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    Budgeting Management Analysis Assignment Help

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    Budgeting Management Analysis Assignment Help


    Budgeting Management- Analysis 

    Two Research Studies

    cutive Summary

    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.

    1. Introduction 

    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. 

    2. Budgeting Accounting Management System and its Components

    2.1 Budgeting Accounting Management System

    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, thus introducing the modern concepts of better budgeting and beyond budgeting (Cardoș, 2014). 

    2.2 Better Budgeting and beyond Budgeting Concepts

    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).  

    2.3 Comparison and Similarities between Traditional Budgeting and Beyond Budgeting 

    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 Stol, 2014). 

    2.3 Comparison Between Traditional, Better and Beyond Budgeting Approaches  

    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 competent coordination 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, )

    Beyond Budgeting Model Principles

    3. Reviewing the Budgetary Concepts in Chosen Empirical Studies 

    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 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 forcing the firm to implement beyond budgeting in their system and the complexities arise in the system after the implementation of the change in management 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 be maintained by the Beyond budgeting system.  

    3.1.2 Research Question 

    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?’

    3.2 Research Paper 2: A Case Study of Park Nicollet 

    3.2.1 Research Objectives and Purpose 

    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. 

    3.2.2 Research Question 

    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 unreliability 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 benefits 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;

    ‘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?’

    4. Comparative Analysis of Budgetary Concepts in Research Studies 
    4.1 Similarities in the Findings of the Research Studies 
    The research literature by Sandalgaard, and Nikolaj Bukh, 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.