It has seen that past decade has developed a rapid change in the global management and organization planning regarding the technological and socio-political perspective. Moreover, it has analyzed that globalization and economy have significant influence on the industry sector of the world and success leading towards survival of the organizations indeed depended on the ability to meet and compete with the global challenges (Sriram, 2008)
Therefore, management and operational strategies are rethinking by all types of organization such as business, health care, education, research and development and military. The main issues are that companies have faced funding cutbacks, competition over limited resources, outcomes of high-quality demand and escalating costs. An organization has to overcome all such pressure to operate more efficiently in this challenging global market (Daníelsson, 2011).
Planning Function of the Manager
One of the biggest responsibility of the manager is to get work done through others. The purpose is to accomplish organizational goals through collaboration, direction, coordination and guidance for the members of the organization. All relates to the classification of the people work through objectives, direction, planning, controlling and organizing to get things right (Sriram, 2008).
Planning function involves decision-making which is an essential planning service in the managerial activity considering all the aspects of the controlling, commanding, coordinating, planning and organizing. However, there are different types of managers present in the organization such as senior executives, middle managers, and operational managers (Sriram, 2008).
Each manager has different responsibility from one another. But, 90% of possessive duty is around going to meetings, receiving calls, constant email checking and blow fire after fire. In a global perspective, the responsibility of functional and worldwide managers is identifying opportunity around the world and provide benefit to the organization from the worldwide operations. The global managers are the one that possesses interpersonal skills and coordinate resources from corner to corner (Sriram, 2008).
Example Case Study
The research of last quarter century defines that growth of home personal computer market has a marvelous success story. Dell is one of the famous brands in the industry that is moving successfully through a procedure of manufacturer, distributor, retailer and customer that involves planning and organizational function of the senior managers of the Dell organization. In the competitive global market, Dell has to stand strong to get things right. For example, selling direct and tailored personal requirement of the customers by considering their options from a range of components and specifications, this is a basic concept behind the idea of Dell company director Michael Dell (Daníelsson, 2011).
The manager has to deal with four main approaches to the organization, structure, and its management. These methods include:
- Classical (purpose, technical requirements, management hierarchy, etc.)
- Human relations (groups, social work factors, leadership, behavior, etc.)
- Systems (traditional and human connection approaches, socio-technical system importance, etc.)
- Contingency (organization design, success, management, and structure formation, etc.).
It is the first management framework for work analysis to take responsibilities and give attention to the division of task with duties and responsibilities clarification while maintaining coordination between the members of the organization (Daníelsson, 2011).
Therefore, a manager has to understand the central principle of the structure that are a working principle, coordination principle, and scalar principle. All of these management principles help to evaluate the development of the project or task progress. Also, leading the manager towards utilization of effective techniques and guiding principles through budget and forecast planning.
Budgets and Forecasts Technique
To describe a financial management cycle of the organization, it can elaborate in four ways such as budgeting, cash flow, procurement commodity/services, financial reporting and monitoring/financial control. Although, budgets and forecasts management are not just about the traditional ways of bookkeeping and accounting. The budget and forecasts technique involves the financial performance of the organization and efficient use of resources as well as creative techniques to utilize resources in a way that generate more resources (Daníelsson, 2011).
Financial management involves three major aspects to get a positive result that are strategic planning, planning and budgeting and forecasting. Whereas organization has to overcome top five challenges that are an integration of planning, budgeting, and forecasting, proper utilization of forecasting, using process discipline, clearly defining decision-making responsibilities and exploitation of technology (Nugus, 2009). It has analyzed that several organizations do not understand the concept what forecasting is. The purpose of forecasting is to make an honest assessment of the market factors, performance based on short and medium term, and environmental factors (Nugus, 2009).
For example, a research study tells that forty-seven percent of the organizational managers get confused about forecasting and conceptualize it with targets and commitments. It is essential to understand that who is responsible for owning issues or working related to the budgeting and forecasting in the organization (Nugus, 2009).
According to research that shows 13.7% ownership of the operational exercises is led by the functional group that gets supported by finance. In comparison to that functional organization has led by investment with their business practices is 46.5%. The organization doing massive financial exercises led by investment involves the help of technical managers are 35.7% and 4.1% vice versa (Nugus, 2009).
