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chapter 8
chapter 8
24
Accounting
Graduate
12/15/2011

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Term
strategic planning
Definition
process of deciding on programs that the organization will undertake and and on the approximate amount of resources that will be allocated to each program over the next several years
Term
strategy formulation vs. strategic planning
Definition
process of deciding on new strategies whereas the strategic planning is the process of how to implement the straetgies
Term
strategy formulation
Definition
management arrives at the goals of an org and creates the main strategies for achieving these goals

- not systematic
Term
overlap between SP and SF
Definition
-studies during the strategic planning process may indicate the desireability of changing goals and strategies
-strategy formulation usually includes a preliminary means of achiving goals
Term
benefits of strategic planning
Definition
framework for developing the annual budget
-management development tool
-mechanism to force managers to look long term
-means of aligning managers with the long term strategies of company
Term
limitations of strategic planning
Definition
-danger that planning can end up becoming a form filling bureaucratic exercise, devoid of strategic thinking
-organization may create a large strategic planning department and delegate the prep of the strategic plan to that staff department
-time consuming and expensive
Term
form strategic plan is desirable in which situations
Definition
-top management is convinced that strategic planning is important
-organization is relatively large and complex
-considerable uncertainty about the future exists
Term
SP for industrial organizations
Definition
programs are product families, plus R&D, general and admin, planned acquisitions, or other
Term
SP for service orgs
Definition
programs tend to correspond to the types of services rendered by the company
Term
how long should a SP cover and why?
Definition
five years
-consequnces of a major decision might not be felt within a short time period
-beyond five years are too murky so it is not worthwhile
Term
organization relationships of strategic planning
Definition
involves senior management and managers and are assisted by staff
-primary purpose is to faciliate communication
-staff should only be catlyst -> should not be that actively involved
Term
Top management style
Definition
designers of system must correctly diagnose the style of senior management and see to it that the system is appropriate for that style
Term
2 categories of new programs
Definition
reactive - in response to a perceived threat of org
-proactive - capitalize on an opportunity
Term
techniques for analyzing investment proposals
Definition
- NPV
-IRR

should only be used half the amount of time that they are
Term
reasons for not using present value techniques in analyzing proposals
Definition
1. may be so obviously attractive
2. estaimtes involved in proposal are so uncertain
3. there may be another goal besides profitability
4. there may be no feasible alternative
Term
rules for proposals
Definition
-rules should be published and have appropriate parties analyzing and making decisions
-guidelines for preparing proposals, minimum required earnings,
Term
avoiding manipulation
Definition
-project analyst must be able to detect manipulations by program presenters to know if they have manipulated the data
Term
other models and techniques for analyzing new proposals
Definition
risk analysis, sensitivity analysis, simulation, scenario planning, game theory, option pricig, contingent claims, decision tree
Term
expert systems
Definition
computer systems that enable and help CEO and other senior management to analyze investment decisions and see the potential consquences of their actions
also can tabulate votes on investment
Term
value chain
Definition
linked set of value creating activities of which it is a part, from acquiring raw materials to ultimate end use product and delivering it to its final customers
Term
three potentially useful areas for value chain
Definition
-linkages with customers
-linkages with suppliers
process linkages within the firm
Term
process linkages within the firm
Definition
-seek to improve efficiency and hurry process of moving goods through improving 3 efficiencies
-inward effiency
production efficency
-outward efficiency
Term
ABC uses
Definition
shows complex products with multiple parts are more expensive than simple products
-shows the cause and root of the cost incurrence
-reducing costs by reducting complicatoins
Term
strategic planning process
Definition
1. review and updating strategic plan
2. deciding on assumption and guidelines
3. first iteration of the Sp
4 .analysis
5. second iteration of strategic plan
6. final review and approval
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