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M5A2 2094955
Beyond Budgeting
To. Arc Productions Management
From: John Jill, CMA
November 28, 2014

As part of Arc Production’s strategic development, this report will provide an analysis of the organization’s current management model and determine whether a new beyond budgeting model should be adopted. Included is an analysis of an organization that has adopted the beyond budgeting model and outlines the characteristics of the organization’s beyond budgeting approach. Also included is a recommendation of whether Arc Production's should adopt the beyond budgeting approach.

In todays ever changing business environment the traditional budgeting model is no longer able to effectively provide an organizations with the tools necessary to be successful. Instead, organizations are now adopting the beyond budgeting model which enables organizations to quickly respond to changing events, attract talented staff, continuously pursue excellence, and provide solutions that meet the unique needs of their customers.1 One such organization that has gained success through the adoption of the beyond budgeting model in the areas of continuous planning, resource allocation, and employee performance evaluations is Statoil.2

Statoil is a large multinational Norwegian oil and energy company with over 20,000 employees.3 In 2005 the organization began setting itself apart from competitors by changing their management processes from the traditional budgeting model to a beyond budgeting model. The first area that was altered was the organization no longer used traditional annual planning but instead used a continuous planning process.4 This continuous planning process takes the form of regular strategy reviews by the executive committee in which the organizations strategy is reviewed and adjusted based on the current business environment. Next, using this new strategy departmental goals and objectives are also adjusted to provide management with targets that are attainable



Bibliography: Bogsnes, Bjarte. Taking reality seriously - towards a more self-regulating management model at Statoil. November 28, 2011. http://www.managementexchange.com/story/taking-reality-seriously-towards-more-self-regulating-management-model-statoil (accessed December 15, 2014). Hope, Jeremy, and Robin Fraser. "Beyond Budgeting." Beyond budgeting Round Tabe (CAM-I ), May 2001. Theresa, Libby, and Lindsay Murray. "Budgeting - An Unnecessary Evil, Parts 1 and 2." CMA Management Magazine, MArch 2003.

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