Planning and control cycle

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Planning and Control Cycle

  • Stage 1: Set Mission

    This involves establishing the broad overall aims and goals of the organisation – its mission may be both economic and social.  

    Most organisations now prepare and publish their mission in a mission statement.  

    Mission statements often include the following information:

    • Purpose and aim(s) of the organisation

    • The organisation's primary stakeholders: clients/customers, shareholders, congregation, etc.

    • How the organisation provides value to these stakeholders, for example by offering specific types of products and/or services

  • Stage 2: Identify Objectives

    This requires the company to specify objectives towards which it is working.  

    The objectives chosen must be quantified and have a timescale attached to them.  

    Objectives should be SMART:

    • Specific

    • Measurable

    • Achievable

    • Relevant

    • Time limited

  • Stage 3: Search for possible courses of action

    A series of specific strategies should be developed. 

    Strategy is the course of action, including the specification of resources required, that the company will adopt to achieve its specific objective.  

    To formulate its strategies, the firm will consider the products it makes and the markets it serves.  E.g. of strategies are

    • Developing new markets for existing products

    • Developing new products for existing markets

    • Developing new products for new markets

  • Stage 4: Gathering data about alternatives and measuring pay-offs

  • Stage 5: Select course of action

    Having made decisions, long-term plans based on those decisions are created.

  • Stage 6: Implementation of short-term (operating) plans

    This stage shows the move from long-term planning to short-term plans – the annual budget. 

    The budget provides the link between the strategic plans and their implementation in management decisions.

  • Stage 7: Monitor actual outcomes

    Detailed financial and other records of actual performance are compared with budget targets (variance analysis)

  • Stage 8: Respond to divergences from plan

    This is the control process in budgeting, responding to divergences from plan either through budget modifications or through identifying new courses of action

The overall is summarised in the diagram below

ACCA MA C1b Planning and control cycle graph
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