Planning and control cycle
The planning and control cycle is the loop of setting objectives, budgeting, implementing, measuring results, comparing them to plan, and acting on the differences before planning starts again.
See it move
A factory budgets €200,000 of production overhead for the quarter but actually spends €215,000, a €15,000 unfavourable variance. The planning and control cycle does not stop there: management investigates, traces the overrun to an energy price rise rather than waste, and feeds a higher energy assumption into next quarter's plan before objectives are set again.
Check yourself
A retail chain's planning and control cycle for the year proceeds as follows: it sets a target of 8% sales growth, builds a budget around that target, opens two new stores and runs its usual operations, then at year end finds actual sales grew by only 5%. Which step comes immediately next in the cycle, and what should it produce?