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Things I keep forgetting - BM - Coggle Diagram
Things I keep forgetting - BM
Variance
Budget - Actual (+) outcome = Variance
Implications
A<B = Adverse
A>B = Favorable
Purpose
For managers to investigate and examine the reasons for the difference that occur to improve financial performace
Centres
Cost centre
- Division of a business that has responsibility for its operational costs (only costs can be calculated)
HR
Customer service
Marketing
Profit centre
- Division of a business that has responsibility for both costs and revenues generated within the department. (both cost and profit can be calculated)
Operations
Sales
Benefits & Limitations
Benefits
Monitoring - benchmarking efficiency
Autonomy - managers of each division can make their own decisions quickly regarding how to use the budgets
Motivating - B can reward managers who are more efficient
Accountability - Makes budget holders and mangers hold accountable for their decisions
Limitations
Unhealthy competition
Loss of control - delegated to the division managers
Zero budgeting - where all budget holders need to justify each dollar of spending to management for the funds to be approved
NPV
Net Cash Flow * Discount factor
Cumulative NCF = SUM OF discounted NCF
NPV = SUM - cost
Shamrock organization
Core - Full-time experts who are vital for the organization’s operations and survival
Contract - Outsourced workers
Peripheral - Temporary workforce hired when needed (part-time/temporary)
Matrix
- reporting to multiple managers - helps communication
Types of economies of scale
Purchasing
Managerial
Technical
Financial
Marketing
Risk bearing
Motivation theories
Pink
(Autonomy, Mastery, Purpose)
Taylor Scientific Management
(finding the best way to do something and making employees all do that)
Herzberg 2 factor
(Hygiene and Motivators)
Maslow's Hierarchy of need
Self-actulisation
Esteem needs
Social needs (love and belonging)
Safety & security
Physiological needs
Adam Equity theory
(Employees comparing output vs input between each other - determining whether its fair or not)
Creditors
- people who WE owe money to