APC 309 Strategic Management Accounting
Module Title: Strategic Management Accounting Module Code: APC309
Individual assignment
SUNDERLAND BUSINESS SCHOOL
Date: 16/04/2011
Introduction:
As Gowthope (2005, p.148) said that: “A budget is a plan, expressed in financial and/or more general quantitative terms, which extends forward for a period into the future. Budgets are widely used in organisations of all types and sizes.” –Budgeting actually refers to the process that, after the strategic plan of the business has been made, companies made a short term plan (usually one year) to meet the strategic purpose. Traditional budgeting has offered a lot of contributions in so many years‟ practice; no one has a better summary of all advantage of traditional budget as (Umapathy, 1987, p. xxii): “I believe that budgeting provides managers with a wonderful opportunity to rejuvenate their organisations. There is no other managerial process I am aware of that translates qualitative mission statements and corporate strategies into action plans, links the short term with the long term, brings together managers from different hierarchical levels and from different functional areas, and at the same time provides continuity by the sheer regularity of the process.” . So, many organisations use a „traditional budget‟ –the short term plan that meet the
strategic purpose of the organisation- because of the easiness of preparation and its simplicity to coordinate budget across various departments. But it seems it is more and more unsuitable for the modern business. In this paper, I will give a brief induction for traditional budgeting; and then discuss the strengths and weaknesses of the traditional budgeting; last I will explain and evaluate the alternative approach that will be more accurate and work for today‟s dynamic markets. In the second part I will tackle the working capital concept by giving some ways to improve parts of Working capital in XYZ limited which is a medium sized manufacturing business.
Individual assignment
SUNDERLAND BUSINESS SCHOOL
Date: 16/04/2011
Introduction:
As Gowthope (2005, p.148) said that: “A budget is a plan, expressed in financial and/or more general quantitative terms, which extends forward for a period into the future. Budgets are widely used in organisations of all types and sizes.” –Budgeting actually refers to the process that, after the strategic plan of the business has been made, companies made a short term plan (usually one year) to meet the strategic purpose. Traditional budgeting has offered a lot of contributions in so many years‟ practice; no one has a better summary of all advantage of traditional budget as (Umapathy, 1987, p. xxii): “I believe that budgeting provides managers with a wonderful opportunity to rejuvenate their organisations. There is no other managerial process I am aware of that translates qualitative mission statements and corporate strategies into action plans, links the short term with the long term, brings together managers from different hierarchical levels and from different functional areas, and at the same time provides continuity by the sheer regularity of the process.” . So, many organisations use a „traditional budget‟ –the short term plan that meet the
strategic purpose of the organisation- because of the easiness of preparation and its simplicity to coordinate budget across various departments. But it seems it is more and more unsuitable for the modern business. In this paper, I will give a brief induction for traditional budgeting; and then discuss the strengths and weaknesses of the traditional budgeting; last I will explain and evaluate the alternative approach that will be more accurate and work for today‟s dynamic markets. In the second part I will tackle the working capital concept by giving some ways to improve parts of Working capital in XYZ limited which is a medium sized manufacturing business.
References: Source: Lucey, 1996, p. 108.