CMA Part 1: Section B - Planning, Budgeting, and Forecasting

Vocabulary-style flashcards covering the fundamental concepts of strategic planning, goal setting, and management theories from the CMA Part 1 syllabus.

Planning

The process that provides guidance and direction regarding what an organization needs to do throughout its operations, determining the "who, what, when, where, and how" of business operations.

Risk Capital

Capital provided by shareholders with the expectation that managers will pursue strategies that will provide good returns on their investments.

Competitive Advantage

An advantage a company has over its competitors gained by offering consumers greater value, such as lower prices for the same product or greater benefits that justify higher prices.

Market Theory

A philosophy that gives management a passive role, viewing its function as making reactive decisions in response to environmental events as they occur.

Planning and Control Theory

A philosophy that gives management an active role, emphasizing its planning function and its ability to control the activities of the business.

Strategic Plans (Long-Term Plans)

Broad, general, long-term plans developed by top management that focus on where the company wants to go (directional) rather than how it will get there (operational).

Internal Factors

Elements within the direct control of company management, such as current facilities, products, market share, technology investment, and corporate goals.

External Factors

Factors not within management's direct control, including the economy, labor market, competition, technological developments, and political risk.

Capacity

The ability of a company to produce its products or services.

Capital Resources

The buildings, equipment, tools, and other infrastructure that a company uses to produce goods and provide services.

Capital Budgeting

The process of planning how a company will obtain needed capacity and the necessary financing for fixed assets.

Tactical Plans

Short-term, specific actions developed by middle managers to execute intermediate plans, such as a $3$-month marketing campaign.

Operational Plans

Short-term plans developed by lower-level managers that focus on implementing tactical plans through day-to-day operations and budgeted amounts.

Single-purpose plans

Plans developed for a specific item or project, such as the construction of a fixed asset or the implementation of a new accounting system.

Standing-purpose plans

Plans that have relevance and use for many different items, such as marketing and operational plans.

Contingency planning

"What if?" planning used to prepare for possible future events, especially negative ones, to enable a company to be better prepared for various scenarios.

Mission Statement

A statement describing what the company does currently, its "reason to be," and the customer needs it serves.

Vision Statement

A statement of a desired future state or what the company wants to achieve; it is meant to be ambitious and motivating.

Marketing Myopia

A state of short-sightedness where a company focuses too much on the product it makes rather than the actual customer need it is satisfying.

Goal

A precise, measurable, and challenging future state that a company wants to achieve, characterized by being time-bound and realistic.

Objectives

The series of smaller targets or steps taken by units, departments, or individuals to attain a larger corporate goal.

Tunnel Vision

A situation where employees or managers become so focused on achieving their specific department's goals that they work against the company's overall goals.

Efficiency

The attempt to fulfill the goals and objectives of the company while using the minimum possible inputs.

Effectiveness

The actual accomplishment of goals; it is considered to be of ultimate importance in management efforts.