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21 Cards in this Set
- Front
- Back
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Purposes of budgets |
Came(p) -communication -authorization e.g expenses -motivation -evaluation -planning |
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Limitations of budgets |
Farm. Tgi(c) -financial: too much focus, ignores customer satisfaction etc -average performance encouraged -role conflict, purposes overlap, focuses on reducing costs rather than value adding -myopia -strategic goals not reflected -time consuming -gaming: -interdependence of B's -centralizes control/removes creativity. Hard to evaluate managers perf if there are factors they cant control |
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ZBB |
-reset the clock -past not incorporated -all expenditure must be justified for each new period -better suited for firms that dont have repeated processes |
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+ of ZBB |
Blocce -bottom up -link between budgets & objectives -elimination of out of date activities -cost effective - improves communication -based on current environment |
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- of ZBB |
Ricce -resource intensive (making b from scratch) -implementation difficult, assumptions of policies -costly-annual cycle -confusion, better suited to individual departments than whole company -enviroment change=problem |
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Rolling budget |
B updateded as new info emerges Suited for firms with repeated processes |
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+ of rolling forecasts |
FAD, SMS -no fixed end date -analysis of drivers of resources -less detail, managers have a clearer idea whats important -can adjust for ST changes in the market -less manipulation as no fixed targets. Encourages managers to keep thinking about future -removes spend it lose it mindset |
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- of rolling forecasts |
Duut -demotivates as constantly working on revisions -diff to understand drivers of resources -creates uncertainty because of constant changes -time consuming & costly because need additional resources to prepare)
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Kaizan b |
-Continous improvement philosophy, small continious steps. -improving quality & coat reductiona -Good for manufacturing firms which are producing products daily |
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+ of KB |
Teds -encourages teamwork -emphasis on operational employees who have detailed knowledge of systems & products -embeds details knowledge of products & processes into managers minds -removes need for ST targets |
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- of KB |
-encourages managers to micro manage -need long period to embed the culture that KB requires -diff to maintain continuous improvements to standard products |
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Incremental b |
-Suited to stable markets where current or historic cost figures are liable for basing future figures -Builds on last years b, modifies where needed e.g inflation, discounts (ID) |
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+ of incremental b |
St Simple to prepare Less time (mainly using numbers readily available from last yr B) |
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- of incremental b |
Meds -encourages manipulation -reinforces existing practices, can be accepting inefficiences -encourages dysfunctional behaviour in managers -encourages spend it lose it attitude towarda end of budget period |
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Main principles of beyond b |
GRR -set goals for continious improvement & inspire employees NOT fixed performance goals -reward success on relative performance (e.g against competition) NOT meeting fixed targets -make resources available as needed NOT through annual b allocations PCC -make planning a continious process NOT a top down annual event -coordinate interactions dynamically NOT though annual planning cycles -base controls on relative trends NOT on variances against plan |
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+ beyond budgeting |
LL fc -more loyal customers, BB places customer value needs at centre of strategy -incorporates LT goals -faster response, save 95% budget time. Firms that use BB operate with speed & simplicity -lower costs, ford estimates €1.2billion per year saved. 30% of management time |
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- of beyond b |
Dit -requires teams operating within flexible self managed networks. This needs decentralisation, is this feasible? (Control send downwards) -hard to implement -requires trust in employees, emg mcgregory theory, would want Y employees. Need to motivate employees so they act how we want |
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Better b |
-regularly viewed&updated -commitments made on shorter time.horizons -greater external focus: benchmarked against competitors -use technology to improve speed, cost, accuracy PB -profit conscious rather than budget constrained approach -bottom up approach |
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ABB |
Costs are associated with activities Focus on value added, eliminates non-value added Popular, just under 50% of large firms use (cima) Only works if abc system is up to date |
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+ of ABB |
Beo -eliminates bottlenecks -efficiency-competitive edge -attention to costs of overheard activities |
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- of ABB |
Ccrud -complex -costly-resource intensive -difficult to identify individual responsibilities for activities -need to understand business -only works if ABC systemis up to date |
