After reading Chapters 2, 5, 10, 13, 17 in the Blocher Text, select 2 techniques/concepts of interest to you. Submit a thread of at least 500 words examining the relationship between the selected techniques/concepts and strategic allocation of financial resources with respect to revenues and expenses. Support your thread by citing at least 3 peer-reviewed journal articles. Your thread must be in current APA format and must include a reference list.
Expert Answer and Explanation
Selected Techniques and Strategic Allocation of Finance
Strategic business management involves a series of practices that help a business succeed. These practices include financial mainstreaming and operational management. According to the highlights by Blocher, Stout and Cokins (2010), some of the primary elements of these practices include budgeting and activity based costing. Budgeting provides a cot-based framework to the business and ensues that the management spends the resources of the business with an objective. On the other hand activity-based costing helps the management evaluate the activities of the business and their financial viability. Accordingly, these two elements of strategic management are closely linked to strategic allocation of finance.
Selected Techniques
Strategy and Master Budget
Budget is described as a detailed plan for resource mobilization and spending over a given period of time in order to achieve set goals and objectives of the organization (Kaplan and Atkinson, 2015). A budget consists both the financial and non-financial element of planned projects and operations. The budget for a particular period is both a framework for operations and a projection of the operating implications from the budgeted timeline. Working with the set goals, the business is able to manage the bottle necks and prevent such bottlenecks from hindering the business from achieving the goals of the business. Through strategic budgeting, the management is able to communicate their anticipations throughout the company. An integral set of budget creates a platform for each subunit to see the way the subunits fit into the overall plan for the period that the budget will cover (Kaplan et al., 2015).
Activity Based Costing
An approach that changes indirect costs to products on the basis of the units that are produced fails to give accurate figures on product costs and also the incentive for the management of indirect costs; hence, the need for activity based costing. Activity-based costing involves the improvement of the accuracy and determination of costs. Although the approach is a new feature as far as cost accounting is concerned, it has been widely adopted by different organizations (Margolies and Hoddinott, 2015). Activity-based costing helps the management establish the proportionate number of units produced compared to the investment. Through this approach, the business is able to control its direct and indirect costs (Margolies et al., 2015).
Strategic Allocation of Finance
The relationship between the selected techniques and strategic allocation of finance
The process of preparing the budget gives the management insights into the business and anticipated challenges. In this regard, the management is tasked with coming up with strategic approaches that will help the business overcome these challenges. Completion of strategic budgeting and cost allocation for all business units and activities help facilitate the coordination of activities throughout the business. For example, the budget will show the implications of sales volumes and activity based costing for the budgeting period. Coordination of functional areas of the business is a significant managerial responsibility. Budgeting is a primary business tool that contributes to the achievement of requisite level of coordinated business activities.
Consequently, it gives the management the power and authority to acquire and use resources in the business. A business strategy is an avenue towards attaining the long term goals and their stated goals. The significance of strategy in budgeting and planning cannot be overemphasized. In most cases, businesses perceive budget for the future and as a continuation of the current period with, at best. Scant attempts to connect the budgeting process to their strategic management. The objective is to develop a budget that achieves the strategic mission and goal of the organization.
References
Blocher, E. J., Stout, D. E., & Cokins, G. (2010). Cost management: A strategic emphasis. Includes index.
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Margolies, A., & Hoddinott, J. (2015). Costing alternative transfer modalities. Journal of Development Effectiveness, 7(1), 1-16.
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