Page 144 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 6: Strategic Planning for Management Control

 The value chain for any firm in any business is the linked set of value creating activities to Notes
produce a product from basic raw materials source for component suppliers to the ultimate
end-use produce delivered into the final consumers’ hands.

6.6 Keywords

Formal Strategic Planning: Formal strategic planning is an excellent management education
and training tool. It provides the managers to think about strategies and their implementations.

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.
Value Chain Analysis: The value chain for any firm in any business is the linked set of value
creating activities to produce a product from basic raw materials source for component suppliers
to the ultimate end-use produce delivered into the final consumers’ hands.
6.7 Review Questions

1. What is the relation between goals, strategies and long-range planning?
2. Trace the evolution of long-range planning.
3. What is the structure and content of long-range plan?
4. What are the benefits and limitations of Long-Range Planning/Strategic Planning?

5. In which type of organization is formal long-range planning required? In a stable
organization, do you require formal programming/long-range planning?
6. “In a company that operates on a calendar-year basis, the programming process is completed
just prior to the preparation of the annual budget.” Can you describe the process?
7. What is a planning gap? How do you close a planning gap?
8. What are the different ways of analysing ongoing programmes/long-range plans?

9. “From strategic planning perspective, the value change concept highlights three potential
areas.” Describe these areas and state methods for improvement.
10. How is activity-based costing a strategic planning tool?

11. What insights of the business does the “Value chain” provide?

Answers: Self Assessment

1. Strategy formulation 2. Strategic planning
3. Operating budget 4. Proposals
5. Formal 6. Linkages

7. Value chain 8. Planning staff
9. Past performance

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