The potential of management accounting and control in global operations

Abstract

Purpose The purpose of this paper is to identify the financial potential of new service businesses in the context of a global machinery manufacturer. The objective is to examine the supportive role of management accounting (MA) and control in service business development, which has not been empirically examined previously. Design/methodology/approach The paper takes advantage of an interventionist case study at a global machinery manufacturer and is empirically based on a comprehensive examination of the service business potential in the selected product category in different market areas. The researchers were actively involved in the accounting development activities underlying this paper. Findings The results suggest that the development of a global service business is necessary to build on market area characteristics. An analysis should combine financial information and equipment fleet information across product lines and organizational units. Research limitations/implications MA and control practices tend to require significant development to actually support the process of identifying and capturing the service business potentials. As the findings are limited to one case environment, further studies should address the longitudinal evolution of MA and control, and the choice and utilization of different performance measures, in similar contexts. Practical implications The paper provides managerial insights on how to utilize MA information and proposes ideas for performance indicators. Originality/value The process examined in this paper responds to the need for tools and techniques supporting service business development. MA and control could provide a comprehensive understanding of the dynamics of service business profitability potential and support in identifying and prioritizing the possible avenues of realizing such potential.

RFM customer analysis for product-oriented services and service business development: an interventionist case study of two machinery manufacturers

“…It is noteworthy that, to a large extent, the long-term customer relationships tie OEMs' profitability to the profitability of their customers (Laine et al 2012b). In this vein, Lindholm et al (2017) suggest new performance indicators related to machinery fleets and their after-sales service needs (from the customer's viewpoint) and potentials (from the manufacturing company's perspective). Similarly, Korhonen et al (2016) examine the possibilities to forecast customer behavior by using an extended understanding of the customers and their buying behavior.…”

“…These variables are potentially transferable across contexts outside product-related services as well. Second, by applying and modifying the RFM model to better suit the productsupport-service context, the paper contributes to the literature on the governance of product-oriented services in manufacturing (Oliva and Kallenberg 2003;Wagner and Lindemann 2008;Ala-Risku 2009;Baines et al 2009;Ulaga and Reinartz 2011;Lindholm et al 2017). The paper shows that RFM analyses (or similar approaches) could help managers identify different types of service customers and embedded service business potentials, and manage the customers according to their specific behavior.…”

“…In addition, manufacturing companies lack tools and techniques for steering their service business activities (Baines et al 2009;Laine et al 2012a), despite the potentials in using installed base information and other information sources for this purpose (see e.g., Ala-Risku 2009;Holmström et al 2010;Saccani et al 2012; 1 3 RFM customer analysis for product-oriented services and service… Perminova-Harikoski et al 2015). Creating supportive information for decision makers represents a challenge for many companies because information is scattered in different systems and forms (Lindholm et al 2017). Quite understandably, prior research calls for new knowledge of how the provision of services drives change in financial information supply (Cinquini et al 2015) and demand (Lindholm et al 2017) in manufacturing industries.…”

“…Creating supportive information for decision makers represents a challenge for many companies because information is scattered in different systems and forms (Lindholm et al 2017). Quite understandably, prior research calls for new knowledge of how the provision of services drives change in financial information supply (Cinquini et al 2015) and demand (Lindholm et al 2017) in manufacturing industries. There is a need for integrative frameworks that help managers use information about their installed base, or their "machinery fleet", to govern the often global service networks.…”

“…The paper shows that RFM analyses (or similar approaches) could help managers identify different types of service customers and embedded service business potentials, and manage the customers according to their specific behavior. Third, more specifically, the paper contributes to literature on management accounting supporting service business development (Malleret 2006;Laine et al 2012a;Lindholm et al 2017) by introducing a method that can use installed base and customer information to measure, analyze and govern the business potential of an industrial machinery fleet. It is noteworthy that although the RFM analyses presented in this paper focus on the existing product-related services, information about the different customer segments regarding these service activities may provide insights into service potentials regarding more advanced services as well [see e.g., Laine et al (2012b) for service business potential simulations].…”