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Introduction to strategic management accounting

2.3 Long-term and short-term conflicts

 Long-term decision may conflict with short-term localised decisions.

 Example: A divisional manager may cut investment in order to boost short-term
profits (and hence perhaps achieve a bonus) but this may be to the detriment of
long-term performance.

2.4 The rational model of strategic planning

Strategic planning is a three stage process:

Strategic analysis
1
 internal and external analysis

 stakeholder analysis

 gap analysis

Strategic choice
2
 how to compete, for example cost leadership or differentiation

 where to compete in terms of markets and products

 how to grow, for example organic growth or acquisition

Strategic implementation
3

 detailed plans and target setting

 monitoring and control

Illustrations and further practice

Now try TYU question 1 and read Illustration 1 from Chapter 1 of the Study Text

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