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Budgeting
Beyond budgeting, two words that some believe hold the future to a company's financial strength and profitability. No longer is it necessary to implement a plan, make and sell business model. Instead, in today's current business environment it is much simpler to organizations to go beyond the traditional budgeting organization to one that goes beyond that budgeting process by providing the opportunity to respond much faster to the demands of a fickle consumer.
One report determines that the old business model involves protracted time and energy in a budgeting process that assumes "that customers will buy what the company decides to make" (Hope, Fraser, 2000, p. 31) but the report goes on to make the assertion that companies run a huge risk when they make assumptions that "are no longer valid in an age when customers can switch loyalties at the click of a mouse" (p. 31). What Hope and Fraser tout is that the company must be able to understand what practices are needed in order to determine how a company competes effectively in today's...
McVay and Cooke state "the beyond decision approach has been designed to surpass the limitations set by the traditional budgeting" (2006, p. 101).
Whether the beyond budgeting process is a current fad or a long-term answer to a constantly changing business environment will be determined in the future, but it does seem to offer some advantages to companies, especially in areas of compensation and rewards.
It has been known for decades that shareholder returns are much higher in companies that display a strong link between strategies and rewards (Harvard Business Update, 1998); the beyond budgeting process helps to establish that strong link. According to one study the beyond budget aims to "not only reduce the costs of budgeting and implement more adaptive planning processes, but also to devolve the responsibility for strategy and the accountability for results to…
References
Harvard Business Update (1998) Common sense about group incentives, Nov. 1998, p. 3
Hope, J. & Fraser, R.; (2003) New ways of setting rewards: The Beyond Budgeting model, California Management Review, Vol. 45, Issue 4, pp. 104-119
Hope, J. & Fraser, R.; (2000) Beyond budgeting, Strategic Finance, Vol. 82, Issue 4, pp. 30-35
Libby, T. & Lindsay, R.M.; (2007) Beyond budgeting or better budgeting? Strategic Finance, Vol. 89, Issue 2, pp. 46-51
According to de With and Dijkman (2008), "Management control is the process by which managers influence other members of an organization to implement the organization's strategies. This process consists of four different phases-strategic planning, budgeting, measurement and reporting, and evaluation-each of which leads to the next phase" (27). Beyond the foregoing formal phases, management control also includes informal communications and interactions such as meetings and conversations (de With &
Budgeting and Financial Planning Distinctions between budgeting & financial planning. The difference between budgeting and financial planning The difference between budgeting and financial planning Budgeting and financial planning are often used interchangeably in the speech of laypersons, when they are talking about the economic outlook of organizations. They are, however, very different processes, although the two are interrelated. One analogy is that of someone trying to maneuver the organization like a rowboat over a
Budget Variance Managing budgets and keeping within those boundaries is a difficult task and requires a steadfast approach with practical strategy. Budget forecasts often are used as important guidelines that are used to keep organizations in line with their corporate strategy. Although this seems rather simple, it is not. The purpose of this essay is to discuss and highlight specific strategies that can be applied to assist in managing a budget
The following list of key competencies would represent the initial selection criteria: 1. Assist in developing and monitoring the Department's budget. 2. Work with all levels of management to develop budgetary needs of existing and new activities, including analysis and forecast of revenue and expenditure trends and program modifications. 3. Prepare written and oral summaries of base budget increases and/or reduction options and summarize into required budget format. 4. Assist in the development of budget packages, current service
GFOA (Government Financial Officers Association) publishes criteria for awards that it uses as a means of enticing government agencies and their financial officers to improve the caliber of financial reports. In the private sector, consistency and usefulness in financial statements is enforced through different accounting standards that are set by a body and to which all publicly-traded companies must adhere. There is no government equivalent with respect to financial reporting.
budget management analysis, it generally looks at how budgets can be effectively managed so as to be in line with the forecast that was earlier made. The first section of the easy spells out different strategies that can be applied to effectively manage budgets. The second section looks at budget variance and how they arise and what strategies can be used to remove them. The last section of the