lecture 20

Question 1

what are the 5 stages of the planning process

Answer 1

1. setting organisational objectives (desired goals of the firm)
2. assessing the environment in which the organisation will be operating by reference to the external factors which may affect its operations
3. assessing existing resources - management is concerned with making the most efficient use of those scarce resources (men, machines, materials, money) - the process involves making an estimate of both external resources which are accessible, and resources already held which are either idle of might be more efficiently used
4. determining the strategy for achieving the stated objectives - overall plan which specifies strategic foals
5. designing a programme of action to achieve the selected strategic goals by means of both long-range programmes and short-range programmes

Question 3

what are the main purposes and benefits of budgeting

Answer 3

1. planning and anticipation
   - management fired to think ahead and plan for future eventualities
   - regular budget setting and review procedures = regular examination of the organisations goals and decisions
2. communication and coordination
   - preparation of budgets encourages communication between different parts of the organisation and different levels of management
   - cohesive budget allows activities to be coordinated
3. motivation
   - budgets and standard costs provide targets and, as such, can motivate staff to achieve them - esp if theyre rewarded on the basis of meeting budgets
4. authorisation and responsibility.
   - managers know that budgeted expenditure has been authorised and can act accordingly
   - setting individual budget for particular business activities/ departments can be used to assign responsibility to invidudal managers for meeting those budgets
5. evaluation and control
   - budgets provide plans against which subsequent performances can be judged
   - management monitors and evaluates whether budgets are fulfilled

Question 4

what are the benefits of budgeting

Answer 4

1. it forces the organisation to plan and improve co-ordination in the organisation

Question 5

what are functional or departmental budgets

Answer 5

various supporting budgets of the various departments or functions
- they include the production budget - further supported by the direct material budget, direct labour budget, sales budget, administrative budget

when all func