CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Accounting information is a part and parcel of today’s life which is necessary to understand the accurate financial situation of the organization and used as the basis of making any decisions. Since strategic decisions have long-term effect on the business and therefore it is important to analyze accounting information for making strategic decisions. Accounting information helps managers understanding their tasks more clearly and reducing uncertainty before making their decisions (Chong, 2010). Accounting is sometimes referred to as a means to an end, with the ending being the decision that is helped by the availability of accounting information (Arneld and Hope, 2013). Accounting systems can aid in decision making providing information relevant to the decision and to the decision maker (Gray, 2010). Eective and eicient accounting information plays a central role in management decision making (Trimisiu Tunji, 2012). Accounting information is one type of information recognized as a ‘learning machine’ that can help to evaluate how objectives might be achieved by quantifying the financial impact of each alternative available to the decision (Burchell et al., 2014). Accounting and financial information are among the most important information widely used in the managerial decisions (Royaee, Salehi, & Aseman, 2012). Within contemporary economic conditions, a successful manager needs a lot of reliable accounting information in order to be able to make quality business decisions (Miko, 2009).
Economical information especially financial and accounting ones are the information which always managers use in short term and strategic decisions and they may have most application among different variables effective in decision-making and in all types of decisions (Royaee, Salehi, & Aseman, 2012 and Hubber, 2013). Strategic decisions, when the decision maker aims for long periods of time, allocates all or part of the company’s core assets to achieve that goal; such decisions are usually adopted at top management (Eugenia1 and Tiberiu, 2013). Strategic decisions are among the most distinctive decisions in an organization and these are used for determining the goals and direction for long-term company development. Basically top management is involved in these sorts of decisions. They decide on company policy, long-term and annual business plans and the organizational structure, i.e. anything that is linked to the future of the company. A wrong strategic decision have far-reaching, negative effects on the company, which in turn places a lot of responsibility on the shoulders of the strategic decision maker (Sikavica, et al.2014). In this study, five strategic decision making areas such as basic, manufacturing, human resource, marketing, long-term investment were selected. These strategic decisions making somehow depend on accounting information. Without accounting information manufacturing department can’t know what is going on with the production cost and equipment cost. For hiring, training and promotions, human recourse manager somehow depends on accounting information. For developing new product or determining the sales commission, a sales manager needs proper accounting information. Accounting information also helps to take long term investment decisions by giving the proper view of present condition and would be condition of the organization. Though top management needs accounting information in every step to take any sorts of strategic decisions but no significant study were found to be conducted on the role of accounting information in strategic decisions making in manufacturing industries in Bangladesh. Therefore, the study was initiated to evaluate the importance of accounting information in decision making.
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