Through budgeting, each part of an organizations structure can be identified for decision making and control. For example, if the budget shows that one million units are to be sold in the next 3 months, the sales department knows that it must achieve that goal. At the end of the first month, the sales department can determine by looking at the budget if it is on track or not and what decisions it must make to meet the goal. A reasonable budget can allow an organization to allocate resources and provide a plan and direction for the organization. A budget can also help measure performance and ensure that managers are held accountable for their decisions. To prepare for this Discussion, Shared Practice: Evaluating the Budgeting Process, take a moment to think about your organization or an organization you are familiar with. Consider the importance of the budgeting process, forecasting, and strategic planning for informing how the organization operates with regard to decision making. Note: If you are not in the position where you are involved in budgeting processes, interview either someone in your organization or a professional outside of your organization who can provide you with this information. Be sure to identify the position held by this person in your post. By Day 5 Post the following: Provide an evaluation of how forecasting, strategic planning, and budgeting processes impact your organization. Provide 23 examples from your professional experience in your current or former organization, or from your interview, to support your position. Be sure to include specific budgeting tools used by the organization. Identify the key stakeholders in the budgeting process at the organization and explain how they are involved in the processes. Explain how knowledge of forecasting, strategic planning, and budgeting processes might impact your decisions in the organization you currently work for or one that you will work for in the future. By Day 7 Respond to two or more of your colleagues in one or more of the following ways: Comment on the use of budgeting tools and the budgeting process in your colleagues various organizations. Support your comments with the resources for the week and additional research. Validate an idea presented by a colleague based on your own experience, the resources for the week, and additional research. Write one paragraph response to each post 22 hours ago William Meehan RE: Discussion 2 – Week 2 COLLAPSE Discussion 2 Week 2 Evaluating the Budgeting Process An organization I was involved in a few years ago was a reasonably large family owned business. It had eight separate locations and 40 departments with 450 employees. I was one of the managers involved in the budgeting process. As well as a part of the committee that reviewed the strategic plan annually. In September of each year we would develop a forecast by department for the next year on a quarterly basis, which was broken down by month. Using this forecast as a base we would develop a budget for the organization by department for the next year. In addition to using the forecast we also used a benchmark report developed by an unidentified group of competitors. This allowed us to generate a report in units sold in addition to dollars and cost per units sold. The benchmark report allowed us to compare our expenses by department with the expenses on the benchmark report. After this process was completed the organization would then focus on a 3 year forecast that was broken down by year. This allowed us to develop a strategic plan for two or three years out that took into consideration the anticipated changes in the business and the economy. This strategic plan would include the overall objectives and tactics for the organization, Zimmerman, J. (2017). The processes we used to develop the forecast and budgets involved all of the managers in the organization. Once a month we would meet and review the financials and compare them with the forecast and budget. It was at this meeting that the comparative would be evaluated between actual, budget and benchmark by department. In this meeting the variances were highlighted and discussed. Since the forecast and budgets had been developed by the department managers using a ratcheting up process, they were capable of discussing the details. These managers were also involved in the budget process which created a bottom-up process. As a result of the forecast being created quarterly and reviewed monthly the budget was viewed as a rolling budget. The rolling budget encourages managers to react more quickly to changing situations. The 3 year forecast allowed us to develop a strategic plan for two or three years. The strategic plan also addresses questions of what the organizations future structure must be to support the strategy, R&D, capital spending, and the financial structure, Zimmerman, J. (2017). Since the CEO was always in the meeting he had the final say and would bring up questions and comments to be considered. His comments were based on years of experience and knowledge of the total organization. The knowledge I have acquired in this course along with the experience I received in working for the previous organization has provided me with an appreciation of the various tools that can be used in different organizations. The forecasting process using a quarterly format along with the rolling budget will provide any organization the ability to develop and evaluate the operations of the organization. These tools coupled with the benchmark of competitors will provide the organization the ability to evaluate present and future operations by department. This information and processes needs to be shared with the managers of the organization and allowed to experience the results, which is a learning tool in itself. The development of the long term budget for three to five years will allow the organization and managers to develop an understanding of the process and the need for strategic planning. It is through strategic planning that the information for the long term budget is developed. It is through these tools that decisions are made to improve the operations of the organization. Reference Zimmerman, J. (2017).
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