Managament accounting

Long-term strategic planning, also known as corporate planning, involves selecting appropriate strategies so as to prepare a long-term plan to attain the objectives. Long-term strategic planning is a detailed, lengthy process, essentially incorporating three stages and ending with a corporate plan

The long-term corporate plan serves as the long-term framework for the organization as a whole but for operational purposes it is necessary to convert the corporate plan into a series of short-term plans, usually covering one year, which relate to sections, functions or departments. The annual process of short-term planning should be seen as stages in the progressive fulfilment of the corporate plan as each short-term plan steers the organization towards its long-term objectives.

There are two stages in the control process.

(a) The performance of the organization as set out in the detailed operational plans is compared with the actual performance of the organization on a regular and continuous basis. Any deviations from the plans can then be identified and corrective action taken.

(b) The corporate plan is reviewed in the light of the comparisons made and any changes in the parameters on which the plan was based (such as new competitors and government instructions) to assess whether the objectives of the plan can be achieved. The plan is modified as necessary before any serious damage to the organization's future success occurs.

Management is decision taking. Managers of all levels within an organization take decisions. Decision making always involves a choice between alternatives and it is the role of the management accountant to provide information so that management can reach an informed decision. It is therefore vital that the management accountant understands the decision-making process so that they can supply the appropriate type of information.