Planning Summary

The purpose of this webpage has been to emphasize the necessity of setting long-run objectives and of relating short-term decisions to these objectives. Long-range planning has received increasing attention in recent years due to rapidly changing business conditions, which have persuaded management to take a longer view of the firm's activities than has hitherto been thought necessary. It is becoming widely recognized that effective long-range planning should result in a firm being always in the best position with products, resources and processes deployed in such a way as to take advantage of all the opportunities which present themselves. Long-range planning is seen as providing a systematic way of running a company so that not only can it anticipate change, but may actually profit from change. The absence of long-range planning may be detrimental to a firm in a number of ways: for example, current profitability may induce so much complacency that danger signals may be ignored, and in due course, valuable opportunities may not be seized. Equally, an excessive concern with short-term planning may en-courage actions in the short-term which are detrimental to the long-term interests of the firm.

A long-range plan may be damaging, however, if it is badly implemented. Thus, a rigid long-range plan may turn out to be inappropriate for new circumstances. It is necessary, therefore, that long-range planning should have a degree of flexibility, so as to allow for adjustments to changing circum-stances. Long-range planning should include a continuous scanning process aimed at discovering opportunities, defining constraints and assessing risks.

The accountant has an important role to play in long-range planning, particularly in long-range financial planning.

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Read on: Long-range Profit Planning and Other Long-range Objectives

Long-range profit planning and other long-range objectives

We have discussed long-range planning almost exclusively in terms of long-range profit planning and its financial implications. This is because it is one of the most important company objectives, and one of special interest to accountants. It should not be forgotten, however, that long-range planning requires that careful attention should similarly be given to the attainment of other objectives of great importance to the company, for example, those relating to employees, consumers and the local community. Unless a firm gives attention... see: Long-range Profit Planning and Other Long-range Objectives