Unit 2, Business P6, M4,
Scenario
Management at British Airways are very impressed with the work i have recently undertaken on
human, physical and technical resources. As a result they would now like me to undertake a new
project to meet the demands of their private clients wanting to travel from Manchester Airport to
Europe. These passengers are willing to pay a higher fare because they will receive a better level of
service when compared to their competitors. In order to establish the feasibility for this service I am
required to formulate a budget and break-even chart, giving reasons why costs and budgets need to
be controlled. I will continue my work by stating how managing resources and controlling budget
costs can improve the performance at BA and will evaluate problems arising when costs and budgets
are unmonitored.
Introduction
In this assignment i am going to write an information sheet for distribution to the BA management
team in which i will illustrate the use of budgets as a mean of exercising financial control within BA.
Budget
A budget is a financial plan for the future concerning the revenues and costs of a business. Formal
budgets not only limit expenditures; they also predict income, profits, and returns on investment a
year ahead. Many companies create budgets on an annual basis so they can carefully outline the
expected needs of each department in the business. Using an annual budget process also limits the
amount of time companies spend creating and managing capital resources. They have evolved into
tools of control and are also used as a means of determining such rewards as profit-sharing and
bonuses. In large businesses, budgeting is a process in which operating departments organise their
plans with certain goal that are published by the managing unit. Unit managers organise the
projections of sales, operating costs and capital requirements. They also calculate the profits and
returns on the investment they intend to use. Therefore each budget is the projection of these
values for the following year.
Why does British Airways use budgeting
British Airways benefit massively when using budgeting as they have the ability to limit how much
money is spent on certain operations. Budgets done at British Airways usually count expense
accounts to ensure that capital is not wasted on nonessential items or they do not overpay for
economic resources used within their business. Limiting the amount of capital spent by British
Airways may require them to find new vendors or suppliers for acquiring business inputs, saving
money and meeting.
British Airways also use budgets to plan for future business growth and expansion. Capital saved on
their regular business expenditures may be placed into a special reserve account designated for
selecting their new business opportunities. Budgeting for future growth opportunities ensures that
Scenario
Management at British Airways are very impressed with the work i have recently undertaken on
human, physical and technical resources. As a result they would now like me to undertake a new
project to meet the demands of their private clients wanting to travel from Manchester Airport to
Europe. These passengers are willing to pay a higher fare because they will receive a better level of
service when compared to their competitors. In order to establish the feasibility for this service I am
required to formulate a budget and break-even chart, giving reasons why costs and budgets need to
be controlled. I will continue my work by stating how managing resources and controlling budget
costs can improve the performance at BA and will evaluate problems arising when costs and budgets
are unmonitored.
Introduction
In this assignment i am going to write an information sheet for distribution to the BA management
team in which i will illustrate the use of budgets as a mean of exercising financial control within BA.
Budget
A budget is a financial plan for the future concerning the revenues and costs of a business. Formal
budgets not only limit expenditures; they also predict income, profits, and returns on investment a
year ahead. Many companies create budgets on an annual basis so they can carefully outline the
expected needs of each department in the business. Using an annual budget process also limits the
amount of time companies spend creating and managing capital resources. They have evolved into
tools of control and are also used as a means of determining such rewards as profit-sharing and
bonuses. In large businesses, budgeting is a process in which operating departments organise their
plans with certain goal that are published by the managing unit. Unit managers organise the
projections of sales, operating costs and capital requirements. They also calculate the profits and
returns on the investment they intend to use. Therefore each budget is the projection of these
values for the following year.
Why does British Airways use budgeting
British Airways benefit massively when using budgeting as they have the ability to limit how much
money is spent on certain operations. Budgets done at British Airways usually count expense
accounts to ensure that capital is not wasted on nonessential items or they do not overpay for
economic resources used within their business. Limiting the amount of capital spent by British
Airways may require them to find new vendors or suppliers for acquiring business inputs, saving
money and meeting.
British Airways also use budgets to plan for future business growth and expansion. Capital saved on
their regular business expenditures may be placed into a special reserve account designated for
selecting their new business opportunities. Budgeting for future growth opportunities ensures that
