Section 1 a Framework For Planning and Control

Section 1 A framework for planning and control

The meaning of planning and control

There are two conflicting schools of thought regarding the extent to which the firm is in charge of its own destiny. Market theory postulates that the firm is solely at the whim of prevailing economic and social forces, so that successful management depends upon the ability to 'read' the environment. By contrast, planning and control theory asserts that management has control over the firm's future and believes that the firm's destiny may be manipulated and hence planned and controlled. In this view, the quality of managerial planning and control decisions is the key factor for success.

In reality, business organizations normally operate somewhere in between these two extreme views: many elements, such as raw material prices, are completely outside their control; on the other hand some elements, such as the selling price of its product, are determined by the organization itself. One may make a distinction, therefore, between controllable and non-controllable items. It is the function of management to manipulate the controllable items to the firm's best advantage, and to ensure that it is prepared to meet changes in the non-controllable ones, so as to take full advantage of favourable changes and minimize the impact of unfavourable ones. Planning is essential for all the factors which affect the organization, irrespective of whether or not they are controllable or non-controllable. We may infer from this fact that to the degree that a firm's management reflects the views of control theorists the greater are its chances of success.

The processes of management

Although there are different schools of thought as to what may be understood by the term 'management' and how it should be practised, it is generally accepted that management has five main functions: planning, organizing, controlling, communicating and motivating.


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Read on: Management Decision Making

Given this definition of the problems of accounting for management decision making, our scheme of work is as follows:

Section 1: A framework for planning and control

In this section, we examine the concepts of planning and control as they are applied to business organizations. We shall see that central to this analysis is the selection of the goals towards which the activities of such organizations are to be directed. These goals, therefore, provide the focus to the decision-making process.

We examine the management process in some detail so as to establish the role... see: Management Decision Making