L3 - Planning & Budgeting

Question 1

What are the products of planning?

Answer 1

Objectives, budgets, schedules, performance standards and a baseline to measure evaluate performance.

Question 2

What does effective Planning & Budgeting require?

Answer 2

Looking at organization as a SYSTEM and understanding the RELATIONSHIP among its components.

Question 3

Planning

Answer 3

Planning consists of developing the objectives, timetables and performance standards needed to implement the organization`s strategy and assigning individual accountability for results.

Question 4

Budgeting

Answer 4

Budgeting involves identifying, prioritizing, acquiring and allocating the RESOURCES needed to carry out the plan.

Question 5

Strategic thinking VS Planning

Answer 5

Strategic thinking is a creative activity whereas planning is an analytical one.

Question 6

The budget contains

Answer 6

1. Strategic goals
2. Operational goals
3. Action plans for Sales, Sourcing and Procurement, HR, CapEX, company financing

Question 7

2 approaches for Budgeting

Answer 7

Top-down and Bottom-Up

Question 8

Bottom-Up budgeting + and -

Answer 8

+ Every step might be planned accurately, involves individuals of all levels within the organisation (not only decision-makers)
- Easy to over-budget

Question 9

Top-down budgeting + and -

Answer 9

+ Establish organizational PRINCIPLES

- lower level employees are excluded from the process

Question 10

3 levels of corporate planning

Answer 10

Liquidity Level (short-term) to ensure the solvency of the company

Success Level (mid term) to ensure the profitability of the company

Potential Level (long-term) to ensure the future of the company

Question 11

6 steps of Corporate Planning

Answer 11

1. Developing the strategy
2. Translating the strategy
3. Shaping the organization
4. Operational planning
5. Controlling and lessons learned
6. Testing and adapting