The concept of budgeting involves creating a plan for the execution of capital and revenue expenditure in the due course of the business. The spending plan and the development of a expenditure is called budgeting. The concept of Budgeting is important in every aspect of the business organizations irrespective of the size and nature of the business. The budgeting aspect and the importance of the same in the hotel management companies is also one of the main and important factor considered and discussed (Kovaleva et al. 2016).
The Private sector organizations and the use of budgeting by the management with the concept of zero based Budgeting in the private sector is discussed in the assignment. The concept of traditional budgeting and modern way of budgeting, which incorporate several data and information required for the process of budgeting, is well discussed and elaborated. The key findings from the articles were the budgeting methods and techniques used by the management and the industries for forecasting and implementation of the budgeting process and the overall cycle of Budgeting (Bader, Nawaiseh and Nawaiseh 2018).
The implication and the cost of zero based budgeting as a technique and the approval of the same and the dispersion of the same from the original budgeting is covered in the first article of the report. The use of zero based budgeting historically the ethos and the techniques applied for the same in different kind of organization forms a subsequent part of our articles. The concerns relating to use of zero-based budgeting as well as its conflict with the traditional method of budgeting is addressed (Tian et al. 2015). The learning outcome derived from the research papers were that the process of budgeting helps in planning of important financial goals of the company, helps in implementation of a particular strategy, communication and coordination in an organization(Gachoka et al. 2018).
Discussions
Concept of Budgeting
The Budgeting as a process and ways are defining and setting up financial goals, forecasting the needs and requirement of resources by the company in the due course of the daily operating activities, monitoring and reviewing the capital and revenue expenditure and income of the company and evaluating the progress in the same for achieving financial goals of the company (Gachoka et al. 2018). The steps involved in the process of budgeting involves are:
Budgeting involves identifying key components of revenue and expenditure and the dispersion of the same in their previous years as in the trend form. The divisions and the segregation of the same in the forms of income, expenses and the net amount saved by the company will help them focus on the key component playing a pivot role in the company (Grossi, Reichard and Ruggiero 2016).
The management of the fixed and variable expenses by the company is also one of the key factor in the expenditure in the company. The use of modern tools of budgeting should be incorporated by the organization for helping them forecast and analyze the process of the budgeting. This involves forecasting of expenditure and income of the company, scenario analysis by the company in the form of different stages of the business cycle of the company and the use of other integrated software tools.
Inflation is a key concept that should be incorporated in the budgeting while assessing the expenditure and the various sources of income for the company. The term inflation reflects the fall in purchasing power of a commodity with a general rise in the price level. Inclusion of Inflation in the expenditure in the form of increasing the expenses by the predicted amount of inflation in the near future and due course of the business will help them better assist the financial needs and conditions of the company (Warren and Jack 2018).
Proper reviewing and monitoring of all overall budgeting procedure will help them asses the quality of the budgeting methods deployed by the company. The budgeting concept on an overall helps in maintaining an operational and financial efficiency in the company. The company recognizes the key aspect of the budgeting such as the allocation and utilization of resources, anticipating and taking actions ahead. The strategy and goals of the company is predicted and is useful when the company is preplanned for the operations (Zhao 2016).
Analysis of Research Paper Included
The first research paper deals with the Hotel Management companies and the forecasting and the budgeting practices involved. The assignment involves the current practices deployed by the US hotel management industries and the practices they involves for forecasting and preparation of the budgeting. The methodology involved in the study-included survey of key executives of the hotel management companies in the USA (Cokins and Dybvig 2018). Use of Chi square test and T test was done for treatment and finding of equality of mean between the large and small data collected i.e.to identify the difference in the large and the small-scale hotel management companies.
The finding from the article involves the identifications of the concepts used in the hospitality industries. The key finding was to analyze whether the current budgeting and forecasting tools deployed by the hospitality industries is currently improving the growth prosperity for the companies. The opportunities involved in the time efficiencies and the whether there is a proper time management from these process. The significant difference arises in the budgeting and the forecasting process in the hotel management industries between the large and small-scale companies (Broccardo et al. 2016). The difference between the companies generally arises on account nature and size of the business. The requirement for the capital revenue and expenditure is different for different size of the companies.
The research implications and the limitations of the paper is elaborated. The future research done focuses on the identification of the economic factors and the influence the revenue generation by the management of the companies at the different levels of operations like the local or the regional level (McVay 2015). The future research process may include the focus and the importance of the of the modern equipment tools which helps in better assessment of financial needs. The practical application and the usage of the study is to recommend and implement a centralized budgeting process which would bring about efficiency, improve accuracy in the forecasting and allowing the flexibility in the spreadsheet for exploring of various scenarios.
The overall findings, contributions and the process for the paper was obt5aining the inputs from corporates, key executives of the hotel management companies and the operations of the same in the USA (Kamau, Rotich and Anyango 2017). The forecasting, analysis and the documentation of the budgeting process which involves analyzing the key financial components of companies in the form of revenue and expenditure key elements were identified in the project. The forecasting and the development of the budgeting process will enable the company implement proper strategy for achieving the financial goals and the prosperity of the company.
