Research On Activity-based Budget Management Based On Value Chain

With the global economic integration, demand-supply relations have been changing from a seller's market to a buyer's. It is found that in the market where competition goes increasingly fierce, the pursuit of market share is no longer an effective way of ensuring the profit, and any one enterprise is not able to be the best in all businesses. They have to cooperate with other upstream and downstream enterprises to make the advantages complementary with each other so as to strengthen their competitiveness together, and therefore adapt to the competitive environment of the contemporary market. Enterprises have gradually abandoned the old management mode, in which they take charge of their own design, manufacture, and sales. While sparing no effort to gain the demands of end customers, they also pay attention to set up the cooperation relationship and firm the community interest with the suppliers and sellers, and create the efficient value chain. Fundamental changes have taken place in the form and boundary of enterprises. Business process integration is the key of the value chain management. It is also the way and means that enterprises accomplish the value chain management. Enterprises set up "Process-oriented Organizational Infrastructure" by analyzing the business process and activity to accomplish the value chain management, in order to achieve the appreciation of value chain.Both external business environment changes and internal business organization changes have shaken the basis and prerequisite of traditional budget management, and have brought a major challenge to the traditional function-oriented budget management system based on the level structure. But at the same time, value chain management and business process management have put forward the new requests to the advanced nature of budget management, while business process integration and activity optimization provide a new organization platform for it. It is of great significance to the enterprises based on the value chain management to construct the budget management system which is suitable for the value chain management mode and make it to adapt to management change of business process reengineering, bring the preliminary control function of budget management into full play, achieve effective allocation of resources, and improve competitiveness in the entire value chain.Based on value chain management, this paper studies the construction of budget management system in the new value chain management mode. Based on the analysis of value chain, this paper uses integrated business processes and optimized activities as the organization platform for the. budget formulation and control to build a loop-type budget management system, which is "Activity optimization-Budget formulation-Budget control and evaluation-Activity optimization". For the budget formulation, the single activity-based costing budget is extended to activity-based revenue budget, activity-based appreciation budget and activity-based efficiency budget so as to determine the utilization of operating on resources and the contribution to the appreciation of value chain according to the analysis of the budget for activity-based appreciation and activity-based efficiency, and therefore appropriate method can be taken in the process of budget control to reconfigure the recourses so as to promote the operating efficiency of activity and process. In addition, budget evaluation is the protection and standard to the efficient and timely budget. For the activity-based budget evaluation system, this paper suggests to set up an evaluation system that the execution of budget is linked to the system of rewards and penalties, and therefore helps to eliminate the "ambush" phenomenon caused by information asymmetry. The author hopes the new value chain management mode can help to solve the problem that budget control is difficult, and get ready to further solve the internal control problem for the enterprise based on value chain management.Activity-based budget management based on value chain requires efficient information platform as support, while the effective use of information technology, such as Internet, e-commerce, etc, is a timely solution to this problem.