[MUSIC] Hi there, good to see you again. We had in the last session the discussion of budgeting control. Now the meetings of this new module we are starting right now are about planning process approaches, and especially the evolution of budgeting. This module is the last one in the course so you're almost at the end of the journey. Soon you won't have to see me here, lucky you. Believe me, if you have watched all my videos and you haven't slept in any part of them then my friend, you're my hero. Well, jokes apart, let's move on to topics of this session. We have seen in this course that we can apply different approaches to budget planning. And also the context of the company, its business environment, and the business support system available may be some of the factors that influence the decisions on which approach to adopt. For instance the company managers may have a busy schedule, so the time they have available to develop a budget is too short to do it as properly as they would like. You may be in such a context, so the alternatives for you would be the same as the managers in the example I just mentioned, observe the time availability plays a vital role in budgeting process. If time availability is not an issue then you have the option to apply a zero based budgeting approach, we'll go through more details about ZBB later with Samantha. For now just consider that it demands time and dedication since every planning process assumes that you will start the budget with zero balance. Scary, no, but there may be some points to justify its application. Now, let's exemplify the influence of an external factor. Remember that we discussed the dynamics of the external environment and that depending on the rapid changes in the business context, managers wouldn't benefit from investing too much time in planning. A planning guideline for this business dynamics is to place the company more closely to the controlling approach. The company managers would be monitoring the environment, and according to the results a rapid response would be implemented. In this case, managers would be allocating their time to monitor and control the company in alignment to the business environment change. In other words, they would roughly blend and would toughly monitor and control. As for the situation analysis regarding the internal business support systems of the company let's assume that the company still doesn't have a good information system, be it caused by liability issues, or scope and completeness issues, or even timeliness issues. The situation leads managers to perceive their planning efforts to be useless, they might consider investing time in planning activity. However the level of confidence on the information available may undermine managers' propensities to develop a proper budget, regardless the fact that the business of the company may be in a quite stable environment. Another aspect that deserves mention here is the strategy and the respective planning process to align guidelines, many authors have proposed conceptual approaches to strategy analysis. For example has emphasized that strategic planning should provide answers to two questions. Question one, how to prepare the company for a future that is not a plain projection of the past? And question two, how to do it broadly and systematically? As you can see, the link between strategy and the budget is a natural consequence of the planning process. The budget is the instrument that supports the plan implementation through the problems and projects. And the planning process can be reviewed interactively based on boundaries of the company. Let's call the boundaries as limitations identified by the participants of the budgeting process. For example, when analyzing the possibility of expanding the production capacity, the bottle neck analysis of the budgeting process may identify that it's not possible and the limitation may come from the technology of the existing assets. The company would be able to expand the production based on the current technology, which would be an incremental expansion. The decision for an incremental expansion would be a budget planning issue, while changing the technology would be a strategic issue. In any way we analyze this case, we can see that strategic planning and budget planning are linked. In this session we made an overview on planning approaches to again reinforce the perception of the connection of strategy and the budget. The next sessions will be about the traditional planning processes. We will briefly summarize them to discuss the contrast of the traditional approach compared to the other methods that emerged to mitigate some of the limitations of the traditional methods. Thank you for your attention, please follow the steps of the course. Stay tuned, and see you soon. [MUSIC]
