Budgeting Within the Business Organization
For the typical multinational firm, the budgeting process is the primary period of planning at both corporate and subsidiary levels. During the planning phase, the subsidiaries establish short-term goals and objectives, devise appropriate operating strategies, and prepare a budget document for subsequent monitoring, control, and evaluation of operations. Although the budgeting process is an important element of success, very little is known about the methods which multinational firms employ to ensure that the subsidiaries present a realistic and reasonable projection of future events. Although there is extensive information about budgeting in the management accounting literature, there is very little information about the specific techniques employed by the managers of multinational firms to develop and formulate budgets.
Budgeting is essential to successful management. It involves five aspects:
Planning occurs when the company determines the priorities and objectives. Within this stage of budgeting a company needs to decide the direction to use the company 's resources that will produce optimal success for the future. Planning is also when a company can evaluate and identify any issues from prior budgets and moreover establish future plans for development within the company to grow.
I believe the planning stage is extremely effective within a budget. This stage is the most critical stage for a company. If a companies do not plan accordingly than unforeseen changes can wipe a company out. For example,
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