Financial planning and control is termed as a systematic process of corporate performance management. It is the process in which accounting department of business identifies the need of capital for several business operations. In addition to that, evaluation of cost resources along with the allocation funds is being managed by an efficient financial plan. Apart from that, financial planning and control provides internal and external guidance (Deakins, Morrison and Galloway, 2008). Internal guidance is mainly associated with the planning and steering along with monitoring value creation processes which can be controlled by the income-statement, cash-flow and balance-sheet.On the other hand, this system also provides external guidance by supplying information that is related to business performance to various stakeholders such as shareholders, banks, customers, suppliers and government (Ahrendsen and Katchova, 2012). With reference to this information, all these stakeholders can assess the information about economic and financial performance of organization in an appropriate manner and rate the company’s creditworthiness as per the business outcomes.

This report carries out systematic study of various accounting and management decision making process to assess a wide range of information about effectiveness and usefulness of financial planning and control process. In this process, this report presents importance of strategic management accounting information for taking many types of strategic decisions such as productivity improvement and re-engineering. Furthermore, this study also evaluates the usefulness of management control system in the assessment of business outcomes.


Management accounting information is focused at internal management as well as decision makers of company. This approach is based on a relevant financial data which is reliable for manager’s operations for making sound business and strategic decisions. Management accounting information is a combination of wide range of financial data or elements such as financial ratios, budget forecasts, variance analysis along with cost accounting (Elearn, 2013). All these kinds of elements are playing a significant role for the attainment of business objectives. The information collected from these sources is playing a significant role to attain the business goals such as improvement in business productivity, re-engineering etc. By considering the views of different stakeholders, management can develop wide range of strategic plans to improve several aspects of business such as enhancing statutory compliance and control capabilities (Bragg, 2012). In order to assess the management accounting information, different kinds of reports and accounts are prepared that would provide accurate and timely information about financial position of company and other statistical data that is essential to take strategic decisions.

The information assessed through management accounting system assists the managers in evaluation of financial implications of various risky projects. In addition to that, management can get aware about the financial consequences of business decisions so that management can select best strategy as per the aim and objectives of organization (Bull, 2007). This information helps the management for establishment of an efficient control system that can manage the business spending and would manage the financial control as well. The data provides assistance to management in order to carry out internal business audits for the attainment of business objectives. Apart from that, this assessment also provides information about the impact of competitive landscape on firm. With the help of this, management can maintain integrity of various business operations (Galloway and Morrison, 2002). This information is greatly influences business decisions that are associated with the productivity of improvement, re-engineering and downsizing. These strategic decisions are playing a significant role in the success of business.

The productivity of a business organization can be measured in the form of profitability, revenue, production, quantity, quality of output, business position in market etc. All these factors influence the management decisions of company. To improve the productivity of business, organization always tries to improve the profitability of company (Healy and Palepu, 2007). In this regard, management determines several strategies to reduce the expenditure and cost of operations. In this process, management accounting information system provides a wide range of information with the help of variance analysis and cost accounting. Variance analysis is playing a significant role in strategic decisions which are related to improvement in productivity by lowering the cost of business operations. In this process, management compares the actual realized expenses on the basis of budgeted expenses (Barth, 2006). Any deviations are identified and corrected as per the goals of business. These variations can be occurred in the man-hours and machine hours along with the raw material consumption as well as production time (Mostafa, 2013). All of these elements are greatly influenced by the company's budget and ultimately, the profitability of business entity.

For example, if the production process of a product is taking 20 percent more man-hours in comparison to budgeted duration then the labor costs are going to over budget. As per the variances, management takes immediate corrective actions to improve the productivity of firm (Lasher, 2010). However, when management addresses positive variance then it could be applied to manage the impact of a negative variance and to increase the production quantity to achieve objectives of profit margin as well. By managing variance in different operations of business, manager can control the cost of operations.

