Management and Budget

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1. There are many criticisms about budget, but using budget can increase sales, decentralize and empower to lower level. According to the reading articles, budgetary can replace the fixed performance target with openness and transparency. And also management can give employees more freedom to manage. For example, Musimundo did not have budget before 2004. After 2004, it had established budget system. The budget was separated in two ways which were bottom-up and top-down. Employees who are at the store level have power to control sales and expenses and managers only schedule product-release and macroeconomic expectations. Both of them doing different jobs, and then meeting each other to merge and revise the budget, this can increase efficiency and also employees feel that they are part of the company and respect by company. The other important reason is that the economy of Argentina was turbulence. Employees who are at store level can forecast correctly than the manager because they deal with the product every day. On the other hand, the manager viewed the other perspective which is the macroeconomics. The budgeting process can be connecting organizational behavior to the level of environmental uncertainty. 2. According to the bonus calculation, 50% bonus depends on achieving the sale target, 30% on the EBITDA target, and the remaining 20% on customer service and superior evaluation. And the performance bonuses represents up to 20% of a store manager’s salary. Therefore, the store manager should investigate of the control process which is product line and controllable expenses to meet the store objective. Sometimes the manager’s perspective would be short-sighted. So, the manager should correct the variance and also should communicate with other managers to seek help of others, with the resulting dialogue fostering new ideas and initiatives to improve the sales. 3. For those store managers who are already meeting and exceeding their budget targets, Nalda...
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