A PERFORMANCE MEASUREMENT SYSTEM AND MANAGEMENT ACCOUNTING IN THE SUPERMARKET CHAIN SECTOR: ANALYSIS IN AN ITALIAN COMPLEX BUSINESS ENTITY

The paper aims to analyse the way in which management accounting is organised within companies which have a strategic need to centralise some functions and decisions, while simultaneously decentralising others. These characteristics are found above all in the supermarket chain sector, where a pressing need to centralise logistical and purchasing functions goes hand-in-hand with the need to respond to demands arising from the individual outlets’ local requirements. In 2005, with a market share of almost 18%, Coop was Italy’s largest food retailing group. Coop’s distinctive organisational feature is that it consists of a total of 140 cooperatives, nine of them large-sized, grouped together in three district associations. The Adriatic District is the largest of these, accounting for about 40% of Coop’s total sales. The unique characteristic of this type of organisational model is the high degree of autonomy enjoyed by each individual cooperative, deriving from its independent corporate structure, with no particular ownership constraints. In spite of this, it may still be beneficial to centralise a number of corporate functions, in order to obtain full benefits from economies of scale with regard to specific management policies. However, if this centralisation is not carefully calculated, it runs the risk of not yielding its full potential in terms of results. The cooperatives in the Adriatic District have responded to these needs by establishing Centrale Adriatica, assigned the task of performing coordination, marketing and logistics functions. This has made it necessary to acquire management accounting tools capable of planning and controlling the decisions affecting the parameters which are governed at the centralised level, but the effects of which are inevitably felt by each individual cooperative. The definition of selling and purchase price policies, promotion and advertising, and logistics management, form the starting-point for systems for the centralised planning and control of the trading margins of the individual cooperatives. By this mechanism, the cooperatives themselves implement a system of delegation of powers which places management of the main factors for the achievement of their strategic and financial objectives in Centrale Adriatica’s hands. The cooperatives continue to handle the acquisition of data and their communication to Centrale Adriatica, together with the planning and control of all the activities performed within the individual outlets, which are still managed entirely by the specific cooperative concerned.