Consider the following management activities:? Choose the organization's long-term strategy. ? Plan and organize the use of resources into efficient operations. ? Implement plans and organizational change. ? Measure and report results. ? Define the organization's scale and scope of operations. Required:a. Identify the sequence in which the decisions must be carried out. Why is it important to carry out these activities sequentially?b. How can an effective cost management system support the above activities?
What will be an ideal response?
a.
The sequence order of activities is as follows:
? Choose the organization's long-term strategy.
? Define the organization's scale and scope of operations.
? Plan and organize the use of resources into efficient operations.
? Implement plans and organizational change.
? Measure and report results.
It is important to carry out the above activities sequentially because managers must follow a logical step-by-step approach in successfully managing an organization. For example, selecting the long-term strategy provides direction to managers regarding how to achieve an organization's objectives. Without a clear definition of this direction, it would not make sense to try to define the scale and scope of operations. In the absence of a sequential approach, there is a significant chance of decisions being made in a haphazard manner resulting in chaos.
b.
An effective cost management system can provide useful support to managers in carrying out the above activities. First of all, a cost management system can provide information about an organization's objectives, which will help in determining strategy. The system can gather information about the cost implications of different levels of scale and scope of operations and the efficiencies associated with these levels. It can then help in planning and organizing the use of resources by reporting on the cost of alternative resources, products, and services. Finally, it can report the actual results of the actions taken by management in terms of how well individual and organizational objectives are achieved. This feedback can be used by management to modify strategies and/or actions as necessary.
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