Get plagiarism-free report by a Ph.D. Writer
Professional essay writers are Aware of your

In order to gain proper information about the cost of different operations, activity based technique is a best tool of management accounting systematic. By using activity-based costing techniques, management can determine the cost of each activity which is required to produce the products and services of a firm (Keller, 2013). On the basis of this information, management can take strategic business decisions which are related to selection of new production line along with the production schedule and machines. This process could reduce the waiting period among two stages of production process along with the wastage of resources such as funds, machines hours etc. All these factors will increase the production quantity as well as cost. With reference to this information, company can reduce the cost of operations and may enhance the profitability of firm (Menifield, 2010). In addition to that, relevant cost analysis helps the manager to examine costs of different advertising alternatives for each product by ignoring the common costs. The approach is very effective in order to determine whether to product lines is to be added or not. On the basis of this information, management can take various strategic decisions in order to improve the productivity of business. In the process of inventory management, manager of firm can adopt different management accounting tools such as LIFO and FIFO that would assist the manager for taking business decisions in an appropriate manner (Mishra and, 2009). These decisions are playing a significant role for the attainment of business objectives.

Ratio analysis is one the most important management accounting technique that provide wide range of information about financial position of company in the form of liquidity, profitability, return on investment, risk etc. By calculating different kinds of ratios on the basis of financial of statements of different companies, management of an organization can compare business results and position of company with reference to other firm belong from similar industry (Wang, Haslam and Marston, 2011). On the basis of this information, management can take various strategic related to productivity improvement in the form of profitability, liquidity etc.With reference to information that have been assessed through ratio, organization develops strategic plans related to advertisements, marketing, costing and profitability. These elements have played significant role in order to increase sales of company within low cost so management can boost up overall productivity of company. However, ratios help manager to assess current business performance but it is not effective to forecast future business outcomes. Sometimes, ratio analysis also provides improper information because one ratio can be calculated by different formulas (Greenwood, 2002). Apart from this ratio analysis is reliable to take business decision related to expansion with reference to current business outcomes.

Business process re-engineering is termed as most important strategic business decisions that affects overall business outcomes. Business Process Reengineering can be termed as radical redesign of core business activities to implement the dramatic improvements in productivity of firm, cycle times and quality of goods and services (Business Process Reengineering, 2015). In the Business Process Reengineering, management carries out systematic study of existing business operations and develops new ideas to deliver more value to the customer that would enhance satisfaction level of consumers along with business efficiency. In this process, management adopts a new value system that puts some extra attention on customer needs.

Furthermore, Companies also try to reduce organizational layers along with eliminate unproductive activities of business operations in two key areas (Lee, Lee and Lee, 2006). First, management redesigns functional organizations into cross-functional teams. Second, manager also adopts the use technology to improve data transmission in decision making process.

BPR is termed a balanced approach in which management has to assess wide range of managerial accounting information for attainment of business targets. First, BPR looks for measurement of performance rather than incremental improvements. Second, BPR pursues towards the varied improvement goals that includes improvement in quality, cost, flexibility and advancement in speed, accuracy along with customer satisfaction (Booker, 2006). To accomplish these outcomes, management considers different kinds information. In this process, manager selects forecasting and budgeting tools to assess management accounting information for attainment of business advancement objectives. With reference to forecasting, managers can gain wide range of information about future market trends, change in needs of consumers, advancement in technology, growth in sales and market demand (Beal and et. al., 2012). In this regard, BPR also considers a holistic approach that would assist management for application of wide range of strategic decisions associated with business improvement, investing technology as well as empowerment of people.

By considering future market trends, the administration of company can consider both aspects technical aspects of process that include technology, standards and control. On the other hand management can consider social aspects associated with staffing, policies, jobs, career paths, etc. as per the future business trends. The process assists management to maintain effectiveness of business activities as per the change in business process, techniques and consumers (Drysdale, 2010). With reference to this tool, company can enhance quality and quantity of goods with the help of latest technology that will lower the cost of product so as management can maintain an efficient profit margin.

Budgeting is defined a systematic process for scheduling of various management practices in which company allocates wide range resources and time period for several business operations as per the priorities of firm. It plays significant role in the process of business process re-engineering (Birchall, 2014). On the basis of different budgets such as sales, cost, investment etc., management schedules activities associated with BPR in which managers plan for acquisition of new technology as per the budget of cost and investment. Apart from this, Budgeting will provide platform that considers all kinds of data about expected outcomes that could be gained by company through business process re-engineering. By considering these standards, management can evaluate outcomes that would be gained with new approaches of business arrangements, staff handling and production line (Hursti and Maula, 2007). So, budgets can be termed as a most important source of management accounting information from which business entity would manage several operations of business associated with application of organizational structure.

