Malven Star Bike Company – Assessment Report
PART A
Name of Organization
Malven Star is a bicycle company set in during 1903 by Tom Finnigan, inner east suburb of Melbourne, Australia (Malvern Star, 2020). It is Australia’s most established and experienced bike manufacturing brand that fulfills the riding needs of kids, hikers and bikers alike. The company deals with manufacturing of a range of bicycles including recreational bikes, mountain bikes, kid’s bikes, heritage bikes and electric bikes (Malvern Star, 2020).
Team Supervision
The supervision of financial department is currently being handled by me. The budgeting team of Malven Star is responsible for designing the short-term and long-term budget models for the entire company. Furthermore, different team members are responsible for gathering and analyzing financial information regarding revenues, expenditure and cash management in order to ensure that all operations are within the budget and all resources are allocated efficiently (Aspire, 2020). The manager of budgeting team is responsible for presenting annual budgets to senior managers.
Team Budget Responsibility
Currently, short term budgets/financial plans are being created, implemented and monitored. Under this, I am responsible for implementing and monitoring the income and expenditure budget. This budget shows the anticipated costs and funding of the costs for a specified period of time. This budget allows the company to get the idea of required revenue in future so that it can be used for growing the business of covering up the future expenditure (Arihant Experts, 2018). This budget must be evaluated regularly to ensure alignment with goals and identification of potential spending issues.
PART B
Purpose of Team Budget
The team budgets are the forecast of expenditures and revenues on monthly basis uptil a year (Anandarajah, Aseervatham, & Reid, 2015). This helps the business managers in making resource allocation decision and then identifies the plan for potential cash crunches.
Explanation
The revenue and expenditure budget was chosen. The initial costing including in revenue and expenditure seems to be accurate as the documents including bills and receipts can be verified. The detailed analysis of expenditure budget is also possible due to availability of the document. However, the time allocated to the tasks seems to be unrealistic.
Areas of Improvement
The initial revenue and costing is needed to be revised because it has been proven to be inadequate or inaccurate. In this light, the sales budget can be improved because of the boom in cycling market in Australia. The demand for mountain bikes has become popular much recently.
Approachable Key Contact
Senior financial manager and market analyst must be approached for clarifying and discussing the team budget (Anandarajah, Aseervatham, & Reid, 2015). The reason for choosing him is that they must have more understanding of market demand and company’s strategic direction. More crucial information can be gathered behind the budget.
Process of Changes
Past budgets, computer ledger account records and budgeted outcomes will be followed in order to negotiate the changes in the team budget or the financial plan (Anandarajah, Aseervatham, & Reid, 2015). Past budgets will allow the assessor to see the goals achievement, the actions required and the key performance indicators. While the computer ledger accounts will allow in collection of actual operating data and information.
PART C
Contingency Plan
Consequences
In order to achieve the targeted outcomes, the organizations are required to undertake the risk assessment and rank the risks in terms of their impact on the budget. Afterwards, the possible contingencies can be identified (Anandarajah, Aseervatham, & Reid, 2015). For Malven Star, a possible event that could impact the expenditure and revenue budget is unexpected changes in costs and price. The increased costs of tires, brakes, plastic, steel and other raw material could increase the production cost and thus have a negative impact on the cashflow of Malven Star.
Steps
In order to develop the contingency plan and make the required adjustments to the budget, negotiation with senior management will be done. Previous expenditure records (financial reports, invoices, logs, credit card and bank statement) and expected expenditures documents will be viewed and corporate projected income will be reviewed (Anandarajah, Aseervatham, & Reid, 2015). As a series of steps, the goal will be set, purpose will be defined, objectives will be specified, action plan will be developed and lastly action plan will be implemented.
Measures will be taken to reduce the reliability on one supplier for certain inputs with varying prices fluctuations. The suppliers will be contacted to agree on firmer contractual terms so that the inputs prices can stay fix in short time. The strategy will be to seek lower cost input options by changing suppliers, producing goods offshore or outsourcing the production to cheaper producers.
Adjustments
Adjustments in the expenditure and revenue budget will be made in accordance with new input prices set. The risk control measures taken will include holding greater quantities of input or have written agreements with the sellers. The adjustment plan will include new sales plan, new expenditure plan and new raw material sourcing limit (Anandarajah, Aseervatham, & Reid, 2015).
Alignment
Senior management will be contacted for combining the original plan with the new adjusted plan in order to reflect the latest changes in the original plan (Anandarajah, Aseervatham, & Reid, 2015). New sales budget, revenue budget and expenditure budget will be made in accordance with changes in cost of sales and inventory levels.
Expected Outcome
If the contingency plan is implemented, the expected outcomes will include more achievable and accurate expenditure budgeting, disaster recovery contingency plan B, hedging from price fluctuation and minimizing the risk of input shortage in future as more suppliers will be on board and contractual agreements would be signed (Anandarajah, Aseervatham, & Reid, 2015).
PART D
Organizational Process
Steps
In order to disseminate the information, formal meetings, group sessions, written communication and electronic communication will be utilized. Group meetings will be done with the finance manager and senior management whereas the information will be sent via written memorandum. Emails to the senior management will also be sent whereas the documentation will be made available on the intranet for reviewing the changes in cost of inputs or suppliers.
Communication Tools
The format of presenting the information will be written and in graphical form. A graphical overview of the expected income and expenditure for the coming year against the projections based on past trends, prices and cost of input will be completed in addition to adding the impact of potential global economic changes or the changes in input prices from the suppliers end (Anandarajah, Aseervatham, & Reid, 2015). The information will be sent through intranet as it is an efficient way of disseminating the material. The information related to financial management including budget, records and tasks will be made available through intranet.
