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Strategic Business Management: From Planning to Performance

Strategic Business Management: From Planning to Performance

Gary Cokins

ISBN: 978-1-937-35235-6

May 2017

178 pages

Select type: Paperback

In Stock

$49.95

Description

Presenting core theories alongside practical applications, this publication will help students understand how to effectively move an organization toward strategic goals. Author Gary Cokins uses his deep knowledge of the subject matter to deliver an easy-to-follow road map to effective and strategic management through:

  • Establishing the integral links between planning and performance
  • Demonstrating how risk management and performance assessment impact planning
  • Applying business analytics and Big Data in the finance and accounting functions as well as marketing, sales, operations and other functions
  • Evaluating the effectiveness of a strategy map and the balanced scorecard as a management tool
  • Tying budgeting to strategy and measuring the effectiveness of both via ongoing performance

Written in a plain, straight-forward fashion that will allow students to draw immediate value from its content, this book pulls together several topics in an elegant yet sophisticated approach. It uses detailed graphics and diagrams to provide students with a clear understanding of the dynamic intersection between key management and organization leadership topics that management accountants need to master in order to fill a strategic leadership role within their organizations.

PART 1: OVERVIEW OF ENTERPRISE PERFORMANCE MANAGEMENT 1

1 INTRODUCTION 3

A Dilemma for Accountants 3

Accountants’ Problem of Denial 4

2 ENTERPRISE PERFORMANCE MANAGEMENT: MYTH OR REALITY? 5

Executive Pain—A Major Force Creating Interest in Performance Management 6

What Is EPM? 7

Is EPM a New Methodology? 7

Clarifying What EPM Is Not 8

What Has Caused Interest in EPM? 9

The EPM Framework for Value Creation 10

The EPM as a Continuous Flow 12

A Car Analogy for EPM 13

Where Does Managerial Accounting Fit In? 14

EPM Unleashes the ROI From Information 15

Management’s Quest for a Complete Solution 17

PART 2: MANAGERIAL ACCOUNTING 21

3 DO ACCOUNTANTS LEAD OR MISLEAD? 23

The Perils of Poor Navigation Equipment 23

The Perils of Poor Managerial Accounting 24

The Accountant as a Bad Navigator 24

4 A TAXONOMY OF ACCOUNTING AND COSTING METHODS 27

Confusion About Accounting Methods 27

A Historical Evolution of Managerial Accounting 29

An Accounting Framework and Taxonomy 29

Asking What? So What? Then What? 31

Predictive Versus Descriptive Accounting 32

Co-existing Cost Accounting Methods 33

5 MANAGERIAL ACCOUNTING DESIGN COMPLYING WITH THE CAUSALITY PRINCIPLE 35

Removing the Blindfold With ABC/M 35

Overhead Expenses Are Displacing Direct Expenses 36

Impact of Diversity in Products, Service Lines, Channels and Customers 37

Growing Discontent With Traditional Calculation of Costs 38

Activities Are Expressed With Action Verbs 39

Drivers Trigger the Workload Costs 41

Strategic Versus Operational ABC/M 42

6 STRATEGIC COST MANAGEMENT FOR PRODUCT PROFITABILITY ANALYSIS 45

ABC/M Is a Multi-Level Cost Re-assignment Network 45

Drivers: Resource, Cost, Activity and Cost Object Drivers 48

Business and Organisational Sustaining Costs 48

The Two Views of Costs: The Assignment View Versus the Process View 49

Vertical Axis 50

Horizontal Axis 50

How Does Activity-Based Costing Compute Better Accuracies? 51

Activity-Based Management Rapid Prototyping: Getting Quick and Accurate Results 53