The Operational Budgeting as a process and as a system involves the important and the crucial part of the firms accounting policy and systems and for creating an organization structure and architecture for the same. The budgeting as a process refers to the transformation of the company strategic plan into an measurable unit form. The budgetary process for an organization is the effort applied by the company in quantifying the amount for the utility of the resources by the company (Pathak and Dzigbede 2016).
The second article included in the assignment is the concept and implementation of zero based budgeting use a management important tool in the private sectors. The research paper examine about the validity and the use of the zero based budgeting that is used by the management of a company as a budgetary process. The zero based budgeting starts with the evaluation of a budget from the beginning or from the base level the steps for the same involves use of different components of the cash flow statement of the companies and justifying and analyzing all the expenditure of the companies which is incurred I the daily operations of the business.
The zero based budgeting in the private sector goes for the zero based budgeting where every expenses of the new period is examined and determined on the base of the actual amount of expenses that are incurred. In the traditional form of budgeting the past trend analysis is the main factor included whereas the zero based budgeting includes balances that are carried forward in the next period and no expenses part is pre-committed.
The study evaluates the applicability and the usage of the zero based budgeting as a management tool and the same used by the company as an investigate and determines the usefulness of the process in the field of determining the key performance done by the management of the company (Callaghan, Hawke and Mignerey 2014). The research crucially identifies that the traditional budgeting process over the modern form of budgeting for the use of the quality data that might be useful in the analysis of the budgeting and to highlight the important budgeting steps and decisions.
The paper includes historical survey of the use of the zero based budgeting in the profit and non-profit organizations to examine and execute the different techniques applied by the company. The chapter further introduces for the budgeting procedures of implementation of Babcock and Wilcox and the presentation for the expected benefits accruing for the use of the Zero Based Budgeting.
The paper also refines a survey for determining the extent of the usage of The Zero Based Budgeting in different corporations and organizations. The Zero-based budgeting is a comprehensive and a self-evolving tool than a merely budget evaluation tool. The application of the zero based budgeting was seen first by the Texas Instrument in the early 1970s. Integration of key managerial functions like the controlling of operating activities and planning of strategy to different kind of performance evaluation is the key factors discussed (Muhammed and Kinge 2016).
Similarities Observed
The article paper discussed and analyzed above shows the importance of the budgeting as an effective tool in the operations of the company. It is for the long-term alignment of the company that can result and bring the growth for the company if there is proper deployment of strategy and planning structure laid down by the management of the company. The key focus on the first assignment is on the budgetary control, forecasting and evaluating or overviewing the budgetary process. The second article focuses on the usage of the zero based budgeting by dividing the income and expenses of the company and identifying the key factor that influences the budgetary process and the overview and the performance of the same in the form of the trend analysis (Popesko et al. 2016).
The key difference observed in the articles were that the first articles focuses on the traditional form of budgeting and the second article focuses on the modern concept of budgeting as an assessment tool for analyzing the performance of the company. The nature and the size of the business was considered one of the key factor while analyzing the needs and operational part of the companies operating in the hospitality sector. The second article gives a uniform base and model irrespective of the size and nature of the business (Segun and Olamide 2015).
Learning Outcomes
The learning outcomes learned from the two studies are:
Strategy and Goals: The key aspect of the budgeting involves implementation and incorporation of planned activities of the companies in the form of the strategy and goals of the company. The same has been discussed in both the article where the budgetary process should have a strategy to start with and there should be a strategy for the implementation of the same (Sandalgaard and Nikolaj Bukh 2014).
Anticipating and Forecasting: The key aspect of the analysis involves anticipation and forecasting of the important data and resources required in the process of the budgeting. The anticipation of expenses and income for the company helps them in assessing and distributions of the budgeting components (Pinjari et al. 2016).
Monitoring and Evaluation: The key aspect of the budgeting is to judge whether the budgeting process involved is self-effective or not. The budgeting process involves the use of planning and strategy implementation. The use of the same by the company in the different levels of the company.
Utilization and Allocation of Financial Resources: The deployment of financial resources and the utilization of the same were the key elements addressed in the articles. The financial resource of the company and the application for the same in the analysis and evaluation of budgeting process were the key aspect of the articles studied (Klychova, Faskhutdinova and Sadrieva 2014).
Conclusion
The financial analysis and the key aspects of the budgeting evolving around is a key aspect in determining the budgetary process. The concept of budgeting is well discussed in the analysis portion of the project. The budgeting aspect plays a different level in different kinds of organization and structure it is the size and nature of the company, which plays the budgeting impact on the company.
The concept and importance of budgeting is important to understand the implications of the same in the role bad in the form of strategy by the management of the company. The long-term success and alignment of the growth and profitability implies by the budgeting played as a role of planning in the prospect of the company. The budgeting role helps in determining the allocation and deployment of proper funds in different aspects of the company. The planning stage helps in setting up strategy and goals for the company and helps in the Anticipation and forecasting of long term and short term financial and operational goals for the company.
