Module 3 - Lecture 4

Question 1

What is beyond budgeting?

Answer 1

The process of avoiding the annual performance trap by replacing rigid annual budget based performance evaluation with performance evaluations based on relative performance contracts with hindsight

Question 2

What are some beyond budgeting criticisms of traditional budgeting?

Answer 2

1) Budgeting systems cause dysfunctional behaviour and consume large amounts of management time
2) Budgeting systems impede firms from being flexible and adaptive in unpredictable environments facing contemporary organizations
3) Budgeting systems are disconnected from strategy and therefore out of sync with competitive requirements

Question 3

What does BB need in order to work?

Answer 3

• Trustworthy, hard-working employees
• Flexible PM systems
• General flexibility

Question 4

When might BB be easier to enact?

Answer 4

• In high uncertainty
• In quality-based strategies
• in organic structures
• In the growth life stage

Question 5

What is an example of a company that used BB and was successful?

Answer 5

Svenska Handelsbanken - Swedish originated retail and wholesale bank