In this report, two different cases of Food Corp and Park Nicollet has been studied with regard to the change in the budgeting accounting management system. Both of the companies operate in the dissimilar industry, however facing similar nature of issues. The company has found ineffective practices in their system created through traditional budgeting system. To eliminate the complexities and turbulence the research studies have suggested to implement the beyond budgeting software. Food Corp incorporates the beyond budgeting system to implement ERP system. On the other hand, Park Nicollet has implemented the beyond budgeting framework to efficiently incorporates the lean process helping in reducing waste. A detailed analysis has been presented in the report narrating the strength and differences of the organization created through a change in the budgeting system. The finding of the study has been discussed with regard to the Australian organizations having complexities and problems in their structure.
The following assignment has been designed to provide a brief insight into the budgeting process used in different organizational setting to gain efficiencies in its operation. According to the Bogsnes, (2016) budgeting is the crucial management components in the accounting paradigm. It is essential for every set of firms dealing in monetary benefits. To gain the competitiveness and diversification, managers are using a blend of budgeting management tool to effectively forecast the demand and challenges impacting the development of the company, managing the day-to-day activities and duties and developing channels to motivate the employees. Management of budget creates agility in organizational practices, thus providing benefits in terms of less expenditure and high output. The following report will be analyzing the budgeting process by reviewing the journal's articles of budgeting accounting concepts applied by the organization operating in a different environment. The two set of the organization is selected such as Food Corp operating in agriculture food industry and Park Nicollet working in the healthcare sector. The research questions and objectives of both the studies will be studied in regard to the budgeting conception. A comparative analysis will be provided illustrating the similarities and diversification in the budgeting outputs of the selected companies. Furthermore, the findings will be applicable to the Australian firms discovering the opportunities to improve their budget management efficiencies.
The budgeting is the highly applicable accounting management tool used for analyzing the trends through prediction and preparing a plan to combat the potential challenges and acquire the opportunities. Budget is a systematic plan incorporating several stages such as setting a target, defining approaches to achieve the target, allocating time and cost to each target and achieving the target in the provided time frame. The main task of the budgeting is to create coordination in the organization (Réka, Ştefan, and Daniel, 2014). The budgeting concepts were founded in early 2000 by the market leader multinationals like General Motors, Siemens, Du Pont de Nemours, and other companies. It is said to be the market changer administration tool achieving success in its early phase. It has provided agility and efficiencies in accounting process while increasing the reliability and authenticity of the financial recording system. In an exceedingly complex firm structure, budgeting provides an efficient means of coordination and communication. Despite its benefits, Budgeting concepts faced the criticism regarding its time-consuming nature and inability to cover every possible dimension in its plan. The criticism towards the traditional budgeting has paved a way for new development, thusintroducing the modern concepts of better budgeting and beyond budgeting (Cardoș, 2014).
The better budgeting provides opportunities to restructure and reintroduce the budgeting process. Whereas, beyond budgeting has provided a new insight into budgeting administration by changing the process on every level. In a layman term, the beyond budgeting can be explained as the comprehensive extermination of budgeting plan and budgets. Better budgeting and beyond budgeting has help the managers to remove the slacks (often called as budgetary slack) and decapitation (Segun,and Olamide, 2015). The empirical study has promoted and supports the incorporation of either of the concepts in the organization financing system. In an organization, the traditional budget management and better budgeting help in creating an inclusive coordination in departments through commissioning the strategic plan of budgeting.However, the beyond budgeting emphasize on developing the coordination through the external forces of the market. In a complex organizational structure, firms do often create coordination by increasing the interaction on a personal level and agreements on the departmental level (Martin, and Osberg, 2015).
The research study has supported the similarities find among the traditional and better budgeting theoretical grounds. In both approaches, coordination is developed through budgetary plan within the organizational division. However, the dissimilarity has been noticed in terms of reachability and depth of the plan. Traditional budgeting prepares similar financial strategies and plans for every operation. Whereas, the better budgeting approach focus on developing the plan and its tactics in the division to cater to the challenges aroused due to complexities and manipulation. The better budget planning helps in reducing the sensitivity of the problem and level of detail. The following criteria enable the company to develop the tactics for growth in terms of the long-term plan and short-term plan to increase the organization coordination and profitability (O’Grady, and Akroyd, 2016). In terms of the complexities created through the internal and external environment, both of the budgeting technique shows robustness in the development process. Specifically, the traditional budgeting process shows vagueness in its approach if the complexities are said to increases with time. In contrast to the traditional budgeting, better budgeting provides enhance regimes to control turbulence. However, it is lower to create coordination by the mean of agreements through groups or markets in extremely dynamic surroundings (Fitzgerald, and St
The problems in the traditional budgeting and better budgeting paradigm is covered by the beyond budgeting approaches. The beyond budgeting do not require plans, however, it accompanies group agreements to implement coordination. The beyond budgeting is designed to provide coordination in the turbulent surroundings in a company setting. Unlike the traditional and better budgeting approaches, the beyond budgeting is non-competitiveness in providing operative and competentcoordination in complex condition through group contracts and markets (Ilchikabir, 2015). The coordination through budgetary plan can either reduce the complexities or eliminate the turbulence at a time. A research study has highlighted that neither every form of budgeting approaches can provide coordination in complexities and turbulence situation. In such a situation, budgeting is used as a channel to create coordination within departments to increase the agility and efficacy (Marcel, 2014).
