Chapter 1 Flashcards
what is strategic planning
deciding objectives of the organisation, on resources needed to attain those objectives, on strategies to govern the acquisition
what is management (or tactical) control
process by managers ensure that resources are obtained and used effectively and efficiently
what is operational control
the process of ensuring that specific tasks are carried out effectively and efficiently
3 potential conflicts between strategic and operational decisions
unrealistic / overambitious plans
poor communications
inadequate performance management
what are performance management systems
the systems in an organisation by which the performance of that organisation is measured
what is strategic management accounting
a form of management accounting in which emphasis is placed on info from external factors and non financial info
advs for strategic management accounting
forward looking
focus on threats in external environment
mix of finance and non financial such as customer satisfaction
hierarchy of performance measures
1) strategy - forward looking, external, non financial
2) tactics - medium term, linked to budgets
3) operations - day to day, internal, detail, transactional level
what is internal benchmarking
compares one unit or function to similair within the organisation
advs of internal benchmarking
easier than external benchmarking
disadvs of internal benchmarking
not that relevant as units are probably not that similair
wont lead to innovation
not paying enough attention to competition
advs of external benchmarking
could remove the rival competitive advantage
disadvs of external benchmarking
hard to obtain the info
info will likely be historical
advs of external benchmarking - industry non competitor such as schools
as they arent direct competition, more likely to give info
disadvs of external benchmarking - industry non competitor
the difference in results need to be looked into, for schools it could be due to area and upbringing
what is external functional benchmarking
compare functions to ‘best in class’, regardless of industry
adv’s of external functional benchmarking
aim is to find new innovative ways to perform activities
they will be more open to sharing info
disadv’s of external functional benchmarking
difference in industrys will make it hard to implement
7 stages of benchmarking
set objectives and determine areas to benchmark
establish KPI’s
select organisations to compare
measure own and others performance
compare performances and identify gaps
design and implement and improvement plan
monitor improvement
what is swot analysis
a critical assessment of the strengths, weaknesses, opportunity’s and threats
what are the 5 key forces that determine the profitability of an industry
new entrants suppliers ( bargaining power) buyers ( bargaining power) substitutes (not always obvious such as holiday over a new kitchen) all lead to competition and rivalry
potential issues with porters five forces model
its not always easy to identify which industry a company is in - they may operate in multiple industrys
measures for new entrants
brand value
% of revenue from patented products
market share
measures for suppliers
level of discounts offered to customers
cost of suppliers product relevant to overall cost
measures for competition and rivalry
market growth
market share
measures for buyers
no of buyers
size of buyers
% of sales to largest customers
measures for substitutes
relative price / performance of subs
growth rate for substitute markets
vertical axis from BCG matrix
market growth
horizontal axis from BCG matrix
relative market share
what is a star
high market share, high market growth
what is a question mark
low market share, high market growth
what is a cash cow
high market share, low market growth
what is a dog
low market share, low market growth
uses of BCG analysis
internal balance can be checked
assess trends
evaluate competitors
evaluate risk
what was porters generic strategies
a firm needs to be the lowest cost producer or it must differentiate products from competition
what does pest stand for
political environment
economic environment
social factors
technological factors
what must you consider in respect of political environment
taxes affect consumer spending
CT policy on business
new regs / legislations - affect profit?
what must you consider in respect of economic environment
economy growing or shrinking
inflation
interest rates
exchange rates
what must you consider in respect of social factors
change in cultures, tastes and lifestyles/ whats popular
what must you consider in respect of technological factors
type of products made or sold
communication with suppliers and customers
whats the modern view of management accountant
management accountants spend more time now as consultants not making reports
