November 19, 2019 160
November 19, 2019 160
Corporate planning can be defined as the establishment of objectives and the formulation, evaluation, and selection of the policies, strategies, tactics, and actions required for achieving these objectives.
This involves the identification of specific work to be done the allocation of human and material resources to such activities, implementing the set-out strategy to attain objectives and the evaluation of performance.
A corporate plan or strategic plan refers to the systematic grafting of a set of activities to be done to attain objectives.
The purpose of any corporate plan is to systematically set up the corporate objectives and make strategic decisions for achieving the set objectives.
Such questions as
They must be addressed and resolved for an effective corporate plan.
Planning comprises of long-term/strategic planning, and short-term operational planning. The latter usually refers to a period of one year.
Such questions that need to be addressed are:
Therefore, it will be seen that the overall process of planning covers both the long and short term. Short-term tactical planning or budgeting works within a framework set by the long-term plans and it deals with a futuristic period.
Planning is a conscious intellectual process characterized by:
There are three planning horizons:
And for each of the three-time horizons, the planning activity is concentrated on the production system which encompasses inputs or resources processes or transformations and output or product subsystems. Depending on the nature of the production and size of the organization, a long-term 1 day can span from 5 to 15 years; Medium-term, 1 to 6 years; and Short-term, 1 day to 360 days. Each plan must establish a control mechanism to avoid waste and failure of the plan.
The following questions have to be answered if an effective control system needs to be built.
Secondly, a control system must undergo five basic stages:
The production control function is set out to accomplish the following:
The management accountant is one of the major providers of information for planning purposes and to do this effectively it is essential that he understands the nature of planning, how plans are established, the distinction between long-term and short-term planning the place of budgeting in the planning process, how to derive individual budgets and the overall master budget, and how planning relates to control.
Statistical and Operational Research Techniques can provide invaluable assistance in planning. Examples include the statistical aids in forecasting cost behavior and such operational research techniques as Linear Programming.
Don’t forget to share this post!