Beyond Budgeting Model Principles
(Source: BBRT, 2015)
In the research study by Sandalgaard, and Nikolaj Bukh, (2014) a case of the Food Corp a company operating in the agri-food industry has been discussed in terms of the change in management accounting system due to the atmosphere uncertainty and robustness of past budgeting g the firm to implement beyond budgeting in their system and the complexities arise in the system after the implementation of the change in system. The reasons have been discussed in details providing an idea regarding the factors which compel the firm to change its previous budgeting system into beyond budgeting despite the challenges. Therefore, the aim of the research study can be summarized as the ‘to study the factors forcinmanagement accounting system relying on upon beyond budgeting concepts'. Moreover, the change in the management accounting system is studied with regard to the combined financial budget target require to bemaintained by the Beyond budgeting system.
Before the adaptation of beyond budgeting, Food Corp was facing issues regarding the internal benchmarks arising from the organizational structure and the pressure to provide the target outcome to the upper-level management. These factors contributed to the implementation of the static and complete financial targets. Therefore, it is feasible to evaluate that company structure and higher level managerial practices create problems in the apparent suitability of the comparative performance estimations.The research studies have questioned the applicability of the beyond budgeting theory as it is term as an unsuitable for comparative performance target. The research study has provided an insight on the claim and asserted that complication in the management accounting system occurs due to incompetent relative performance information. The following revelations have helped the current research study to design its research question in terms of change management in the accounting system in Food Corp;
‘Does the Beyond Budgeting concepts are generally applicable in the organization across the globe or the complexities in the atmosphere affect the application of basic Beyond Budgeting concept?’
The research study by McVay and Cooke, (2006) has studied the management accounting system transformation in the recent years from tradition budgeting to the beyond budgeting system. Moreover, the lean practices inspired by Toyota Motors has been implemented in the newly transformed system. The current study has provided the in-depth analysis of the factors which push Park Nicollet a medical health service provider to adopt the eliminate the traditional budgeting practices. The potential differences between the traditional budgeting and beyond budgeting system have been presented to provide a detailed impression which leads to the change in accounting management system. By reviewing the above-presented information it can be concluded that the recent research study aims to provide the reason encouraging the change in the accounting management system from traditional budgeting to beyond budgeting. Moreover, a transition to the beyond budgeting has been studied and,comparative analysis of traditional budgeting and beyond budgeting is presented.
In the current research study, the appropriate budget system is regarded as the innovative, flexible and reliable. The traditional budget system was creating issues such as the longer period of time requires in development of IDs thus impacting the overall annual budget and requiring excessive accounting time. Moreover, the forecast was unreliable for the health service providers due to incompetent practices and unavailability of the mechanism predicting future trends impacts the overall functionality of the department. The following factors have been considered as the major impetus behind the change management of an accounting system. Although the traditional budgeting possesses incapability and unreliabilitefits in contrast to the previous budgeting system. Therefore, the question has been arising based on the above-presented assumptions that whether the beyond budgeting system is beneficial for the organization or not. To provide the solution, a transition beyond budgeting has been presented illustrating the benefits of the system. The following argument has provided a brief idea about the research-creation, thus the research question will be;y problems in its structure, it also possesses certain advantages which are lacking in the new budgeting techniques. On the other hand, beyond budgeting is considered to be the potential choice for the organization for eliminating the current issues. However, it also lacks certain ben
‘What is the limitation of the traditional budgeting that leads Park Nicollet to change its accounting administrating system to ‘beyond budgeting’ and does the beyond budgeting is providing benefits to the organization?’
The research literature by Sandalgaard, and Nikolaj Bukh, (2014) and McVay, and Cooke, (2006) eliminates the traditional budgeting accounting management system and adopt the beyond budgeting accounting management system to improve their efficiencies. In both cases, the traditional budget created lag in the collaboration system. Non-Prevailing factors of the traditional accounting system are becoming a hindrance in the progression of the organization and create inefficiency. Fixed financial budget target has been the common factors creating problems for the companies as it focuses on completing the task while eliminating the efficiencies. In both cases, inefficiencies in the management function across the division along with the collaboration issues have been considered as the main reason behind the change in accounting management procedure.Both research literature has provided a number of reason to adopt the beyond budget techniques to improve the collaboration in the organization. In both budget planning include continuous improvement has been promoted through eliminating the fixed targets from the planning framework.
