Management Accounting and Business Model - An Intertwined Relationship

Abstract

In today’s world of cut-throat competition, as the business models are increasingly getting advanced, management accounting is getting advanced too. This is because unless the management can understand what is going on with their business, it will not be able to strategize properly. We can verily compare today’s competition among the businesses to a war between two countries due to very little scope to increase prices. When a business cannot increase prices freely in a market, the obvious way of increasing profit is to reduce the cost and for that the entire value chain of the business model needs to be watched and here comes the importance of the intertwined relationship of management accounting and business model which is discussed in this article using various management accounting tools and their applications.