Page 133 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems Pooja, Lovely Professional University

Notes Unit 6: Strategic Planning for Management Control

CONTENTS
Objectives
Introduction

6.1 Evolution of Strategic Planning
6.1.1 Benefits and Limitations of Strategic Planning
6.2 Analyzing Proposed New Programs

6.3 Analyzing Ongoing Programs
6.3.1 Value Chain Analysis
6.3.2 Activity Based Costing
6.3.3 Use of ABC Information
6.4 Strategic Planning Process

6.5 Summary
6.6 Keywords
6.7 Review Questions

6.8 Further Readings
Objectives

After studying this unit, you will be able to:
 Discuss the evolution of strategic planning
 Explain the analyzing of proposed new programs

 Analyze the ongoing programs

Introduction

Most companies’ managers spend considerable time thinking about the future, which results in
an informal understanding of the future direction the entity is going, or it may be a formal
statement of specific plans about how to go there. Such a formal statement of plans is called
strategic planning (also called long-term planning and programming). Strategic planning is the
process of deciding on the programmes that the organization will undertake and on the
approximate amount of resources that will be allocated to each program over the next several
years.

Relation to Strategy Formulation

Strategy formulation is the process of deciding on new strategies, whereas strategic planning is
the process of deciding how to implement the strategies. In the strategy formulation process,
management arrives at the goals of the organizations and creates the main strategies for achieving
the goals. The strategic planning process then takes the goals and strategies as given and develops
programs that will carry out the goals and strategies efficiently and effectively. For example, the

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