The Contingency Theory of Management Accounting posits that there is no single universally acceptable management accounting system suitable for all organizations or consistently effective within an organization across all situations. Instead, accounting systems must adapt to prevailing circumstances, such as shifts in the environment, competition, organizational structures, and technology.
Industry structure analysis involves evaluating the opportunities and threats presented to a firm by the prevailing environment. It helps appraise the attractiveness of the industry to investors or new entrants and devise competitive strategies. Porter’s Five Forces framework is the standard tool for this analysis.