The following companies are operating in a different environment, thus creating a diversification in their requirements and needs. The Food Corp was following fixed financial budgets targets and after the implementation of the beyond budget, they will be maintaining fewer components of the fixed budget targets. However, in the case of the Park Nicollet, the fixed target performance has been changed and the targetis measured by the key performance indicators. By eliminating the fixed targets, the performance of the company will be evaluated on the on-going procedure. The planning and control functions will be considered as an integral part of the continuous progression that is a drive from the rational and tactical plans. The long-term plans will be incorporated to improve the forecasting. The beyond budget in the Park Nicollet will be focusing on the continuous improvement throughout the system rather than meeting budget targets. The following activities will be helping the employees to present their skills in the best way as the focus of the organization is to create efficiency in the task.
The Food Corp change its budgeting system to implement the enterprise resource planning (ERP) system. The main motive was to clearly scrutinize the organization process such as budgeting and planning. The feasible budgeting process to cater to the problems of the Food Corp was beyond budget. Through the change process implementation of the ERP will be smooth and it will reduce the complexities and total capital expenditure. Moreover, it provides a plan to reduce the impact of the economic uncertainty and creating sustainability in the process. Whereas in the case of the Park Nicollet, the beyond budgeting is chosen to implement the lean process inspired by the Toyota Motors for bringing efficiencies in operation and reducing time process in activities. Moreover, the transition to the beyond budgeting system is explained through empirical studies in the case of the Food Corp. While the Park Nicollet explain the procedure in the six-step model.
The initial and foremost learning outcome from the Food Corp case helps us to understand that it supports the advance planning process. The beyond budget helps the organization to implement the ERP system. The continuous improvement in the planning and controlling process will help the organization to eradicate the complexities through group agreements. The following type of the budget helps the organization to create the policies combating the unrest situation. The economic uncertainty is eliminated through the competitive beyond budgeting techniques.Australian complex structure organizations can reduce its uncertainties and turbulence through the budgeting plan. Food Corp does not eliminate all type of the target such as imposed target will be continued despite the changes in the external atmosphere.Moreover, it has been found that initially, it will be difficult for the organization to change the fixed financial targets into the comparative performance assessment, and the necessity for comprehensive budgets might differ also inside the enterprise. The imposed target will be incorporated into the bonus system and performance appraisal designed by the company compromising of different personal targets, group targets and organization targets. Research has suggested that beyond budgeting discourage the target set in the organization.
After reviewing the findings the Australian company can use a blend of the budgeting approaches while changing their system to implement beyond budgeting. It will reduce the error and time-consuming in the managerial activities. The efficient and detailed report will be created to help the stakeholder to understand the company position. Additionally, it has been also found beyond budgeting is not the optimal solution for every set of the organization in a different solution. Therefore, the company does require static strategies to reduce the unseen complexities. The following outcome will help the other organization to define the policies which will help in the financial downturns. Beyond budgeting allows the organization to define self-designed methodologies which will help the Australian organization to increase its competitiveness.
The current dissertation has provided a competitive difference between the traditional accounting management system and beyond accounting management system. The difference illustrate that organization still practicing the traditional accounting management practices have a vague system. The competitiveness of the industry discourages the adaptation of the traditional system as it increases the time, efforts, miscommunication, inefficient management practices, and incompetent inventory management in the organization. Whereas, the beyond budgeting helps in creating agility in the process. It promotes the coordination in the organization and precisely assigns the duties and responsibilities which help in creativity and less utilization of the resources. The Australian firms having a problem in the management of the financial accountability of the company might use the following case as an inspiration to improve its position.
The beyond accounting management system provides features which help the organization to effectively implement the lean procedure. The lean process help in reducing the waste at each step of the production. The waste in the healthcare sector is reduced through bringing efficacy in the practices such as the lesser amount of time required for the development of IDs, fast retrieve of data and effectively managing the task and responsibilities. The current findings will help the healthcare and car manufacturing industry to effectively implement the lean process in their budgeting management system. It will allow the employer to gain the competence and increase the productivity.
The current report has been constructed to assess the budgeting accounting administrating process implement by a different organization in the different environment setting to improve its functionality. The initial section of the report provides the descriptive analysis of the budgeting concepts and its application in a different organization. for the progression of the report, two research studies have been selected analyzing and evaluating the role of budgeting system in the organization to increase its efficacy. The selected research studies have implemented change management of the accounting system as they eliminated the traditional budgeting system into the beyond budgeting. The change is said to occur due to the environmental uncertainties, organization incompetence, unreliable practices and lack of coordination. Two cases have been studied in Food Corp and Park Nicollet. Food Corp is a food manufacturing company in the agri-food industry, while Park Nicollet is a health service provider. The current research aim and questions have been narrated along with the similarities and differences found in the study. It has been analyzed that both of the study established to understand the reason which leads the change in company budgeting process. Moreover, both of the company has found that beyond budget helps them in eliminating the inefficiencies and increasing the development. The findings of the outcomes have been narrated in the context of the Australian firms.
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