Product Profitability Analysis 54

Two Alternative Equations for Costing Activities and Cost Objects 55

PART 3: STRATEGY MANAGEMENT 57

7 THE PROMISE AND PERILS OF THE BALANCED SCORECARD 59

What Is a Balanced Scorecard? 59

Balanced Scorecards Are Companions to Strategy Maps 60

Measurements Are More of a Social System Than a Technical One 62

Scorecard or Report Card? The Impact of Senior Management’s Attitude 63

GPS Navigators for an Organisation 63

How Are Balanced Scorecards and Dashboards Different? 64

Scorecards and Dashboards Serve Different Purposes 65

Scorecards Link the Executives’ Strategy to Operations and the Budget 68

Dashboards Move the Scorecard’s Dials 68

Strategy Is More Than Performing Better 68

Getting Past the Speed Bumps 69

8 DESIGNING A STRATEGY MAP AND BALANCED SCORECARD 71

Eight Steps to Create a Strategy Map 71

Scorecards and Strategy Maps: The Enabler for EPM 76

PART 4: PLANNING, BUDGETING AND FORECASTING 79

9 PREDICTIVE ACCOUNTING AND BUDGETING WITH MARGINAL EXPENSE ANALYSIS 81

What Is the Purpose of Management Accounting? 81

What Types of Decisions Are Made With Managerial Accounting Information? 82

Rationalisation 82

Planning and Budgeting 83

Capital Expense Justification 83

Make Versus Buy, and General Outsourcing Decisions 83

Process and Productivity Improvement 84

Activity-Based Cost Management as a Foundation for Predictive Accounting 84

Major Clue: Capacity Only Exists as a Resource 85

Predictive Accounting Involves Marginal Expense Calculations 86

Decomposing the Information Flows Figure 88

Framework to Compare and Contrast Expense Estimating Methods 90

Predictive Costing Is Modelling 91

Debates About Costing Methods 91

10 WHAT’S BROKEN ABOUT BUDGETING? 95

The Evolutionary History of Budgets 96

A Sea Change in Accounting and Finance 98

The Financial Management Integrated Information Delivery Portal 99

11 PUT YOUR MONEY WHERE YOUR STRATEGY IS 101

A Budgeting Problem 101

Value Is Created From Projects and Initiatives, Not Strategic Objectives 103

Driver-Based Resource Capacity and Spending Planning 104

Including Risk Mitigation With a Risk Assessment Grid 105

Four Types of Budget Spending: Operational, Capital, Strategic and Risk 107

From a Static Annual Budget to Rolling Financial Forecasts 108

Managing Strategy Is Learnable 108

PART 5: INTEGRATING ENTERPRISE RISK MANAGEMENT AND ENTERPRISE PERFORMANCE MANAGEMENT 111

12 THE INTEGRATION OF ENTERPRISE RISK AND ENTERPRISE PERFORMANCE MANAGEMENT 113

How Do ERM and EPM Fit Together? 113

Is Risk an Opportunity or Hazard? 114

Problems Quantifying Risk and Its Consequences 114

Types of Risk Categories 115

Risk-Based EPM Framework 117

Risk Managers: Friend or Foe of Profit Growth? 118

Invulnerable Today but Aimless Tomorrow 119

PART 6: BUSINESS ANALYTICS FOR ACCOUNTING AND FINANCE 121

13 WHAT WILL BE THE NEXT NEW MANAGEMENT BREAKTHROUGH? 123

The History of Management Breakthroughs 123

Will Business Analytics Be the Next Breakthrough? 124

14 HOW DO BUSINESS INTELLIGENCE, BUSINESS ANALYTICS AND ENTERPRISE PERFORMANCE MANAGEMENT FIT TOGETHER? 127

The Relationship Between Business Intelligence, Business Analytics and Enterprise Performance Management 128

Overcoming Barriers 129

15 CFO TRENDS WITH ANALYTICS 131

Analytics as the Only Sustainable Competitive Advantage 131

Resistance to Change and Presumptions of Existing Capabilities 132

Evidence of Deficient Use of Business Analytics in Finance and Accounting 133

Sobering Indication of the Advances Still Needed by the CFO Function 134

Moving From Aspirations to Practice With Analytics 135

Customer Profitability Analysis to Take Actions 135

Rationalising and Validating Key Performance Indicators in a Strategy Map and Balanced Scorecard 136

Moving From Possibilities to Probabilities With Analytics 137

Fill in the Blanks: Which X Is Most Likely to Y? 139

Increased Employee Retention 139

Increased Customer Profitability 139

Increased Product Shelf Opportunity 139

The CFO Function Needs to Push the Envelope 140

PART 7: HOW TO BEGIN IMPLEMENTING ENTERPRISE PERFORMANCE MANAGEMENT 143

16 WHERE DO YOU BEGIN IMPLEMENTING ANALYTICS-BASED PERFORMANCE MANAGEMENT? 145

Accept That Analytics-Based EPM Is About Integration and Speed 145

Assuming an Enlightened Leadership Team, Then What? 146

Embrace Uncertainty With Predictive Analytics 147

17 A CALL TO ACTION—BUILDING A BUSINESS CASE 149

The Obsession With ROI Justifications 149

Management and the IT Function Can Be Obstacles 150

Is EPM Art, Craft or Science? 151

Balancing a Smart, as Well as a Healthy, Organization 151

The Power of Business Analytics 152

The Future of Analytics-Based EPM 152