chapter 3 Flashcards
how can variance analysis help to improve budgeting
shows the differences between the budget and the actual expense or income
can help to inform management when planning future budgets and improve its accuracy
what are three techniques that can be used to monitor progress against a business plan
management accounting
critical success factors
key performance/risk indicators
what are three types of key risk indicator
IT downtime
complaints
examples of fraud
what is strategic information used for
used by senior managers to plan the objectives of their organisation and to assess whether the objectives are being met in practice
what is a project
considered to be a finite piece of work
what is a change management programme
seeks to implement changes in real time
should also handle all stakeholders that are affected by change
what are the two main approaches to managing knowledge in financial services organisations
codification strategy
personalisation strategy
what is codification strategy
knowledge is codified and stored in databases, it is easily accessible by appropriate employees
what is personalisation strategy
knowledge is closely tied to the person who developed it and is shared mainly through direct person to person contacts and structured training programmes
technology is used to help people communicate knowledge rather than to store it
what are critical success factors
critical to realising a company’s mission by either exploiting opportunities or by fending off dangers posed by external threats and internal weaknesses
what is a kpi
quantifiable points in the development of a company’s strategy that show whether or not the company is reaching its targets and objectives
can be results oriented or effort oriented
what is a kri
measures the type and effectiveness of controls that are in place
e.g. it downtime
what is a balanced scorecard
identify knowledge, skill and systems that employees will need in order to innovate and build the right strategic capabilities and efficiencies
what is benchmarking
allows a company to compare its own progress with that of a comprehensive standard
types of benchmarking
internal, external, functional
what is functional benchmarking
assessment of the company’s main functions and processes and compares them against the same functions and processes in other organisations but not necessarily competitors
what is mbo
management by objectives
process of defining objectives within an organisation so that both management and employees agree to the objectives and understand what they need to do in order to achieve them
what is top down budgeting
decide on individual plans for each department and function, these plans are given to the individual managers to implement
what is bottom up budgeting
department managers construct their own budgets within set guidelines
these are then passes up to the managers and directors who incorporate the individual budgets into the organisation’s master budget
what is zero based budgeting
relies on managers to justify their expenditure from a fresh standpoint
what are rolling budgets
always looking ahead, at the end of each month a new month is added at the far end of the whole period
what is variance
difference between actual and budgeted performance
what is unfavourable variance
when budgets are not met
what is favourable variance
when budgets are exceeded
what is strategic information
what and why a business chooses to do something
what is tactical information
how an organisation plans to accomplish their strategic objectives
strategic planning covers what time range
3-10 years
timescale for tactical planning
1-3 years
what do operational plans look at
routine day to day matters
Key performance indicators are quantifiable points in the development of a company’s strategy that show
whether or not the company is reaching its targets and objectives
example of effort orientated kpis
number of potential customers contacted
number of debtors pushed
