Strategic Management Accounting Essay

3275 WordsSep 14, 201314 Pages
Introduction and Overview It is difficult to find an example of a more spectacular business failure than the recent collapse of Arthur Andersen. Within a few years, Andersen moved from one of the largest professional service organisations in the world to almost complete collapse. The impact of the firm's failure on its employees, customers, investors, and the general pub¬lic is hard to overstate. Its once proud reputation had been reduced to shambles. Even the President of the United States joked: We just received a message from Saddam Hussein. The good news is that he's willing to have his nuclear, biological and chemical weapons counted. The bad news is he wants Arthur Andersen to do it. The dramatic demise of Andersen (along with the failures of companies such as Enron and Global Crossing) has raised concerns among managers throughout the world. They want to understand what caused the collapse of the company so that they can take actions to avoid similar fates. Over the years, Andersen's business environment and strategy changed in material ways. Their management responded by making associated changes in their organisational architecture (decision right, performance evaluation and reward systems). Part 3 of this book has argued that ill designed organisational architectures can result in poor performance and even company failure. An important question is whether Andersen's failure can be traced to inappropriate organisational choices. An even more critical ques-tion is whether other managers can learn from Andersen's mistakes. We believe that the answer to both questions is yes. Our case study begins by summarising the history and events that led to the col¬lapse at Arthur Andersen. This discussion is followed by a series of questions that ask the reader to analyse the demise of Andersen in the context of the framework intro¬duced in this book. Our

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