ACCA Performance Management (F5) Certification Practice Exam

Which example illustrates strategic planning?

1. Monthly staff meetings

2. Long-term forecasts and capital expenditure decisions

3. Daily operational reviews

4. Immediate budgeting adjustments

The correct answer is: Long-term forecasts and capital expenditure decisions

Strategic planning involves the process of defining an organization's direction and making decisions on allocating its resources to pursue this direction. It typically encompasses long-term objectives and involves comprehensive planning regarding the future of an organization. The example of long-term forecasts and capital expenditure decisions fits this definition perfectly. Long-term forecasts help an organization anticipate future trends, market conditions, and potential challenges, allowing it to prepare strategically. Capital expenditure decisions pertain to significant investments in long-term assets which are critical for the organization’s growth and sustainability. These decisions must consider not just short-term impacts, but also the long-term implications for competitiveness and position in the market. In contrast, the other options pertain more to day-to-day operations and tactical adjustments. Monthly staff meetings, for instance, are more about ongoing operational matters rather than strategic direction. Daily operational reviews focus on immediate performance and operational efficiency without the broader context of long-term strategy. Similarly, immediate budgeting adjustments are reactions to short-term financial conditions rather than proactive strategic planning. Thus, the option that illustrates strategic planning is clearly the one involving long-term forecasts and capital expenditure decisions.