Importance Of Financial Planning And Decision Making

1231 Words3 Pages
bulb-icon

Recommended: Principles and processes of financial planning

This paper examines the strategic management sector pertaining to financial planning and decision making methods. Managers use these tools often, in order to carry on day to day operations at their firms. Finding the right combinations of cost allocation and implementing strategic measures, can be complex at times. However, to remain competitive in the industry, companies utilize benchmarking and other techniques in order to monitor their competitors’. This paper analyzes various approaches that managers may use, in order to make sound financial planning and decision making.

Strategic Management: Planning and Decision Making

The importance of an organization remaining successful, relies on various strategic …show more content…

Blocher et al (2013), added that at the end of an operating period, managers view the budget plan to interpret any variance between actual and budgeting expenditures and operating outcomes. Under certain circumstances, a firm uses a budget plan, to ensure accurate spending, monitoring costs, and to analyze a subunit’s accomplishment. For example, the government use these tactics when a fiscal year budget has not been approved; which is known as a continued resolution. The lawmakers allocate a portion of funds to sub-agencies in order to remain operational. However, the budget plan allows lawmakers to monitor costs, planning, spending and the sub-agency’s goals for accomplishments. Blocher et al (2013), indicates several components that make up a budget process, ranging from small firms which make take a few days or weeks to complete; corporations and government which may take an extended period of time.
• Budget Committees oversee all budget matters to include, allocating funds to the departments, coordinating budget preparation and justifications and monitors unit activities throughout the financing …show more content…

The information provided for Triple F Health Club, have a few issues. The first issue is the balance due for the new equipment, which is $15k and the company wants to invest in more equipment for $25k. Although the company plans to purchase the equipment in the upcoming year, the current balance due will reduce the overall earnings. Additionally, the company’s financial information and the owner’s personal account should not be recorded as one balance (providing it is the owner’s personal account). Another flag is the $2.5k balance for accounts payable (utilities and supplies). While it is a small amount, the company could pay it now instead of waiting for the next period. Also, the remaining balance on the mortgage may cause issues if the company’s liabilities increases or the projected number of patrons

Show More
Related

  • The Evolution of the Federal Budget Process

    997 Words  | 2 Pages

    For government budgeting to be effective, the process that guides it must be an evolving one. As the government gets bigger, it will most likely destabilize the existing method. Therefore, it must change to keep pace with the demands and growth of the country. The process must be capable of handling the complexity of our nation and its multifaceted needs so it will always need revisions and restructuring to face these new challenges. Its ultimate goal must be to reinforce the government and strengthen the country.

    Read More

  • Analysis Of Harry Styles

    752 Words  | 2 Pages

    Women paint their nails and men drink beer. That is the way things are supposed to work, but not according to Harry Styles. Styles has shown time and time again that he does not believe or participate in gendered stereotypes such as the ones listed previously. Society dictates that women can only do things that are considered feminine such as cooking, cleaning and watching romantic comedies. Men can only do things that are considered masculine such as watching football, drinking hard liquor and liking and fixing cars. Harry Styles publically participates in activities on both sides of the spectrum. This relates to the myth of gender because it shows that men can only do typically masculine things and women can only do feminine things. Harry

    Read More

  • Executive Branch And Legislative Process

    858 Words  | 2 Pages

    “After World War I, such arguments succeeded in rationalizing the budget process under the president’s authority: the 1921 Budget and Accounting Act gave presidents responsibility for overseeing individual agencies budget requires and unified; coordinated executive budget. A new organization, the Bureau of the Budget (BoB), was created within the Treasury Department to serve as the administration’s staff arm in endeavor” (Rudalevige,

    Read More

  • Budget Analysis

    1842 Words  | 4 Pages

    p. 496). See also p. 495. The budget process, according to Marshall, is to "develop and communicate" how an organization's economic, industry, and organizational strategies will be effected within the budgeted time frame. People within the organization, from planners, economists, and managers, contribute to facets of the strategic budget process in order to meet organizational needs. Upper management then typically approves those budgets....

    Read More

  • Why The Judicial Branch Is The Most Powerful

    1487 Words  | 3 Pages

    The past four decades has seen Congress attempt to centralize the budget process and place restraints on overall spending. The passage in 1974 of the Budget and Impoundment Control Act, Congress established a new budget committee in each house. These committees receive the president’s budget and analysis provided by the Congressional Budget Office (CBO). The CBO was created with expertise equivalent to that possessed by the Executive branch. You could infer that creating such an office only implies more power to Congress considering they are working around the Executive branch in this instance. Although the president can recommend a budget for Congress to consider, the actual appropriation of funds is in the hands of the House and

    Read More

  • Porter's Five Forces

    2167 Words  | 5 Pages

    Even though a myriad of tools and techniques learnt in the Strategic Cost Management and Strategic Business Analysis courses are not fully exploited in this essay, it is generally recognised that those techniques are useful for a corporate to formulate strategy, do strategic planning, control costing and quality, as well as eventually elevate its values, regardless the nature and size of organizations.

