Managing Financial Resources

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Henley Management College


Assignment Managing Financial Resources

Author: Peter Neirynck
Learning Team:Regional Group B – TIE team
Date: October 29, 2007

Management Summary

This paper analyses critically the financial performance management within IBM Software Group Belgium and IBM Southwest IOT.

In order to understand how the financial reporting is an enabler for the execution of the corporate strategy, we analyse the published financial information, the budgeting cycle and short term decision process inside IBM, each on various levels from business unit to geo-level.

The main finding is that the financial processes are very well structured within IBM, and lead to correct financial reporting.

However, this paper recommends that communication should be enhanced by application of a bottom-up approach, which would lead to more understanding/acceptance by the workforce of a finance culture.

Table of Contents
1Management Summary2
2.1Assignment structure5
2.3IBM IOT Southwest8
2.4IBM Belgium & Luxembourg9
2.4.2Key resources within IBM Software Group Belgium11 2.4.3My role within IBM SWG Belgium11
3Ratio Analysis12
3.3Financial Structure15
3.5Practical utility of the data17
3.6Quality of the data17
4Short-term decision analysis18
4.1Cost-Volume-Profit Relationships18
4.2Key limiting factor19
4.3Practical utility19
5Business planning and budgeting20
5.1Budget environment20
5.1.1Defining objectives20
5.2Budget Techniques24
5.2.1Fixed/Flexible Budgets24
5.2.2Incremental/zero-base budgeting24
5.2.3Rolling budgets/years forecast or out-turn24
5.3Budget Administration24
5.4Practical Utility of the data24
5.5Quality of the data24
6.1Table of figures26

Table of abbreviations

BCSBusiness Consulting Services
BPBusiness Partner
CRMCustomer Relationship Management
EMEAEurope, Middle-East and Africa
GPGross Profit
IBMInternational Business Machines Corporation
IBM SWG BeLuxIBM Software Group Belgium-Luxembourg
IMTIntegrated Marketing Team
IOTIntegrated Operating Team
ITInformation Technology
ITSIntegrated Technology Services
NBBNational Bank of Belgium
PBITProfit Before Interest payable and Taxation
POTProof of Technology
PTIPre-Tax Income
PWCCPrice Waterhouse Coopers Consulting
SMBSmall and Medium Business
SOAService Oriented Architecture
SWGSoftware Group
WWWorld Wide


1 Assignment structure

This paper consists of on 4 major parts, after the executive summary, which highlights the key findings of the assignment, and the introduction to the scope and context, we will assess the usefulness of ratio-analysis for IBM Belgium. We will challenge the ratios with the ratios of HP Belgium.

In chapter 4 we will investigate the usefulness of short–term analysis for IBM Software Group Belgium.

In the last chapter we will examine the usefulness of Business Planning and Budgeting to the management of the Southwest IOT.


Figure 1: assignment structure


IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate, is a complex organization with approximately 330,000 employees worldwide in 175 countries. Hereunder we created an overview of the IBM organization[1].


Figure 2: Organization of IBM

The Company's major operations comprise a Global Services segment, a Systems and Technology Group, a Software...
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