RSM429H1 Lecture Notes - Lecture 4: Budget Process, Strategic Planning, Operating Budget
Document Summary
Deciding which programs org will undertake and how many resources will go into it. Strategy formulation (ideas- systematic, annual process) vs. planning (implementing them unsystematic) Plan needed when: top mgmt. must believe in planning, uncertainty into future, firms are large and has the flexibility to change. Important tool for s-t (1-2 years) planning and control important to allocate resources effectively, assist with managing costs and allows for tracking results and review/analysis. Operating budget (covers 1 year) rev/exp for year, estimate profit, management takes on accountability, gets approved by authority higher than manager, will not be changed mid period. Strategic planning should be basis for what budget numbers are. Forecast: may or may not be in $ terms, not for any time period, no responsibility taken on to show results, no approval by authority, updated with new info, variances from forecast are not reviewed annually.
