Chapter_27_for_Class - 1 Chapter 27 Analysis for Decision...

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Unformatted text preview: 1 Chapter 27 Analysis for Decision Making 2 Short-Run Decision Analysis and the Management Cycle Objective 1 Explain how managers make short-run decisions in the management cycle 3 Short-Run Decision Analysis and the Management Cycle Readers of financial reports are interested in knowing what happened to produce those particular results Answer this question using the historical information in these reports Provides financial and nonfinancial quantitative information Should be relevant, timely, and presented in a format that is easy to use in decision making 4 Short-Run Decision Analysis and the Management Cycle (contd) Short-run decision analysis The systematic examination of any decision whose effects will be felt over the course of the next year Managers frequently take five predictable actions when deciding what to do First four actions During the planning stage Last action During the reviewing stage 5 Planning Managers take the following four actions during the planning stage when performing short-run decision analysis 1. Discover a problem or need 2. Identify all reasonable courses of action 3. Prepare a thorough analysis of each possible solution Identify total costs, savings, and other financial effects 4. Select the best course of action 6 Planning (contd) The following qualitative factors will influence a bank managers decision to keep or eliminate a branch location Competition Do competitors have a branch office located here? Economic conditions Does this branch location benefit the community we serve? Product or service quality Can we attract more business because of the service quality of this branch? Timeliness Does the branch promote customer service? 7 Executing Stage in which managers Must adapt to changing environments Take advantage of opportunities that will improve the organizations profitability and liquidity in the short-run During this stage a bank manager may choose to Eliminate a branch office Because costs exceed revenues Keep a branch office Because the community expects the organization to provide this service 8 Reviewing Managers evaluate each decision to determine whether it produced the forecasted results This is the fifth predictable action when performing short-run decision analysis If results fell short, managers identify and prescribe corrective action If the solution is not satisfactory or the problem remains, the management cycle begins again 9 Reporting Managers prepare reports related to short- run decisions throughout the management cycle Develop budgets that show estimated costs and revenues related to alternative courses of action Compile analyses of data that support their decisions 10 Discussion A. What are the five predictable actions frequently taken by managers during short-run decision analysis? 11 Discussion A. What are the five predictable actions frequently...
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Chapter_27_for_Class - 1 Chapter 27 Analysis for Decision...

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