CIMA BA2 Syllabus A. THE CONTEXT OF MANAGEMENT ACCOUNTING - Decision Making Levels - Notes 2 / 6
What are the 3 decision making levels that management accountants can be involved in?
They are:
Strategic
These are unstructured, long term decisions like setting strategies for an organisation, for example, which new products to launch in the next 5 years.
These decisions will have major impacts for the organisation.
Tactical
These are more structured, medium term, more detailed plans, for example, producing the budget for the next year.
As these are medium term, they will have a medium impact.
Operational
These are short term (day to day) plans and decisions, for example, which supplier to purchase from in the next week.
As these are very short term, they have minor impacts on the organisation.
Which types of managers will be involved at which level of planning?
Senior managers will be involved at the strategic level of planning.
Their decisions will be forward looking, and use internal and external sources of information.
Middle managers will be involved at the tactical level of planning.
Their decisions will be forward and backward looking, for example comparing the budgeted results with actual results and calculating variances.
They will mainly use internal sources of information to make decisions.
Front line managers will be involved at the operational level of planning
Their decisions will be made using historic, detailed and internal sources of information.