For managing business as per the market conditions, management also takes some strategic decision associated with downsizing. Downsizing refers to the permanent reduction of a company's workforce to control efficiency and business performance due to some changes that are occurred in business conditions (Surroca, Tribo and Waddock, 2010). This process is also called as reorganizing, reengineering and restructuring. In the strategic decisions related to downsizing, every organization has to develop systematic restructuring programs on the basis of staff reductions, departmental consolidations, plant or office closings as well as reduction in payroll expenses. The Corporate downsizing is mainly influenced by poor economic conditions and management decisions to cut costs along to maintain or achieve specific level of profitability.

In this process, management accounting system provides a variety of data in the process of execution of downsizing method (Briers and et. al. 2006).In this, management examines the percentage of staff members that would affect from the approach of downsizing. Furthermore, top authorities also evaluate several other element like slow down in economy, impact of merger and acquisition with other companies, reduction of product or service lines, market share of firm, etc. All these element are playing significant role in the management decisions of downsizing along efficiency of company. In this regard, management accounting information system arrange wide range of data by evaluating external and internal marketing conditions to attain business goals.

In addition to that downsizing helps organization to cut corporate bureaucracy and hierarchy to reduce cost of production by paying extra attention on the core business functions along with outsource non-core functions (Borghi and et. al., 2006). In this process, management promotes the use of part-time and temporary workers to complete several job operations that are previously performed by full-time staff. In order to increase effectiveness of strategic decisions related to downsizing, management can assess wide range of information about current performance of staff, impact of economic slow down on the profitability of company, reduction in sales, change in market share of company etc. Furthermore, management also provides information about negative aspects of downsizing approach that include the loss of highly-skilled and reliable workers along with increase in recruitment cost for finding the new workers, increase in overtime wages, decline in quality of customer service due to lack job security and increase the tardiness, absenteeism, and reduced productivity (Brimley, Garfield and Verstegen, 2005). Furthermore, Restructuring programs also leads confusion in order to manage job operations with new roles and responsibilities.


A management control system is termed as most important tool of business management. With the help of this system, management collects as well as use the information for evaluation of the performance and outcomes of different organizational resources such as human, physical, financial etc (Brigham and Daves, 2012). It plays significant role planning and control decisions of company. The management control system influences the behavior of wide range of organizational resources for implementation of many kinds of corporate strategies. Management control system is used by manager in a formal or informal manner. Management control system is termed as most essential tool to aid management for controlling an organization toward its strategic objectives along with competitive advantage in different market conditions (Broadbent and Cullen, 2012). It assists manager for implementation of various business strategies with the help of efficient management controls system, organizational structure, human resources management and culture.

For development of an efficient management control system, every organization has adopted different types of performance evaluation approaches that assist management to gain efficient information about productivity of company. With the help of an efficient performance evaluation technique, business entity formulates and plans further business strategies related to acquisition of financial resources, determination of productivity standards for employees, standards to manage consumption of materiel etc (Deakins, Morrison and Galloway, 2008).All these factors help manager to improve business performance along with optimum utilization of resources. In this process, performance evaluation strategies have played significant role to attain corporate objectives with the help of an effective control and business measures.

Managers have adopted several approaches to evaluate business performance for attainment of business objectives with the help of an efficient management control plan. It includes bench-marking, budgeting, ratio analysis etc. All these tools are termed as traditional business control techniques. But, balance score card is considered as a very effective business control that could play significant role in the process of performance evaluation (Ahrendsen and Katchova, 2012). The balanced scorecard (BSC) is a very effective strategy performance management tool that can be is used by managers to handle systematic execution of activities and operations by the staff within proper controlling system (BALANCED SCORECARD, 2015). The balanced scorecard concept is developed by management not only to measure the financial performance of company, but also to assess customer concerns, business process improvement along with the enhancement of learning tools (Elearn, 2013). This concept determines four business aspect to control business outcomes along with efficient performance.

