Topic 10 Budgeting
www.buseco.monash.edu
ACF5903
- Topic 10 - Budgeting
www.buseco.monash.edu
Objectives
•Understand the link between strategic planning and budgeting
•List the key steps in the budgeting process
•Understand the different types of budgets
•Outline behavioural issues associated with budgeting
Reference
Birt et al Chapter 9
www.buseco.monash.edu
Agenda
1. Overview: Planning and control in firms
2. The budgeting process
3. Types of budgets
4. Budget variances
5. Behavioural aspects of budgeting
6. Summary
www.buseco.monash.edu
Corporate Goals and Value Creation
Strategische
Steuerung
Strategic Control
Investitions
Investmentrechnung
Appraisal
Strategische
Strategic
Analysen
Analysis
Investition
Investments
Performance
Erfolgspotenzial
Potential
Wert
Valuesteigerung
Creation
Financial
Finanzsteuerung
Control
Erfolgs
Profit steuerung
Control
Liquidit
Cash ät
Erfolg
Profit
Finanzierungs
Cash Flow Statement rechnung Income
Erfolgsrechnung
Statement
Operative
Steuerung
Operational
Control
Source: Coenenberg 2007, p. 11
www.buseco.monash.edu
Management Functions
• Planning
– Looking ahead in a formal regular process
– Develops strategic plans in terms of its overall direction – Plan is put into operation
• Directing and motivating
• Controlling
www.buseco.monash.edu
Strategic planning
Operational planning
To do the right things!
To do the things right!
www.buseco.monash.edu
Strategic planning
• Long term planning
– 3 to 5 years
• Usually carried out by senior management
• It commonly relates to broader strategic issues –
–
–
–
Expand the business
Business takeovers
Close down certain business segments
Product/service development
www.buseco.monash.edu
Strategic planning
• Outcomes
– Strategic plans for the entity
> Leads to shorter term plans
– Budgets
» Budgets focus on the short term
» Operationalise strategic plans and allows operational areas to understand how their area contributes to the entity’s strategic objectives
ACF5903
- Topic 10 - Budgeting
www.buseco.monash.edu
Objectives
•Understand the link between strategic planning and budgeting
•List the key steps in the budgeting process
•Understand the different types of budgets
•Outline behavioural issues associated with budgeting
Reference
Birt et al Chapter 9
www.buseco.monash.edu
Agenda
1. Overview: Planning and control in firms
2. The budgeting process
3. Types of budgets
4. Budget variances
5. Behavioural aspects of budgeting
6. Summary
www.buseco.monash.edu
Corporate Goals and Value Creation
Strategische
Steuerung
Strategic Control
Investitions
Investmentrechnung
Appraisal
Strategische
Strategic
Analysen
Analysis
Investition
Investments
Performance
Erfolgspotenzial
Potential
Wert
Valuesteigerung
Creation
Financial
Finanzsteuerung
Control
Erfolgs
Profit steuerung
Control
Liquidit
Cash ät
Erfolg
Profit
Finanzierungs
Cash Flow Statement rechnung Income
Erfolgsrechnung
Statement
Operative
Steuerung
Operational
Control
Source: Coenenberg 2007, p. 11
www.buseco.monash.edu
Management Functions
• Planning
– Looking ahead in a formal regular process
– Develops strategic plans in terms of its overall direction – Plan is put into operation
• Directing and motivating
• Controlling
www.buseco.monash.edu
Strategic planning
Operational planning
To do the right things!
To do the things right!
www.buseco.monash.edu
Strategic planning
• Long term planning
– 3 to 5 years
• Usually carried out by senior management
• It commonly relates to broader strategic issues –
–
–
–
Expand the business
Business takeovers
Close down certain business segments
Product/service development
www.buseco.monash.edu
Strategic planning
• Outcomes
– Strategic plans for the entity
> Leads to shorter term plans
– Budgets
» Budgets focus on the short term
» Operationalise strategic plans and allows operational areas to understand how their area contributes to the entity’s strategic objectives