    Read More

  • Executive Branch In California

    1822 Words  | 4 Pages

    In the annual budgeting stage of the legislators job they determine how much money is needed to keep government programs running. They usually work on subject like these during the Winter

    Read More

  • The Pros and Cons of Participative Budgeting

    1276 Words  | 3 Pages

    Participative Budgeting is the situation in which budgets are designed and set after input from subordinate managers, instead of merely being imposed. The idea behind this sort of budgeting is to assign responsibility to subordinate managers and place a form of personal ownership on the final budget. Nearly two decades of management accounting research has resulted in equivocal findings on the consequences and effects of participative budgeting (Lindquist 1995). Participative budgeting certainly has various advantages, these include the transferral of information from subordinate to superior increased job satisfaction for the subordinate, budgetary responsibility and goal congruence. Its disadvantages include budgetary slack and negative motivation, however it is the conditions in which participative budgeting takes place determines whether the budgeting process is successful. The conditions are dependent on various factors such as the level of participation, level of subordinate influence, the extent to which budgetary slack takes place, volatility, job related information, and the complexity of the budget.

    Read More

  • Essay On Beyond Budgeting

    1789 Words  | 4 Pages

    Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).

    Read More

  • Strategic Management at Virgin

    2066 Words  | 5 Pages

    Throughout the global economic environment the desire to out-perform the competition is always present. In every situation, the companies who do better are the ones with superior strategy (Rothaermel, 2013). Strategic management is therefore important in every company, no matter what industry or market they operate in; and as stated by M. Carpenter and G. Sanders, 2013, is described as "The process by which a firm manages the formulation and implementation of its strategy". Strategic management is a constant topic under discussion with different schools of theorists with different beliefs and attitudes which is described as "A tense array of disagreement" (Rees, 2012).

    Read More

  • What Are The Pros And Cons Of Increased Government Spending

    765 Words  | 2 Pages

    It is always changing. The constitution doesn’t specify how the federal budget process should work. Because of that, it has evolved and led to agencies like the Office of Management and Budget, the Government Accountability Office, and the Congressional Budget Office. They all play a critical role in creating the budget. The budget process will keep evolving over time.

    Read More

  • The Contribution of Strategic Management and Strategic Thinking Processes to Organisational Performance

    1697 Words  | 4 Pages

    This indicates the importance of strategic management for organisations in making appropriate decisions and selecting strategies which will assist them to gain strategic competitiveness and as a result earn above-average returns.

    Read More

  • Strategic Management and Decision Making

    1872 Words  | 4 Pages

    Strategic management is a disciplined effort or control to make necessary decisions that have an effect on a business or an organization; the aim of strategic management is mainly to develop new, innovative or diverse ideas and opportunities for potential or development, and facilitates or assists an organization to achieve its goals (SM, 2010). In reality, strategic management not only can be used or applied to determine mission, vision and values or objectives, but it also establishes roles and responsibilities or timelines in a business (David, 2009). In the following sections, this study will focus on and examine the nature of strategy formulation, implementation, and evaluation activities, and analyze the potential pitfalls or risks in using a strategic-management approach to decision making.

    Read More

  • The Importance Of A Personal Financial Plan

    1600 Words  | 4 Pages

    A personal financial plan is essentially important for any person and their loved ones to minimize future hardships and difficult financial situations. Short and long-term financial freedom and stability is something an individual wants to have through to the end of his or her life. Financially planning for one’s retirement years is vital so a person does not sustain major unhappiness or unnecessary pain in what is supposed to be the reward for working so hard in their younger years.

    Read More

  • The Importance Of Economics On Personal Life

    1804 Words  | 4 Pages

    It requires an adequate and sound organizational structure, that is, there must be a definite assignment of responsibility for each function of the enterprise. Budgeting compels all the members of management, from the top to bottom to participate in the establishment of goals and plans. Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise. Budgeting helps the management to put down in figures what is necessary for a satisfactory performance. Budgeting helps the management to plan for the most economical use of labor, material and capital. Budgeting tends to remove the cloud of uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives. Budgeting promotes an understanding among members of management of their co-workers' problems. Budgeting force management to give adequate attention to the effects of general business conditions. Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support

    Read More

More about Importance Of Financial Planning And Decision Making

Open Document