Planning and Implementation of Financial Management Approaches
1. Provide an Overview of the organization and your business unit
Telstra Corporation Limited, hereby referred to as Telstra, is Australia’s largest telecommunications and media company. It is an organization that has specialize in the building and running of telecommunications networks. Some of its products the organization markets include voice products and services, mobile, pay television, and internet access among other products and services. It is an organization that has originated together with Australia Post as a government department (Telstra Website, 2016). However, it now functions as a fully privatized entity and has been under continuous change and transformation to become a customer-focused organization. Telstra was named as the most respected company in Australia by the Australian Financial Review newspaper in the year 2014. The organization has a strong customer base and has over 35,000 employees who serve customers based in more than 230 countries and territories indirectly. It also dominates the overall Australian telecom market with a 62% overall market share by revenue. The other competitors in the field include Optus and Vodafone Australia (Telstra Website, 2016).
2. Identify the internal strategic goals for this organisation and the external stakeholders, and discuss their influence on the financial decisions in to your organisation
Telstra has embraced a new path in response to the extremely competitive measures taken by the competitors (Telstra Website, 2016). A range of other industry sectors such as education, healthcare, commerce, energy, and the media are set to become major partners with the telecoms industry. As such, the organization has taken concrete steps to improve its market position and take advantage of unique opportunities created by its extensive network operations in Australia and around the world. To achieve this, the organization has first of all embarked on customer conscious strategy aimed at cementing its position in the market place. Telstra has declared that customer service is at the center of everything that it does as an organization. There are also plans to reduce customer turnover such as dropping prices to match those of the competitors. It also seeks to offer discounts on calls during off peak times especially for those who make international calls. There are measures aimed at rewarding loyal customers (Telstra Website, 2016). The organization has also taken concrete steps towards generating new forms of contact with the customers apart from the conventional television and radio advertising. Training and development of staff is a key priority for the organization as a high level of expertise is needed to make sure that people can deliver top quality products and services to their customers (Telstra Website, 2016). New innovations and product development strategies are also encouraged by the organization. These are designed to take advantage of the new opportunities created by new concepts such as the Internet of Things. These are designed to cater for the sectors such as small and medium enterprises, health, and sports (Telstra Website, 2016).
3. Discuss the different types of budgets your organisation is required to prepare and provide an explanation on how each budget is developed
The organization prepares three main types of budgets, which include operational budgets, capital budgets and master budgets. The operational budgets are designed to deal with activities that directly affect the Statement of Financial Performance (Brigham & Ehrhardt, 2013). The profit and loss statement is designed to look at the key factors responsible for cash inflows and outflows in the organization. It covers the revenues and expenses surrounding the crucial day-to-day functions of an organization. The relevant components in operational budgets include sales and purchases budget, the costs of goods sold budget, operating expense budget and the inventory budget (Viljoen &Dann, 2000). Another budget that will be created by the organization is the capital or financial budget. It is mainly designed to outline the mechanisms involved regards the receiving and spending of money on a corporate scale. Issues such as revenues earned from the core business in addition to the income earned capital expenditures are factored in by the finance department. A capital budget defines the financial position of the organization with regards to its business functions and operations within a specific trading period. Some of the components of the capital budgets include cash budgets, Budgeted Statement of Financial Position, and the Capital Expenditure Budget (Anandarajah, Aseervatham, & Reid, 2004). Another budget that will be created is the Master Budget. It is a comprehensive projection of the management’s expectations with regards to the conduct of every aspect of business about the trading period. It is responsible for summarizing the projected activity using instruments such as the cash budget or the budgeted income statement, and the budgeted balance sheet. An effective master budget looks at the interrelated budgets arising from the various departments, and as such, financial managers depend on such budget categories to plan and institute performance objectives (Knaus, 2011).
4. List the people, their roles and responsibilities in the organisation who are involved in the budget process (from planning to implementation). List the specific budget they are interested in
In the preparation of budgets, several layers of human resource personnel are required by the finance department to assist in their development. The general rule of thumb is that the more people involved in the budgetary planning, the more accurate the budget. More workers involved in the planning process also encourage accountability and responsibility in the organization. As such, all sections of the organization will be needed to plan and execute the budget. The finance department, including the financial managers and controllers, will be responsible for instituting the master budget in the organization (Brigham & Ehrhardt, 2013). The production and manufacturing department will be responsible for streamlining the operational budgets. The sales department will also be involved in this analysis together with the operations and the firm’s accountants. The human resource department will also be used in the development of the master budget. It will also be used to develop the financial budget in addition to the operational budget as they will provide insight into the labor costs. The human resource department is particularly useful in ensuring the right people are involved in the right business operations at the right time. It is also useful for the management of conflict within the organization. The accounts department should also be used to ensure budgetary information is properly communicated to all the departments of the organization (Anandarajah, Aseervatham, & Reid, 2004).
5. Discuss the process of negotiating budget funding after they have been allocated? How would you relate budget changes to your strategic and business goals
The organization will utilize various methodologies in negotiating and communicating budgetary allocations. The main platform that will be used to steward all aspects of financial management in the organization is the accounting system developed and tailored for the organization (Anandarajah, Aseervatham & Reid, 2004). The Quicken Platform provides a useful interface by which the organization can manage its financial operations. Electronic resources will be used to manage the entire process and record information as well as maintain it for future reference. Human resources should be allocated according to their areas of expertise to ensure the development and overall growth of the organization. In the organization, the process of communicating budgetary changes will involve the use emails together with physical meetings. The meetings will determine the extent of understanding of the personnel with regards to the budget (Stevenson & Sum, 2002). Work sessions will be conducted to provide more understanding of the budget and specific roles of individuals with regards to budgetary projections. The organization will institute a network of mentors and coaches to assist in the provision of specialist advice. Additionally, shadowing and induction methodologies shall be employed by the organization to streamline its ambitions to be in line with the budgetary allocations (Anandarajah, Aseervatham, & Reid, 2004).
6. Contingency plan/ Analysis of Variances
Contingency planning is an activity that will be used to cater for the variances present in budgetary planning and allocations. It is allowing a specific allocation of funds to be set aside for emergencies. In cases of a positive variance, a contingency plan will include increasing sales and/or production processes while a negative variance will signal a change towards the reduction of costs and stocks for sale. The organization should also look into reducing wastage while encouraging recycling and reusing of critical resources (Stevenson & Sum, 2002). Depending on the emergent variation, other forms of remedial action may include sourcing for cheaper raw materials that are of low quality. The organization should also institute restructuring programs regarding the human resource management. In this regard, it can opt towards outsourcing human resources as well as other tasks (Anandarajah, Aseervatham & Reid, 2004). Through trend analysis, the organization has at its disposal a management tool that can be used to reveal variances that occur over a specific period. A horizontal analysis will be used to analyze results that occur over a period and see to it that a trend is not occurring over this period. On the other hand, a vertical analysis will be used to show the relationship between amounts. It will be used to display the percentage of sales spent on expenses and those left for the net profit (Abell, 1980).
7. How would you collect and analyse data and feedback on the effectiveness of your financial management processes and make recommendations to improve improvements?
The operational budget is a prime budget that can be used to provide information with regards to expenses and costs incurred by the organization in the course of business. Additionally, the purchases and production budgets can also be used to provide such information. The collection of data and information will involve conducting staff surveys to assess the entire budgetary process. Financial reports will also be assessed to show the accuracy of budgetary projections. It is essential to have a feedback and analysis protocol that will be sourced from all relevant parties (Viljoen &Dann, 2000).
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