The Balanced Scorecard

In this regard, the financial perspective of balance score card evaluates different measurement tools in terms of rate of return on capital (ROI) employed and operating income of the business. With reference to this factor, manager can examine financial performance of company.Customer Perspective related to balance score card measures the level of customer satisfaction, customer retention, loyalty of consumers along with the market share held by the firm (Bragg, 2012). This information assists manager in establishment of efficient marketing tools or marketing plan to attain business goals.The third element is Business Process Perspective in which management can measure cost of different management operations along with quality related to the business processes. The last aspect of balance score card is Learning and Growth Perspective. This element assists manager for assessment of satisfaction level of workers, employee retention as well as impact of knowledge management activities on the employees (Bull, 2007). The balance score card reflects goals of company along with performance measures. Furthermore, It also sets business targets along with classification activities to attain business goals with an appropriate manner.

Benchmarking is termed as a most important traditional approach of business performance evaluation in which management can compares business processes and performance metrics with reference to industry bests. It plays significant role in management control system because this approach evaluates quality, time and cost of operations (Benchmarking, 2015). In the process of benchmarking, management identifies the best firms related to particular industry. This information assists manager to set performance standards of company. With reference to bench-marking, organization can control business strategies related to management of cost of operations and quality of product and services.

On the other hand, balance scorecard can compares several aspects of business such as financial outcomes, satisfaction level of consumers and etc. Balance-score card is provide wide range of information about business outcomes so as management can develop various strategies to establish an effective management control system (B10 BPM tools every manager needs to know, 2015).On the other hand, bench marking improves business performance by identifying different methods that could assist management to implement improvement in operational efficiency and product design. It is great tool to understand relative cost position. This is because it reveals a company's relative cost position by focusing operations of company. In addition to that this approach also provides strategic advantage by focusing the capabilities of company. This approach also promotes the rate of organizational learning. In this, Benchmarking brings new ideas into the company and facilitates experience sharing approach (Menifield, 2010). But, balance score considers several aspects of business with reference to profitability, earning capabilities, satisfaction level of consumers etc. On the basis of above assessment, it can be said that bench-marking is very effective performance evaluation tool of business but this tool is limited because it covers only few aspects of performance assessment process (Keller, 2013). With the help of this, management can develop business control plan mainly for cost and quality control.

Budgeting is most essential traditional approach that is used by management to develop various business plan along with management strategies for attainment of business goals and scheduling of various business operations. It is not only formulate a systematic schedule of activities along with optimum allocation resources but also examine business outcomes. A systematic budget is termed as a quantitative expression of a plan for particular time duration (Purpose of Budgeting, 2015). It is based on the sales volumes and revenues, quantities of different resource, costs and expenditures, value of assets and liabilities along with cash flows. Budgeting is one of the most critically important section of the business planning process in which managers tries to assess profitability of business. The main objective of budgeting is to facilitate a model of business operations that could reflect efficiency of business operations. For development of efficient business control system to monitor business outcome, the manager always to forecast outcome and expenditure along with profitability. The framework of budgeting is mainly based on quantitative term (Mishra and, 2009). On the other hand, balance score card is formulated to assess both quantitative and qualitative aspects of business performance. This tool provides information about profitability and satisfaction level of consumers.

The main purpose of budgeting is to enable management to manage comparison of the actual business performance on the basis of foretasted business results. On the basis of this comparison, management identifies variance between budgeted expenditure and actual expenditure so as business entity can develop further strategies in order to control business expenses along with profitability (Wang, Haslam and Marston, 2011). Budgets are mainly representing a detailed analysis about future expectations of management for spending of monetary resources on various business decisions.

In this regards, Many companies formulates budgets by considering the annual business activities in which management can carefully outline and evaluates the expected needs of each department of company. Another major benefit of business budget is that the management can develop an ability to limit expenditures on several activities of business such as marketing, production, new product development, staffing etc. Budgets help managers to reduce wastage of resources on unessential items and activities along with the company does not overpay for economic resources used in the business (Greenwood, 2002). Furthermore, Budgeting also often allows firms in development of financial roadmap within business operations as per the schedule of future business growth and expansion process of organization. It also saves the capital on day to day business expenditures. This saving will assist management for selecting new business opportunities to improve performance of business.