The utilization and allocation of financial resources is better done with the help of the budgeting and the company can better utilize and efficiently allocate resources. Breaking down the various components of the budgeting into expenses and income and recognizing the key factor among them is also a key factor to analyze for the company. The importance of modern budgeting plays and important and crucial role over traditional form of budgeting in an organization.
The modern tools of budgeting plays an important role and gives much more classified form of information to the company in assessing and analyzing various aspects of financial and operational levels of the company. Thus there are different budgeting role and aspects that can be played in the company by different strategies of budgeting deployed by the company.
Reference
Kovaleva, T.M., Khvostenko, O.A., Glukhova, A.G., Nikeryasova, V.V. and Gavrilov, D.E., 2016. The Budgeting Mechanism in Development Companies. International Journal of Environmental and Science Education, 11(15), pp.7726-7744.
Bader, A., Al-Nawaiseh, H.N. and Nawaiseh, M.E., 2018. Capital Investment Appraisal Practices of Jordan Industrial Companies: A Survey of Current Usage. International Research Journal of Applied Finance, 9(4), pp.146-161.
Tian, J., Ni, Q.L., Hao, Q. and Wu, D., 2015. The Application of the Beyond Budgeting to Organisations — An Example of Application of Borealis Company. Modern Management Science & Engineering, 3(1), p.65.
Gachoka, N., Aduda, J., Kaijage, E. and Okiro, K., 2018. The Moderating Effect of Organizational Characteristics on the Relationship Between Budgeting Process and Performance of Churches in Kenya. Journal of Finance and Investment Analysis, 7(2), pp.1-5.
Gachoka, N., Aduda, J., Kaijage, E. and Okiro, K., 2018. The Intervening Effect of Internal Controls on the Relationship Between Budgeting Process and Performance of Churches in Kenya. Journal of Finance and Investment Analysis, 7(2), pp.1-4.
Grossi, G., Reichard, C. and Ruggiero, P., 2016. Appropriateness and use of performance information in the budgeting process: Some experiences from German and Italian municipalities. Public Performance & Management Review, 39(3), pp.581-606.
Warren, L. and Jack, L., 2018. The capital budgeting process and the energy trilemma-a strategic conduct analysis. The British Accounting Review.
Zhao, Z., 2016. Why local governments need performance evaluation: intermediary institutions in the performance-based budgeting process in China. Journal of Chinese Governance, 1(4), pp.564-573.
Cokins, G. and Dybvig, A., 2018. NEXT GENERATION BUDGETING: If you want more accurate results from your budgeting process, it may be time to switch from traditional budgeting to operational budgeting. Strategic Finance, 99(10), pp.38-46.
Broccardo, L., Giacosa, E., Culasso, F. and Ferraris, A., 2016. Budgeting process: an Italian survey in family and non-family firms. World Review of Entrepreneurship, Management and Sustainable Development, 12(2-3), pp.157-174.
McVay, G.J., 2015. THE EFFECTS OF COMPENSATION SCHEME, SOURCE CREDIBILITY, AND RECEIVER INVOLVEMENT ON THE ORGANIZATIONAL BUDGETING PROCESS. Academy Of Accounting & Financial Studies Journal, 19(3).
Kamau, J.K., Rotich, G. and Anyango, W., 2017. Effect of budgeting process on budget performance of state corporations in Kenya: A case of Kenyatta National Hospital. International Academic Journal of Human Resource and Business Administration, 2(3), pp.255-281.
Popesko, B., Klju?nikov, A., Hrabec, D. and Dokulil, J., 2016. Predictability of business environment within budgeting process–Is it connected with fluctuations of economy?. Economics and Sociology.
Segun, A. and Olamide, F.T., 2015. The global debate on budgeting: Empirical evidence from Nigeria. Business Management Review, 13(1).
Sandalgaard, N. and Nikolaj Bukh, P., 2014. Beyond Budgeting and change: a case study. Journal of Accounting & Organizational Change, 10(3), pp.409-423.
Pathak, R. and Dzigbede, K., 2016. Public Budgeting in African Nations: Fiscal Analysis in Development Management, edited by Peter Fuseini Haruna and Shikha Vyas?Doorgapersad. New York, NY: Routledge, 2016. Public Budgeting & Finance, 36(4), pp.131-134.
Callaghan, S., Hawke, K. and Mignerey, C., 2014. Five myths (and realities) about zero-based budgeting. McKinsey & Company, p.2.
Muhammed, A.A. and Kinge, R.F., 2016. Executive-Legislature Relations in the Budgeting Process: A Study of President Obasanjo Years, 1999–2007. Covenant University Journal of Politics and International Affairs, 2(3).
Pinjari, A.R., Augustin, B., Sivaraman, V., Imani, A.F., Eluru, N. and Pendyala, R.M., 2016. Stochastic frontier estimation of budgets for Kuhn–Tucker demand systems: Application to activity time-use analysis. Transportation Research Part A: Policy and Practice, 88, pp.117-133.
Klychova, G.S., Faskhutdinova, ?.S. and Sadrieva, E.R., 2014. Budget efficiency for cost control purposes in management accounting system. Mediterranean journal of social sciences, 5(24), p.79.
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