An evaluation of budgeting practices: A case study of Company X
Bhandari, Brinda (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024052917950
https://urn.fi/URN:NBN:fi:amk-2024052917950
Tiivistelmä
This bachelor’s thesis evaluates the budgeting and forecasting practices of Company X, a subsidiary organisation. Therefore, it is a case study of a single organisation within the car leasing industry. Budgeting is considered as an essential activity within the case company, with various operational areas dedicating significant time to planning and building it. The research aims to examine the execution of the budgeting and forecasting practices of the case company, along with associated benefits and challenges. Subsequently, it identifies recommendations to enhance current budgeting and forecasting practices employed by the case company.
The research consists of a theoretical and an empirical section. The theoretical framework encompasses budgeting theory including, various types of budget, the budgeting process, three generally acknowledged budgeting approaches, traditional budgeting versus beyond budgeting models, rolling forecasting method and budgeting tools. It also highlights the benefits and challenges of budgeting and the importance of sustainable strategy while planning the budget.
The qualitative method is applied in this research. The empirical data primarily consists of data collected by the author through semi-structured interviews conducted at the case company. The primary data collection consists of eight potential employees of the case company responsible for budgeting. Eight individuals represent five different operating areas of the case company. Therefore, four individuals were from the finance team, and one each from the sales, operation, human resource and procurement. The semi-structured interviews were conducted between 15th February 2024 to 13th March 2024. Thenceforth, the thematic analysis was applied to analyse the data collected through semi-structured interviews, which is a general method for performing qualitative data analysis.
The research result demonstrate that the case company implements very structured and effective budgeting practices. The company has a mid-term planning structure, where the budget is built for the budget year and following two years. The forecasting is executed four times a year to evaluate the budgeted figures. The sustainable strategies are also taken into the account. The employees significantly highlight planning and benchmarking as a beneficial factor of the budgeting practices. Similarly, the communication and collaboration is consider as a challenging factor that still requires enhancement. Budgeting is also considered as a complex and time-consuming process. The addition of automation and robotics into current budgeting tools, along with providing clear instructions, facilitating communication and collaboration, integrating suitable elements from the beyond budgeting model, such as rolling forecasting, could enhance the current budgeting practices.
The research consists of a theoretical and an empirical section. The theoretical framework encompasses budgeting theory including, various types of budget, the budgeting process, three generally acknowledged budgeting approaches, traditional budgeting versus beyond budgeting models, rolling forecasting method and budgeting tools. It also highlights the benefits and challenges of budgeting and the importance of sustainable strategy while planning the budget.
The qualitative method is applied in this research. The empirical data primarily consists of data collected by the author through semi-structured interviews conducted at the case company. The primary data collection consists of eight potential employees of the case company responsible for budgeting. Eight individuals represent five different operating areas of the case company. Therefore, four individuals were from the finance team, and one each from the sales, operation, human resource and procurement. The semi-structured interviews were conducted between 15th February 2024 to 13th March 2024. Thenceforth, the thematic analysis was applied to analyse the data collected through semi-structured interviews, which is a general method for performing qualitative data analysis.
The research result demonstrate that the case company implements very structured and effective budgeting practices. The company has a mid-term planning structure, where the budget is built for the budget year and following two years. The forecasting is executed four times a year to evaluate the budgeted figures. The sustainable strategies are also taken into the account. The employees significantly highlight planning and benchmarking as a beneficial factor of the budgeting practices. Similarly, the communication and collaboration is consider as a challenging factor that still requires enhancement. Budgeting is also considered as a complex and time-consuming process. The addition of automation and robotics into current budgeting tools, along with providing clear instructions, facilitating communication and collaboration, integrating suitable elements from the beyond budgeting model, such as rolling forecasting, could enhance the current budgeting practices.