ange of Decisions to be taken
The technique I choose for a given decision will be influenced by the importance and complexity of the decision. Decision making without planning is common but usually it doesn't do the work, there is a 20 year of research that have pointed out 50 percent of decisions made have failed and I believed that the reasons half of these decisions made have failed was mostly because of the methods they have used. To look for a good method to make the decision we should plan carefully in the first place. The benefits of planning are:
-Planning allows the establishment of goals and decisions are not only made as reactions to external stimuli. Managers now steer the organization rather than being steered by external forces, sometime the difference between planning or not is described as taking control of the situation versus responding to stimuli.
-Planning would provide a standard of measurement and it provides something to measure against so that we can discover whether or not we are achieving our goals.
-Planning can convert values into actions, when we are faced with a decision we could determine which decision will help advance our plan. When a crisis arises, thinking about the overall will help determine which decision to make will not only help solve the crisis by also help advance the plan. Without planning, decisions may ultimately be in conflict with each other.
Types of Decisions and Sources of Information
-Strategic decision is long term, involve uncertainty, and involve certain amount of risks, deals with non recurring situations and complex. It is the highest level which concerns general... READ FULL DOCUMENT
Decision making techniques
A CIMA case study
Page 1: Introduction
A business aims to generate value for its owners, customers and other stakeholders. It must decide how to combine valuable resources – typically buildings and equipment, materials, people and knowledge – in such a way that the value of the output exceeds the costs of the input.
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As resources flow into or out of a business, information flows too. Much of this information leaves a footprint in the form of financial data as the activities along a business’ value chain result in financial outcomes. These are reported in financial statements including the cash flow and income statements as well as the formal balance sheet. Traditional accounting is concerned with reporting on a business in financial terms about its past performance.
Management accountants go beyond this to prepare both financial and non financial information to support the business. They combine the relevant expertise of a traditional professionally qualified accountant with an understanding of the drivers of cost, risk and value in a business. This enables them to provide analysis and insights which are used to improve future performance.
CIMA, the Chartered Institute of Management Accountants, is the world’s leading professional body of management accountants. CIMA trained management accountants help to lead the process of strategy formation in a business. Strategy is the plan for achieving objectives. However, strategy only points the way. Many decisions – large and small – must be made. Management is all about decision making and management accountants play a vital role in providing the crucial evidence that helps managers to make the right decisions.
Detecting, monitoring and evaluating risk is a very important element of this process. Management accountants use their accounting know-how to factor risk into decisions to help senior managers make realistic plans. The effectiveness of this depends on good communication. Even the best...
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