Referencing Styles : Harvard You must respond to a SCENARIO which is provided below; it requires you to complete three Activities, A, B, and C. As part of the exercise, you are required to clarify budget plans with your “manager†( students to work in groups for this purpose ) and negotiate changes to the budget. You will then identify and analyze a risk to the budget and prepare a contingency plan to prevent or minimize the risk. Finally, you will be required to prepare a short budget coaching / training plan for staff having difficulties in meeting budget requirements. Procedure Read through the SCENARIO provided and respond to Activities A, B and C. The scenario asks you to meet and confer with your “manager†( students to discuss this in groups ) in order to clarify the budget and negotiate changes ; in particular, you must : a. identify areas of the budget that are not achievable, inaccurate or unclear ; identify at least two issues for clarification b. prepare to negotiate necessary changes to the budget (negotiate at least two changes) IMPORTANT NOTES : · The outcomes from all of the meetings must be recorded in writing and your notes submitted as part of your answers. · Further, based on the above negotiations for changing the budgets, you must use the contingency plan TEMPLATE provided in APPENDIX 3 and create a contingency plan. · Your training / coaching plan must be prepared on a WORD document, printed out with your name on it and submitted along with all your other documents. SCENARIO – Big Red Bicycle Pty Ltd Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market. The senior management structure of the company appears below. Person Position Michelle Yeo CEO Tom Copeland Managing Director John Black CFO Stuart La Roux Operations General Manager Pat Roberts Senior Accountant Samantha Gellar Sales General Manager Charles Pierce Production Manager Holly Burke HR Manager According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are: â— poor sales due to economic downturn â— increases in expenses such as wage expenses. In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product. Task 1 – Activity A Assume that you are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect both the needs and importance to the business of Cost Centre A. The Sales General Manager, Samantha Gellar has asked you to review the master budget (found in APPENDIX 1), and the cost centre budgets (found in APPENDIX 2), prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the master budget projections are achievable, accurate, understandable and fair. She regards this as urgent because certain additional information has become available (as described below). Your trainer will instruct you about the method to use to reflect changes to the Master Budget. Please show any workings and calculations you need to make. She would also like you to look at the budget for your cost centre closely, note any changes you think are necessary, develop an argument for the changes and negotiate for those changes to be made. New information you now have available includes: · Sales in the second quarter will be $1 million. · Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) will be 30% less than Q2. · Sales in Q2 depend on completion of 100% of repairs and maintenance. · Commission negotiated with members of the sales team is now set at 2.5% of sales. Task 1 – Activity B It has come to the attention of the managing director, Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid Q2, when sales data for the company’s product are in. As a special project, the managing director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%. As per the organizational policy found in APPENDIX 4, you should use the contingency plan template provided in APPENDIX 3. Task 1 – Activity C You must submit a coaching / training plan for new staff who show signs of floundering in the process of meeting budget requirements.
