2. Consider what information sources may be useful to evaluate the organisation's position relative to its competitors in an industry (position could be market share or it could be in terms of cost structure, size, financial stability, product differentiation, etc.). Assume for this activity that the concern is around market share and financial stability. (250 words) [Marks: 10) Activity 3.2 Information sources for strategic management accounting Spend about 10 minutes on this activity Consider what information sources may be useful to evaluate the organisation's position relative to its competitors in an industry. To begin the exercise it is important to define what is meant by position. It could be market share or it could be in terms of cost structure, size, financial stability, product differentiation, etc. Assume for this activity that the concern is around market share and financial stability because two competitors are rumoured to be considering a merger. Discussion The marketing department may have access to industry associations that produce and disseminate market data. Usually this works on the basis that each member organisation that contributes to the survey is entitled to receive the results. Alternatively it may be necessary to commission market research or undertake it in-house if the organisation has the necessary resources and skills. It is then possible to compare the internal information about product sales with the external data about the market to get a sense of relative position (either in unit sales or sales revenue). Financial stability may be a concern if the potential combined competitor is likely to use its increased size to gain access to the share market (if it is going to become publicly listed) or to raise debt. In considering its relative financial position, the organisation needs to consider its position, including its cash flows and working capital to support increased price competition or to sell on better terms to distribution networks. It may also need to consider its leverage in absolute and relative terms. If the new competitor reduces cash inflows from sales for a period of time, could it survive and service its debt and other commitments longer than others in the industry? This information may not be very timely, but it should be available through annual and interim reports for competitors. Having connections in the capital markets and Session 3 Strategic management accounting financial services sectors may help with early warning of any significant competitor raising capital. Overall, it is important to understand the focus of the information required and be prepared to cooperate and communicate with others in the organisation who may be in a better position to provide it. Just looking at the information generated internally will not be sufficient