ABSTRACT
The purpose of a strategic plan is to defi ne how the organisation intends to achieve the aim of creating and sustaining long-term existence as an enduring organisation. Standard accounting systems are based upon monitoring the performance of the fi rm over a 12-month period. This time frame can cause managers to focus on meeting the near-term quantitative performance objectives such as annual sales, costs and profi ts. As a consequence situations may arise in which decisions are made which completely ignore the long-term strategic goals of the organisation. In the face of very poor sales performance, a company strategy based upon innovation and consistently superior products may be ignored. Instead senior management may instruct the marketing department to embark upon actions such as implementing price reductions, up-weighted sales promotion, postponing new product launches and ignoring service quality problems. These actions will probably result in the annual sales forecast being met, but at the cost of failing to introduce new products accompanied by damage to the company’s image for no longer delivering superior products and quality of service.
