Budgeting Process in Business

Topics: Management, Strategic planning, Strategic management Pages: 6 (1717 words) Published: March 6, 2012
Chapter 1

Background of the Study

It can be said that success begins and ends with a perfect strategy.  In order to grow a business and succeed in a volatile marketplace, it is important to have that strategy, and plan for the future.  Many business professionals agree that the best way to get ahead is to design and implement an effective strategic business plan.  While this can be a somewhat daunting task, there are actually many strategic planning resources available to help get you started down the right path.

One of the most non-value-added activities within financial management is budgeting. Budgets are prepared to allocate and control how resources will be used in the future. Unfortunately, the future is hard to predict and upper-level management doesn't always communicate with people who prepare budgets. Because of poor communication and planning, budgeting becomes an exercise in futility.

In fact, President Aquino sign last December 13, 2010 a P1.64 trillion ($37.1 billion) national budget for 2011. The early approval of the budget will enable the government to embark on its infrastructure and social projects as early as the first quarter of 2011. The 2011 budget is known as the "Reform Budget." Budget Secretary Florencio Abad said the budget reflects the President's commitment to lift the nation from poverty through honest and effective governance. This only means that our president is planning righteously to the budget of the Philippines for the benefits of the Filipino people.

Here in Tagum City, budgeting should be a dynamic process within strategic planning. The more Tagumeños budgets can react to change, the closer budgeting will be to a value-added activity. It is an observation in UM Tagum College that most of the students are budgeting their money, time and resources because of poverty and scarcity. Budgeting is the setting and allocation of the capital which is then used in the proper way to achieve the set or designated targets of the firm or certain individual. We, Tagumeños must know the techniques of budgeting for in nowadays resources are very limited but our necessities are growing. A lot of people really take a careful planning of their budget. Hence, this prompted the researchers to investigate the exposure of firms and individuals in planning and budgeting.

Chapter 2
Review of Related Literature Studies
The writers made a thorough research on the different writings and gathered particularly the studies conducted from various materials such as books, internet, theses and newspapers in relation to present study. Literature to be discussed includes definition of business planning, strategic business planning, budgeting, strategic analysis, traditional planning and budgeting in a volatile world, testing alternative planning and budgeting scenarios, interactive business planning and process simulation, planning for capacity constraints, sound plans, coordination, communication, and planning. Business planning is the effective co-ordination of resources and activities across the enterprise and matching them against anticipated future demand avoiding both bottlenecks and unutilized capacity. Strategic business planning is a key part of the strategic management process and focuses those business plans on the preferred strategic objectives of the enterprise.

Budgeting is a plan of action that forecasts future transactions, activities and events in financial and non-financial terms that will meet agreed targets usually over a one-year time horizon. Strategic analysis of an enterprise and the environment in which it operates should yield insights and opportunities that deliver real competitive advantage. These might include: understanding the real source of customer profitability, recognizing the true cost of customer churn and the corresponding benefit of customer retention, identifying the true cost of business complexity and change, knowing the full advantage of...
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