Video 1 - The planning cycle

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En provenance du cours de Fundação Instituto de Administração

Budgeting essentials and development

23 notes

Fundação Instituto de Administração

Budgeting essentials and development

23 notes

The Budgeting Essentials and Development course focus on an integrative and practical view of concepts, methods, and techniques to develop a budget. After finishing this course, learners will be able to: - Develop the budget with a broad view of the corporate functions; - Integrate the strategic guidelines into the discussions of budgeting process; - Structure the budget planning and development in a logical sequence - Coordinate the project of budget planning with the different areas of the company - Actively promote assumptions discussions to improve the process of developing the budget - Apply financial concepts to support the budget planning process - Design a budget monitoring and control model to support the performance management - Evaluate the performance of the company by managing the results and the budget In this course, learners will have a deeper understanding of the budgeting process, its challenges, common issues, and approaches to mitigate the problems and improve the learning curve of budget planning. It is integrative by emphasizing the transition between the corporate strategy and the budget. It is practical by following a structured process of going through a framework that illustrates and demonstrates how to analyze, develop and control the budget.

À partir de la leçon

Module 1: Strategy & Budgeting - Planning & Controlling

As the budgeting process needs strategic guidelines, and these guidelines drive the planning process, corporate managers develop the budget plan accordingly to the strategic guidelines.The budget contributes to the roll-out of programs, projects, and actions to implement in the organization. These programs and projects are planned in the budget development process. In this module of the course, the discussions aim to overview the transition between strategy to the budget planning process. The course is targeted to professionals who actively participate in the budgeting process, e.g., professionals who have been recently promoted to a managing position, in which the scope of responsibilities are broader, especially in the budget planning, monitoring, and control. Pre-requisites to benefit the most from this course is basic to intermediate business management knowledge and concepts.

Video 1 - The planning cycle4:09

Rencontrer les enseignants

Alberto Sansiviero Jr.
MBA
FIA Futures Studies Program
Samantha Mazzero
MSc, MBA, BS Math
FIA Profuturo – Futures Studies Program
Nelson Yoshida
Ph.D., MBA, B.Eng.
FIA Profuturo – Futures Studies Program
Roberto Dumas Damas
M.Sc., CFA
FIA Profuturo - Futures Studies Program
Fernando Fleury
Ph.D.
FIA Profuturo - Futures Studies Program

Hello and welcome.

My name is Fernando Fleury. Glad to know you.

Our first topic of discussion today is

the strategy and its connection with planning and budgeting.

A quick story overview shows you that strategy

is a relatively new subject in the field of management.

Until the early 70s world demand grew above the world capacity of

supply so companies would dedicate efforts for production.

How to produce more,

how to produce better,

how to produce with lower costs.

With a world economic crises in the late 70s and early 80s,

world demands sharply decreased and we observed

an excessive production capacity in relationship to the existing demand.

It was the first moment in recent history that companies had

really to compete for the same client in the same market.

The modern approach to strategy was first presented by Michael Porter in 1984.

He developed what we call today a market based theory of strategy.

Porter's theory can be summarized in three stages.

The first stage is market evaluation.

In order to analyze the potential profitability of a certain market,

Porter identified five or six forces.

Porter's main five forces are: clients,

suppliers, competitors, substitutes, and potential entrants.

The sixth force is the environment.

That can mean the physical environment,

social, or political environment.

After evaluating the potential for profitability of a certain market,

the company must develop its own market positioning or value proposition.

This is the second stage.

The value propositions should be based on a quality or cost effectiveness approach.

Companies as Mercedes, Montblanc, Armani are well

known for their market positioning based on a quality proposition.

On the other side,

Walmart and Zara are also well known for their very effective cost proposition.

The third stage is called the value chain.

The company must look at every single step in its internal prediction activity,

must be clear if this step is correctly designed to deliver

its value proposition for the chosen market.

That is exactly where budgeting plays a fundamental role.

The budgeting procedures, techniques,

and methodologies we shall study along the next lectures are a key issue to provide

effectiveness for the market and value propositions which were

previously defined while working on the forecast of demand,

pricing and sales, production and cost.

The budgeting analysis enable

a more through life approach to the understanding of the strategic decisions made.

In this sense, the annual budget is

a critical element for the revision of the strategic planning developed.

Working on the budget,

companies will usually have to conduct a broad revision

in its strategic plan or at least fine tune the previous decisions.

Remember, the company environment may be very dynamic so

revising previously taken decision is something companies must permanently do.

The budgeting approach will provide a very useful support for that.

Now let's go for our suggested readings.

If you have a special interest for this subject,

I recommend you reading Porter's Competitive Strategy

or From Competitive Advantage to Corporate Strategy.

See you in our next lecture. Bye-bye.

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