also, balanced scorecard maybe causes business unit gain the competitive advantages leading to the benefit to the financial performance.

Balanced scorecard has unable to supply the quantitative indicators and measure the relative important weights for each perspective contribution. But the method of quantitative may produce too much performance measures. It is quite difficulties in generating non-financial indicators, but the financial indicators not a certain problem. Sometimes, less highlight on human resource maybe the greatest weakness of balanced scorecard. There have competitive factors with innovation and knowledge which is the big challenge in current organization.

When the organization’s key drivers change, the balanced scorecard must be update such changed. At the same time, resources and organizational capabilities should act as limitation for small organization. Compare with specific industry, there have some limitation or maybe use the balanced scorecard frequently. Any changes in environment, customers and competitors to be more highlight the effect of using the adequate balanced scorecard.

If you want to accomplish more easily, should be coordinate with four perspectives, customer, financial, internal business and learning and growth. Nowadays, balanced scorecard is commonly used in the organization. Adopt a good balanced scorecard should be state your strategies with the objective and measure which you have choose. In the organization, everyone must understand each specific strategy, help organizations to acquire full successes. The most important point is the business must maintain updated balanced scorecard and aligned with needs of today.

1. Rastogi, N. P. (2011) Winds of Change: India’s Emerging Climate Strategy, The International Spectator, Vol. 46, No. 2, June 2011, pp. 127–141 2. Sharma, A. (2009) Implementing Balance Scorecard for Performance Measurement, The Icfai University 10 Journal of Business Strategy, Vol. VI, No. 1, p. 11 3. Sorooshian, S (2014) Study on Unbalanceness of the Balanced Scorecard, Faculty of Industrial Management, University Malaysia Pahang, Malaysia, Applied Mathematical Sciences, Vol. 8, 2014, no. 84, 4163 – 4169

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