Question

In: Accounting

Using the organization/company that you work for, or have worked for in the past, how do...

Using the organization/company that you work for, or have worked for in the past, how do they (1) align the budget with organizational goals and (2) align the budget with the mission of the company? How are capital decisions made? If you were in a position that you could change things, what would you change? Why? Support your answer with credible sources. If you have never worked for an organization, use the library to find an article related to budgeting. Summarize the key points made in the article. Cite your sources using proper APA format (both in-text and reference entries).

Solutions

Expert Solution

The budget is a plan that is prepared for the purpose of obtaining the goals and objectives of the organization. The budgets are prepared with the participation of the level of executives and they thus prepare the budgets in accordance with the strategy of the organization. The budget is prepared for the long run program and the budget cycle is then set in accordance with the organizational goals and objectives. The metrics which are critical to the success of obtaining organizational goals are properly measured and communicated. The revisions are also made in the budgets in order to achieve the organizational goals on timely basis. The changes are also made in the organizational goals in order to ensure that the goals are practically achievable thus the budget is being prepared in accordance with the competitive and economic environment.(1)

The budgets are also properly aligned in the company with the mission of the company. The budgets are not just prepared for the annual period but also for the long term period; hence it helps in aligning the budget with the mission of the company. Thus the budget becomes the part of the overall strategy which is being set in order to achieve the objectives of the company. (2)

The capital decisions are made by evaluating the financial productivity of the investment. The pay-back period of the capital expenditure is to be analyzed. The decision is taken to be positive if the net present value of investment is positive. (2)

The budgeting and decision making process is correct and thus no major changes are required but timely checking of the budgets need to be done in order to attain high growth.

References:

1. 2018, "The Incredible Power of Company-Wide Goal Alignment & Organizational Business Goals"; Available at: https://www.successfactors.com/en_us/lp/articles/corporate-goal-alignment.html

2. Andrew Cravenho, 2014, "The 5 Essentials for Aligning Your Budget With Your Business Strategy"; Available at: https://www.entrepreneur.com/article/240664


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