tailieunhanh - Ebook Accounting for managers: Interpreting accounting information for decision-making: Part 2

(BQ) Part 2 book "Accounting for managers: Interpreting accounting information for decision-making" has contents: Strategic investment decisions, performance evaluation of business units, budgetary control, introduction to the readings, budgeting,.and other contents. | 12 Strategic Investment Decisions We introduced strategy in Chapter 2 to explain its link with achieving shareholder value. In this chapter we are more concerned with strategy implementation through capital investment decisions and the tools used to evaluate those decisions. Strategy Ansoff (1988) provided a typical description of strategy formulation: objectives and goals were established; then an internal appraisal of strengths and weaknesses and an external appraisal of opportunities and threats led to strategic decisions such as diversification or the formulation of competitive strategy. He established a hierarchy of objectives that were centred on performance measures such as return on investment (see Chapter 7, later in this chapter and Chapter 13). A contrasting approach was developed by Quinn (1980), which he called logical incrementalism. Quinn argued against formal planning systems, which he believed had become ‘costly paper-shuffling exercises’, observing that ‘most major strategic decisions seemed to be made outside the formal planning structure’ (p. 2). Quinn further argued that: the real strategy tends to evolve as internal decisions and external events flow together to create a new, widely shared consensus for action among key members of the top management team. (p. 15) Logical incrementalism is similar to work by Mintzberg and Waters (1985), which defined strategy as a pattern in a stream of decisions. Mintzberg and Waters separated the intended from the realized strategy, arguing that deliberate strategies provided only a partial explanation, as some intended strategies were unable to be realized while other strategies emerged over time. The difficulty for businesses in the twenty-first century is that they must continually adapt to technological and market change, making long-term strategy problematic. However, to give the external appearance of being well managed they need to develop strategies, even if only to legitimize what senior managers .