Plosser, 2008 describes that a more quantitative approach is taking against forecasting such as forecast is entirely based on single-point, metrics and estimates whereas quantitative approach have multi-factor perspectives taken from single input sensitivity and single-point forecasting. In the business units have substantial variability in the assumptions and data as an approach to forecasting. However, quantitative distribution considering possible outcomes through risk drivers to get cash flow or earning calculation taken under key balance sheet metrics and financial ratios (Plosser, 2008).
Whereas in the best case, financial manager can take analysis from decision makers. A risk of an asset is the main difference between the best and worst case scenarios. However, budget and forecast planning needs to be informative. But it is to inform that best way is always during the asset estimation. There are multiple ways through which perfect financial forecast can determine in which organizations are not restricted to the best and worst case progress report of the budget and forecast statement (Réka Cardos, 2014).
According to Réka Cards, 2014 explains that some critical steps are required in the budget and forecast analysis. Key components have to deal with the sensitivity analysis in which determinants have identified that build around scenario and consider as its factor. Such as an automobile firm regarding economy during new plant consideration. The sensitivity of situation is also measured through its status that can be realistic, complicated regarding data collection or assets and cash flows information.
A function manager needs to understand the benefit of the associated with the budget and forecast plan as it helps to analyze the progress report of the project. It becomes easier for the management to know a whole project progress through an illustration of a visual display, parallel processes, overall time process, and tracking the project progress (Schick, 2007).
The project tasks can be dependent and challenging. But budget and forecast analysis helps the team to make subtasks of a task through graphical demonstration. For example, an organizational manager has to start the process by distributing a task into subtasks to make a chart of a project through which three columns are created with the title work, start, and duration (Réka Cardos, 2014).
The easiest and simplest way to forecast the budget use the same task by adding it to project management through an extension of the lines on the balance sheet/cash flows/income statement/ financial statement. The table will provide the progress of the project through the percentage and its dependencies on the subtasks. In the project management, the financial analyst makes the title of Info, No., Activity, Start, Duration, End, Progress, Done, Undone, and Predecessor (Schick, 2007).
Hence, it was difficult to avoid managerial pitfalls that involve unrealistic crisis management, chronic crisis management, inaccurate analyses of the real cost, dependence on the one funding source, most severe lacking of managerial expertise regarding a discussion of the financial information usage and communication.
Consequently, all these issues do exist in the administrative function, but to overcome all these problems managers have to perform accurately with complete knowledge of the budgeting and forecasting plan.
As a result, companies like Dell that has successfully use budget and forecasting plan in their organization's financial planning can progress successfully and compete with the global market. Budget and Forecast planning are used as a project tool to rectify particular milestones and activities, finding proper sequence of the activities, estimate activity time through diagram construction, finding a critical path along with project progress through economic evaluation and development.
In financial management plan, a manager is responsible for handling expected cash flows through a value of the risky assets using one or two-way technique. All methods are depending on different budgeting and forecasting plan to get a better understanding of the risk associated with the value. There is an extreme scenario that has a worst case, and the other one is a generalized situation. The manager has to understand that when dealing with risky assets, a difference occurs in expected results
- Daníelsson, J. (2011). Financial risk forecasting. Chichester: John Wiley.
- Nugus, S. (2009). Financial planning using Excel. Amsterdam: CIMA.
- Plosser, C. (2008). Financial Econometrics, Financial Innovation, and Financial Stability. Journal of Financial Econometrics, 7(1), 3-11. http://dx.doi.org/10.1093/jjfinec/nbn014
- Réka Cardos, I. (2014). New Trends in Budgeting – A Literature Review. Practical Application of Science, 2(4), 483-487. Retrieved from http://sea.bxb.ro/Article/SEA_4_56.pdf
- Sriram, R. (2008). Business Intelligence - in the Context of Global Business Environment. Journal of Global Information Technology Management, 11(2), 1-4. http://dx.doi.org/10.1080/1097198x.2008.10856464
- Schick, A. (2007). Performance Budgeting and Accrual Budgeting. OECD Journal on Budgeting, 7(2), 109-138. http://dx.doi.org/10.1787/budget-v7-art11-en