On the other hand, balance score card is not only applied quantitative data in business performance evaluation but also qualitative of information associated with needs of consumers, satisfaction of consumers along with employees. With reference to balance-score card, management also develops various strategies to examine views of consumers along with assessment of productivity of staff (Booker, 2006). Budgeting is very lengthy process that aims to monitor income and expenditures of company by managing several activities of different departments. In this regard, balance-score card is a very quick tactic to assess overall business performance.

Balance score card is performance management tool that helps the business organization to evaluate its performance. One of the important roles of this system in the organization is that it aligns the activities of the business with the vision of the company. On the other side, previously companies use the traditional control techniques of measurement (Brimley, Garfield and Verstegen, 2005). With the help of these techniques, business organization uses the methods such as return on investment, ratio analysis etc. However on comparing the balance score card system with the traditional control techniques, it was assessed that their main focus is on the measurement of business on the aspect of financial terms. On the other side, balance score card does not only focus on the financial measures but also on the improvement on operational activities, performance of the business, vision of the organization, growth and many other aspects.

There are total four different perspectives of balance score card. The four major parts of balance score card are financial performance, learning and growth, internal processes, financial performance and from the customer’s point of view (Mostafa, 2013). In present competitive market, balance score card system play very important role as this system pay emphasis on the four different aspects of the organization. Nevertheless, in traditional methods different techniques were used for measuring the different aspects of the organization and they also mainly focus on the financial health of the organization. Balance score card helps the management to review the clear picture of organization that in which area the company is lacking or having downward position. It focuses on the internal process of organization such as requirement of employee training or development, learning and growth opportunities (Briers and et. al. 2006). These two factors help to review the performance of the business from internal side. Other two factor of this system are customers and financial performance, it helps to evaluate the satisfaction level of customers in market regarding the products and services offered.

Another factor that is financial performance measures the value and performance of its assets. Unlike in the earlier techniques of traditional method, it helps the management to assess the return on investment, measurement of financial health on the basis of past records. On the other side balance score card system, assist the management to manage its short and long term objectives and this are linked with the vision of the business (Surroca, Tribo and Waddock, 2010). It helps the company to make decision making process and also to maximize the value of stakeholders of the organization. Balance score card also play important role in management action regarding the pricing of products and services, quality and many other areas related to internal and financial management of the organization.


On the basis of above assessment, it can be concluded that financial planning and control is playing significant role in the process of corporate performance management. This report has addressed that strategic management accounting information creates huge impact on effectiveness and efficiency of wide range of strategic decision associated with productivity improvement and business process re-engineering. This study has been concluded that downsizing approach provides a systematic basis for the staff reductions, departmental consolidations, plant or office closings as well as reduction in payroll expenses so management can enhance efficiency of business entity. It has found that the management control system has played significant role in order to influence the behavior of wide range of organizational resources for implementation of a variety of corporate strategies. This study has concluded that traditional tools of management control system are mainly focused of some specific objectives and factors. But, the balance-score card provides reliable information about all aspects of business with an appropriate manner.


Ahrendsen, B. L. and Katchova, A. L., 2012. Financial ratio analysis using ARMS data. Agricultural Finance Review.

Barth, E. M.,2006.Including Estimates of the Future in Today's Financial Statements. Accounting Horizons: September.

Beal, D. and et. al., 2012. Financial planning. John Wiley & Sons.

Birchall, A., 2014. Financial Analysis and Control: Financial Awareness for Students and Managers. Butterworth-Heinemann.

Booker, J., 2006. Financial Planning Fundamentals. CCH Canadian Limited.

Borghi, J. O. and et. al., 2006. Mobilising financial resources for maternal health. The Lancet.

Bragg, M. S., 2012. Financial Analysis: A Controller's Guide.2nd ed. John Wiley & Sons.

Brigham, E. and Daves, P., 2012. Intermediate financial management. Cengage Learning.

Brimley, V., Garfield, R. R. and Verstegen, D. A., 2005. Financing education in a climate of change. Allyn and Bacon.

Please Share

Your location to get much better services