Essay on HCC Industries

This research paper is a brief discussion of budget management analysis. Budgeting is the key to financial management, and is the key to translates an organization goals or plan into money. Budgeting is a rough estimate of how much a company will need to get their work done, and provides the basis for evaluating performance, a source of motivation, coordinating business activities, a tool for management communication and instructions to employees. Without a budget an organization would be like a driver, driving blinded without instructions or any sense of direction, that’s how important a budget is to every organization and individual likewise (Clark, 2005).

ABSTRACT: This case1 provides an opportunity to study budgets, budget variances, and performance evaluation at several levels. As a purely mechanical problem, the case asks for calculations of various price, efficiency, spending, and volume variances from a set of budgets and actual results. The case is also an interpretive exercise. After the variances have been computed, the next step is to develop plausible conjectures about their likely causes. Finally, it is a case about performance evaluation and responsibility accounting. The company has an incentive plan, based on the budget

Budget formulation and use are tools that guide many decision making strategies in business. The measures that are least effective could create an avalanche of catastrophic events that can negatively impact the decision making strategies. It is in the best interest of the pertinent parties to draft an operating budget based on a collective set of information relating to organizational vision and mission. Ineffective measures can be catastrophic based on the foundation for measures used in creating the budget. Among the many issues organizations face that relates to creating an effective operating budget results from poor

Budget is time-consuming, especially if it involves a poorly managed company. The budget only pays attention to the quantitative aspect of business while neglecting the qualitative aspects. It does not consider the quality of services or goods and therefore inconsiderate of customers’ satisfaction. Another disadvantage of a budget is that it is inaccurate. A firm rarely “makes budget.” The hope is that the business activity will be close to the budget, but it could be off considerably and lead to bad hiring, spending and production decisions. This is because budget preparation is based on assumptions and thereby changes in the business environment could lead to unachievable

When it comes to decision making across the organization, managers must have an understanding of cost effectiveness, selling, pricing, and budgeting. The organization must be able to accurately budget for variable cost as well as fixed cost while maintaining an increase in profit and revenue. In this paper, I will discuss the different view-points of decision making across the organization.

The coffee retail industry is a growing industry, which consists of companies that sell coffee based drinks and other foods and beverages for consumption either on premises or takeout. Annually the industry sees about a 10% growth rate. Coffee is the second most sought after commodity in the world, making it worth over $100 million worldwide.

It is possible that managers will set budgets which are not in line with the organization’s strategy as lower-level managers lack strategic focus. Moreover, lower-level managers may have difficulties to set up the budget because their budget may depend on the forecasts of other departments as for example, the cost of production may depend on the scale of production which has to be estimated by the sales department. Furthermore, employees need to be trained in setting up budgets and there needs to be someone who controls the submission of all budgets at a specified time. In this respect, absences and changes in position may become a challenge when conducting a bottom-up budgeting method.

It is important that an effective business plan establishes a comprehensive relationship between budgets, long term strategies and short term operating plans. The process begins with developing a rational mission that will consider the needs, wants and desires of the organization. Once a rational mission has been established a budget that is within the company’s limits can be drawn. Budgeting is critical to any organization since money is policy. A budget provides an overview of the inflows and outflows of cash within a company and helps to determine the ability of a company to pay its current expenses. The strengths of having a budget include strategic planning, accountability and integrity. Strategic planning aids in handling various issues according to the level of importance, that is, the organization sets its priorities right (Bechet 112). This way, the very urgent issues are tackled first. Accountability, which makes the department and service line managers in charge of the budgeting process accountable of any cash flow transactions, is equally vital. It enables the organization to conduct its activities with transparency and integrity. The department and service line managers are held accountable by the management through clear statement of the consequences to be faced in cases where they cannot account for a particular transaction. The relationship between budgets, long term strategies and short term operating plans occurs in numerous dimensions. Budgeting helps in

Budgets generate a point of reference, making it easier for managers to accomplish activities with stability. As long as managers can meet the set parameters, budgeting and the use of budget cost centers provide them with the liberty to run their operations (Neely at al., 2003).

The managing director of Gouna Limited, Andy Birk, relies on shareholders’ requests and his own interests when making decisions on new ventures or the development of a new product/service. This means that the Director does not consider other factors that may be influential in the decision making process. Making decisions based on his own interests makes the situation worse as there is no consultation with the rest of the shareholders or any expert that can offer valuable advice. Besides, the decisions are made without proper understanding of the costs associated with different business activities. This manner of decision making is bound to have detrimental effects on the company especially in its finances. This report discusses the need for proper understanding of cost behaviour at Gouna Limited. It also examines two of the methods used in deriving a cost function, and explains the Cost-Volume-Profit (CVP) analysis method.

HTC is one of the world’s most successful and innovative manufacturing company. Their original business plan was to manufacture laptops which had issues because it had “high production costs, technical glitches, and lack of brand recognition”. HTC tackled the PDA market in 2011 and reported their first profit that year. In the early 2000s, their main manufacturing segments was the original design manufacturer (ODM) for branded handset companies and producing phone for wireless network operators. They focused their resources on customized approaches with mobile operators to differentiate HTC from other contract manufacturers which helped them gained a sense of control over their product portfolio. In 2006, they were facing other competitors who were catching up in the ODM market, which gave Palm and HP, two of HTC’s biggest customers, to look for different partners that were cheaper alternatives. Peter Chou, the new CEO that took over 2006, recognized that their company lacked branding. They needed to set themselves apart from its competitors and this will lead to greater control over the company’s future. Thus, is the reason why Chou wanted to release its own smartphone. Serval directors on board disagreed and was worried that “their operator customers could view HTC as a competitor, creating conflict of interest between HTC’s own brand sales and customized phones for the operators” (Alcacer, Kim, Yoffie, 2012). HTC’s marketing strategy was

At first, building a money step into planning may feel like slowing the business down. Being realistic about the costs of all great plans can, in the beginning, put a damper on how we feel about the upcoming year. However, as we add budgeting to our planning process on an ongoing basis, we will discover a balance between productivity and money that fits in and the tolerance for financial risks. This balance will give a sense of financial security so that we can take calculated risks, grow our business, and have the impact we want.

Sheffield Surgical Ltd (SSL) is a SME which manufactures high quality stainless-steel and titanium surgical instruments. It has built outstanding reputation and significantly expanded. However, the sales are gradually declining whilst having continuous rise in operating costs. The Current Traditional System (CTS) has displayed much frustration. Therefore, SSL is considering the concept of ‘Beyond Budgeting’ for a remedial action.

From the digitization of sales to the modernization of field sales teams, the industrial supply company is a fast-changing business. While technology is a great asset in the development of a customer base, digital technology cannot replace the hands-on experience of a trained tool tech. Mobile devices may be replacing cute colored brochures, but nothing can replace quality customer service. Web sites, digital brochures, and quick access to product information have changed the speed at which the industry operates, but without quality products backed by a reputable service team, order speed is just a faster way to frustration.

Many businesses expect employees to achieve budget targets as part of their overall performance. While the specifics requirements of each employee differ with the position and nature of the company, it is common for employees to be expected to sell a certain number of items, control costs versus a budgeted amount or reduce waste compared with a benchmark. A potential downfall of using budget information for performance evaluation is that employees may be so concerned with making budget targets that they may do so at the cost of other parts of the business.