Study Notes management accounting acca f2

S
pecific 
▪ 
M
easurable 
▪ 
A
ttainable 
▪ 
R
esult orientated 
▪ 
T
ime bounded 
Some objectives are primary corporate objectives (goals) and some are secondary objectives. Both 
should combine to ensure the achievement of the overall corporate objective. For example a company 
sets its 
Primary objective 
as to maximize profit, for this it has 
Secondary objectives 
like cost reduction, 
sales growth, customer satisfaction etc. 
Objectives may be 
long term and short term. 
A company that suffering from losses in short term might 
continue to have a long term primary objective of achieving a growth in profits, but in short term its 
primary objective might be survival. 
Strategic, tactical and operational objectives: 
Objectives can also be classified as strategic, tactical or 
operational. 
♦ 
Strategic objectives
 would include matters such as required level of company profitability. 
♦ 
Tactical objectives
 would concern with efficient and effective use of organizational resources. 
♦ 
Operation objectives
 would include guidelines for ensuring that specific tasks are carried out. 
 
Trade-off between the objectives: 
When there is number of objective, some might be achieved on the 
expense of others. For example, a company’s objective of achieving good profits and profit growth might 
have adverse consequences for the cash flows of the business, of the quality of the firm’s products. 
Short-termism 
is when there is a bias towards short-term rather than long-term performance. It is often 
due to the fact that managers' performance is measured on short-term results. 
Organizations often have to make a trade-off between short-term and long-term objectives. Decisions 
which involve the