The assignment question and the supporting reference is attached.
TO TUTOR: THIS WAS MY OWN DISCUSSION THREAD THAT THE PROFESSOR WANTS US TO USE AS REFERENCE FOR THE ASSIGNMENT. TUTOR WILL USE ONE OF THE TECHNIQUE/CONCEPTS HERE, TO DEVELOP THE REAL WORLD APPLICATION PAPER AS INSTRUCTED IN THE OTHER FILE ATTACHED. ( YOU CAN PICK MASTER BUDGET OR LIFE CYCLE COSTING).
Budgeting is the natural manner of conveying the goals and functions inside the economic unit, and it is the process of translating management plans into digital or financial form.
strategic allocation of financial resources.
The budget is a planning document that comprises a variety of financial and/or nonfinancial information about future operations.
The action of recording financial and/or non-financial factors into the budget is known as budgeting (Achim, 2009a). Blumentritt (2006) defines budgeting as “the process of allocating an organization’s financial resources to its units, activities, and investments,” whereas Horngren et al. define budgeting as “the quantitative expression of management’s proposed plan of action for a specified period and an aid to coordinating what needs to be done to implement that plan” (Blumentritt, 2006). (Horngren et al., 2004)
Although most firms engage in strategic planning and capital budgeting, some of the projects they undertake are inefficiently handled, resulting in project failure or cost overruns. What variables lead to the overrun or failure of capital projects, and how may these problems be avoided?
What does it mean to allocate financial resources strategically? According to Henry Mintzberg (2009), “the realm of strategy is untidy and tangled up” (p. 162)
According to Ali (2017), strategy entails a focus on the organization’s long-term direction, aligning the business’s actions with the environment to maximize opportunities and avoid dangers, and matching the organization’s activities to its available resources (para. 2). This underlines the importance of strategic planning and budgeting for the distribution of financial resources in companies. By incorporating strategy into the plan, the business will be able to spend resources more carefully while avoiding misuse or theft of cash.
Maritan and Lee (2017) emphasize the complexities of resource allocation, pointing out that it entails many activities carried out by management across roles, levels, and units, and that it is influenced by social, political, and economic considerations (para. 1). Strategic planning is essential given the level of complexity,
To guarantee a proper allocation of financial resources, strategic planning should be integrated in the capital budgeting process. According to Mathur (2017), a capital improvement plan combines the general plan or master plan with financial planning, allowing for the implementation of improvements and prioritizing tasks based on service levels, asset condition, and available resources (para 2).
Life Cycle Costing
The producer, the client, and the market all have different perspectives on the cost of the product life cycle. Understanding the interplay between the three viewpoints provides a comprehensive framework for cost management and reduction prospects. Focus on the three views to efficiently manage costs, each of which has different stages and costs associated with it, as each suggests (Hansen & Mowen, 2007, p. 741-742, & Horengren et al., 2018, p. 540). From a product perspective, or so-called production viewpoint, which includes stages of research, development, design, production, and other related costs, and from a market perspective, which focuses on the behavior of sales revenues and includes the life cycle in multiple stages, beginning with the stage of offering the product to the market, the stage of growth and progress in sales, and then the stage of maturity and decline, it includes costs such as marketing. From the consumer’s perspective, it is the focus on achieving entire customer happiness while also recruiting new customers, which is influenced by both buy costs (acquisition, installation, and usage expenses) and post-purchase costs (operation and maintenance costs).
Because it analyzes the complete cost life cycle of the product or service, life-cycle costing provides a long-term view. As a result, it gives a more comprehensive picture of a product’s or service’s expenses and profitability.(Blocher, 2021, p. 538) A product that is built quickly and carelessly with minimal investment in design costs, for example, may have much higher marketing and service costs later in its life cycle. Managers care about total costs to the organization throughout the course of its whole life cycle, not just production costs.(Blocher, 2021, p. 538)
Keller and Alsdorf (2012) does not necessarily talk about budgeting and product life cycle, but the application of quality of the work we are involved in the span of our work years, matters. “the loss of work is deeply disturbing, because we are designed for it. This realization injects a deeper and far more positive meaning into the common view that people need to work to survive.” Through work, we discover who we are, our gifts, abilities and a major component of our identities. Keller & Alsdorf (2012, pg. 38)
Achim S. A., “Contabilitate pentru manageri”, Risoprint, Cluj-Napoca, 2009a.
Ali, A. A. (2018). Strategic planning-organizational performance relationship: Perspectives of previous studies
and literature review. International Journal of Healthcare Management, 11(1), 8-24.
https://doi.org/10.1179/2047971915Y.0000000017 (Links to an external site.)
Blocher, E. (2021). Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing. In E. Blocher, Cost Management: A Strategic Emphasis (p. 538). New York: McGraw-Hill.
Blumentritt T., Integrating strategic management and budgeting, Journal of Business
Strategy, 27 (6) (2006), pp. 73–79
Keller, T. & Alsdorf, K. (2012). Every Good Endeavor. Penguin US. https://bookshelf.vitalsource.com/books/9781101600337
Maritan, C. A., & Lee, G. K. (2017). Bringing a resource and capability lens to resource allocation. Journal of
Management, 43(8), 2609–2619. https://doi.org/10.1177/0149206317727585 (Links to an external site.)
Mathur, S. (2019). Linking planning with budgeting: Examining linkages between general plans and capital
improvement plans. Journal of Planning Education and Research, 39(1), 65–78.
https://doi.org/10.1177/0739456X17715307 (Links to an external site.)