Patagonia
9/2/2014
Planning & Budgeting
Purpose
Target Setting
Types of financial performance targets
Planning
Coordination
Top management oversight
Motivation
Planning Cycles
Strategic planning
Capital budgeting (programming)
Operational budgeting
Target Setting, cont.
Common financial performance target issues
Appropriate amount of challenge
Appropriate amount of influence to allow subordinates in setting targets
Advantages of highly achievable goals
Increased manager commitment
Protection against optimistic projections
Higher manager achievement
Reduced costs of intervention
Reduced game-playing
Beyond-budgeting Model
Aims to increase organizational adaptability
Simple organizational structures
Flat hierarchies
Flexible peer-to-peer networks
Assume organizations are capable of selforganization and self-regulation
Resource allocation is event driven
Performance targets set relative to peers or other benchmarks Creativity and rapid responses are encouraged
Model-based
Historical
Negotiated
Fixed
Flexible
Internal
External
Criticisms of Planning & Budgeting
Filled with politics and game-playing
Only produce minor modifications to the plans and budgets from previous periods
Don’t respond to changes in today’s fast-moving economy Centralize power and stifle initiative
Separate planning from execution
Cause too many costs for too few benefits
Overview of Company
Founded in 1957 by Yvon Chouinard an avid outdoorsman Yvon could not get pitons he liked so he started producing his own
By 1970, Chouinard Equipment had become the largest supplier of climbing hardware in the U.S
In the late 1960s Yvon shifted his attention to the sale of quality outdoor clothes
In 1972 the clothing business took off which was organized under the Patagonia, Inc. name
1
9/2/2014
Company Mission and Values
Patagonia’s Goals
At Patagonia, “quality” was not reflected just by how long the products lasted; the
Planning & Budgeting
Purpose
Target Setting
Types of financial performance targets
Planning
Coordination
Top management oversight
Motivation
Planning Cycles
Strategic planning
Capital budgeting (programming)
Operational budgeting
Target Setting, cont.
Common financial performance target issues
Appropriate amount of challenge
Appropriate amount of influence to allow subordinates in setting targets
Advantages of highly achievable goals
Increased manager commitment
Protection against optimistic projections
Higher manager achievement
Reduced costs of intervention
Reduced game-playing
Beyond-budgeting Model
Aims to increase organizational adaptability
Simple organizational structures
Flat hierarchies
Flexible peer-to-peer networks
Assume organizations are capable of selforganization and self-regulation
Resource allocation is event driven
Performance targets set relative to peers or other benchmarks Creativity and rapid responses are encouraged
Model-based
Historical
Negotiated
Fixed
Flexible
Internal
External
Criticisms of Planning & Budgeting
Filled with politics and game-playing
Only produce minor modifications to the plans and budgets from previous periods
Don’t respond to changes in today’s fast-moving economy Centralize power and stifle initiative
Separate planning from execution
Cause too many costs for too few benefits
Overview of Company
Founded in 1957 by Yvon Chouinard an avid outdoorsman Yvon could not get pitons he liked so he started producing his own
By 1970, Chouinard Equipment had become the largest supplier of climbing hardware in the U.S
In the late 1960s Yvon shifted his attention to the sale of quality outdoor clothes
In 1972 the clothing business took off which was organized under the Patagonia, Inc. name
1
9/2/2014
Company Mission and Values
Patagonia’s Goals
At Patagonia, “quality” was not reflected just by how long the products lasted; the