OPERATIONAL BUDGETING AS A MANAGEMENT TOOL OF THE ENTERPRISE

Abstract

Enterprises as fundamental economic units are established and develop their activities in accordance with the internal and external environment’s conditions. Economic development’s distinct phases are characterised by interaction between people as the enterprise’s main resource and other tangible and intangible assets. The interaction is created in accordance with certain legislations and norms, appropriate management structures and conditions and the production processes’ establishment.
One of the main business organization’s function is production management (production operations). Resources ought to be supplied for the production of goods or the performance of services. Management’s pivotal task is to make the best allocation and use of resources, to exercise control over the activities which will lead to the desired production results as well as the realisation of the produced goods (services). Coordinating activities at production operations level and making decisions which goods or services to be produced, providing the necessary technical means and technologies, i.e. tangible and intangible assets, as well as product realisation are operational budgeting’s main focus. Precisely budgeting can be defined as a tool of the management system by incorporating official planning at each stage of the enterprise’s activity and summarising data on a quantitative basis. Planning is a process that takes place as part of a closed cycle of enterprise management. The planning function requires management to specify the goals and objectives by linking them to inventories and the actions for the plan’s implementation in accordance with the environment’s requirements, constraints and alterations.