The role of management can be described as making decisions that are likely to ensure the viability of an organisation and to plan and control the implementation of these decisions. Ultimately, management is concerned with planning, decision-making and control.

Set business objectives The aims of a business are often couched in broad terms and may be set out in the form of a mission statement. This statement is usually brief and will generally articulate high standards or ideals for the business. The objectives of a business are usually quantifiable and more specific and should be consistent with the aims of the business. Examples could include; the kind of market it wishes to serve, the market share it wishes to achieve and the range of products and services to be offered.

Identify potential strategies This second stage involves the search for a range of strategies for the business to achieve its objectives. This task is undertaken by management and involves much data collection and analysis of both the external market and an internal analysis of the resources and expertise available to the business to pursue each option. Much of the external analysis focuses on the future, for example new markets, future demand, and the changing business environment. These decisions are referred to as long-run or strategic decisions and generally have a profound effect on a businesses future position. By comparing the environmental influences (opportunities and threats) and the resource limitations (strengths and weaknesses), a strategic plan can be put together setting the organisation on a course to follow in the hope of achieving specific goals.

Evaluate and select strategies When deciding on the most appropriate option(s) to choose, management must examine information relating to each option to see if that option fits with the objectives that have been set and assess whether or not it is feasible to provide the resources required. Management must consider the effects of pursuing each option on the future financial performance and position of the business. Projected financial statements play an invaluable role in the evaluation of the various options open to management.

Implement the strategies Once decisions have been made at stage three, they should be implemented as part of the normal budget process. A budget is a financial plan outlining the projected effects of the decisions management has made. They are prepared based on the differential costs and revenues associated with the particular course of action chosen and although these costs and revenues are estimates, generally management will apply probabilities to calculate a likely basis for the costs and revenues estimated. The planning process leads with an overall or strategic plan, which is divided into annual plans, which show in detail how the strategic plan is to be achieved.

Compare actual results with plan This is where progress on achieving the plan is monitored. This involves daily, weekly or monthly comparison of actual performance against budget. In particular, budgeted costs and revenues are compared to actual performance and any variances are identified.

Investigate variances and take corrective action The control process should provide management with relevant, reliable and timely information to help them decide on possible corrective action when variances between budgeted and actual costs and revenues occur. All significant variances must be investigated and this must be done quickly to ensure management have timely information to take corrective action. This process involves focusing on possible reasons for the variances and then deciding on the corrective type of action required. This corrective action can involve changing the plan slightly as it may have been too ambitious and unachievable or too easily achieved. Management must also be aware of the external factors that can influence actual performance and create variances.