Budgeting Within the Business Organization

Topics: Management, Budget / Pages: 12 (2846 words) / Published: Apr 5th, 2006
The budgeting process and the end product, the budget, comprise two essential elements of multinational management: planning and control. Planning is the primary function of the budgeting process and the result, the budget, provides the basis for subsequent monitoring and control of activities. For a multinational firm, with geographically dispersed subsidiaries to coordinate and control, an ineffective planning and control system can be disastrous.
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,

References: Financial management, budgeting and planning. (2002). Retrieved March 29, 2006, from www.UN.org. Marshall, D. (2004), Accounting What the Numbers mean (6th ed.), chapter 15. Mayberry C. (2006), Re: Week 5 Prep, written on March 27, 2006 at 7:37pm, retrieved on March 30, 2006. Metapraxis Ltd., (2004). A means to an end. Retrieved March 28, 2006, from MetapraxisLtd.com. Patzac, G. (1999), Project Management Paradigm: A System Oriented Model of Project Planning, in Dimensions of Project Management, edited by H. Reschke& H. Schelle, Springer-Verlag, Berlin. 5, (2), 26-35.

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