Managing Financial Resources
Henley Management College
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Assignment Managing Financial Resources
IBM HMC17
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
1 Management Summary 2
2 Introduction 5 2.1 Assignment structure 5 2.2 IBM 6 2.3 IBM IOT Southwest 8 2.4 IBM Belgium & Luxembourg 9 2.4.1 General 9 2.4.2 Key resources within IBM Software Group Belgium 11 2.4.3 My role within IBM SWG Belgium 11
3 Ratio Analysis 12 3.1 Profitability 12 3.2 Liquidity 14 3.3 Financial Structure 15 3.4 Employee 16 3.5 Practical utility of the data 17 3.6 Quality of the data 17 3.7 Summary 17
4 Short-term decision analysis 18 4.1 Cost-Volume-Profit Relationships 18 4.2 Key limiting factor 19 4.3 Practical utility 19
5 Business planning and budgeting 20 5.1 Budget environment 20 5.1.1 Defining objectives 20 5.1.2 Planning 21 5.1.3 Organizing 22 5.1.4 Controlling 22 5.1.5 Co-ordinating 23 5.1.6 Communicating 23 5.1.7 Motivating 23 5.2 Budget Techniques 24 5.2.1 Fixed/Flexible Budgets 24 5.2.2 Incremental/zero-base budgeting 24 5.2.3 Rolling budgets/years
[pic]
Assignment Managing Financial Resources
IBM HMC17
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
1 Management Summary 2
2 Introduction 5 2.1 Assignment structure 5 2.2 IBM 6 2.3 IBM IOT Southwest 8 2.4 IBM Belgium & Luxembourg 9 2.4.1 General 9 2.4.2 Key resources within IBM Software Group Belgium 11 2.4.3 My role within IBM SWG Belgium 11
3 Ratio Analysis 12 3.1 Profitability 12 3.2 Liquidity 14 3.3 Financial Structure 15 3.4 Employee 16 3.5 Practical utility of the data 17 3.6 Quality of the data 17 3.7 Summary 17
4 Short-term decision analysis 18 4.1 Cost-Volume-Profit Relationships 18 4.2 Key limiting factor 19 4.3 Practical utility 19
5 Business planning and budgeting 20 5.1 Budget environment 20 5.1.1 Defining objectives 20 5.1.2 Planning 21 5.1.3 Organizing 22 5.1.4 Controlling 22 5.1.5 Co-ordinating 23 5.1.6 Communicating 23 5.1.7 Motivating 23 5.2 Budget Techniques 24 5.2.1 Fixed/Flexible Budgets 24 5.2.2 Incremental/zero-base budgeting 24 5.2.3 Rolling budgets/years
References: ➢ Mills and Robertson, 2004, Fundamentals of Managerial Accounting and Finance, 4th edition, Mars Business Associates Ltd ➢ Henley Management College, 2006, Managing Financial Resources Handouts ➢ National Bank of Belgium, Annual reports of IBM Belgium, 2001, 2002, 2003, 2004, 2005, 2006 ➢ National Bank of Belgium, Annual reports of HP Belgium, 2001, 2002, 2003, 2004, 2005, 2006 ➢ Pierre Audoin Consultants, SITSI report for Belgium, 2005 ➢ IBM Intranet, various publications ➢ IBM Annual Report, 2006 ----------------------- [3] IBM Annual Report, 2006 [4] IBM Annual Report, 2006 [5] Mills & Robertson, Fundamentals of Managerial Accounting and Finance, 1999 [6] http://www.tutor2u.net/business/accounts/main_ratios.htm [7] Mills and Robertson, 2004 [8] Wright and Race, 2004