Bidding-oriented Overall Budget Management Research

Overall budget management not only plays a significant role in modern enterprise management, but also serves as an important method to help company realize short-term operating objectives and long-run strategic goals. Currently, several problems, such as the separating of budgeting and operating activities lacking of effective assessing and motivating mechanism, ignoring the factor of"human", are brought to light. How to solve these problems properly and how to implement overall budget management fully have become the research targets.The typical suggestions are as follows: Wang changhong (2003) comes up with the idea that budget management be under control by dividing the total budget into individual ones according to organizational charts. Yang bin(2003) suggests that the gaming mechanism should be introduced into budget management. Companies select the proper employees on the basis of competition and performance assessment. Furthermore, the leading indicators of performance are those reflecting financial budget. Wang jianhui ,Tu aihong(2005) advocates that the units and departments of each level are supposed to get involved in budget management . Therefore, every employee should take parts in and coordinates with each other. The strict management system and the value that people come first should run parallel in the company.Since it is easier for budget planning by all to implement the overall budget management, then how to get either the departments or employee involved in budget planning? The author comes up with the bidding–oriented approach to facilitate budget management. There are some differences between this approach and planning by all budget planning. The bidding-oriented planning approach is from bottom to up, later from top to bottom, combining the directions together. In order to verify the feasibility and superiority over comprehensive budget management, this article first analyzes the fundamental concepts and relevant theories, then draws the conclusions and comes up with relative suggestions. The article consists of five chapters:Chapter one is the preface of the article. First, elaborating the significance of the topic, then making a summary and review on overall budget management. On the basis of Agent Behavior Theory, some researchers attempt to reduce agent cost in budget management, to promote private information disclosure and to optimize organizational goals. The researchers dedicated to budget management reveal that the essence of budget planning is the gaming among planning unit, implementing units and the top decision making management in terms of operating objectives and strategic goals.Chapter two discusses the essence of bidding-oriented overall budget management. On the one hand, by analyzing all relevant concepts, the author raises the concept and function of overall budget management (OBM). On the other hand, by analyzing the season for current unsatisfactory outcome of implement OBM by many companies, the author draws the conclusion that the bidding mechanism and OBM can be integrated as a whole.Chapter three tests the feasibility of bidding-oriented OBM by exploring the human nature theory, agent theory, transaction cost theory, rent-seeking theory and gaming theory. This chapter focuses on gaming theory and its implications on bidding-oriented OBM. By revealing the gaming format, gaming content and gaming equilibrium on OBM, the author covers two points: first, promoting gaming ethics and creating good gaming environment; second, strengthening fundamental management and reducing the gaming opportunities as many as possible.Chapter four puts forward the case study of ZhongYuan oil-field. First, introducing the operating reform to chartering system and measure of budget management taken by the company, then by differentiating the bidding-oriented OBM and chartering system, deducing four advantages compared to chartering system. Bidding-oriented OBM proves to meet the requirement of conglomerate better and enable it to realize long-run strategic goals.Chapter five comes up with suggestions and the situations for bidding-oriented OBM, which is suitable for groups with advanced and democratic management as well as good budget foundation.The main contributions of this article is as follows: 1. The innovation on the topic. The author comes up with the concept of bidding-oriented OBM. The subsidiary organization bids with self-setting budget objectives which is set in accord with tasks assigned by appointed committee, and the fulfillment of goals will be assessed at the end of year.2. Making a thorough comparison between OBM and chartering system prevailing in 1980s and demonstrating its superiority over chartering system.3. Bringing up the corresponding assessing method of BM.As writing time of the paper and the supplied reference of the selected topic are limited, this article also has the deficiency:1. The concept of bidding-oriented OBM proposed in this article may be not strict enough.2. The appraisal method which adapts to bidding-oriented OBM designed by this article lacks practical examination, and needs the enterprises which use the budget management to determine value of a, b, and c according to those situations.3. In the case choice, the author had not temporarily found the successful enterprise which used this budget management. If she can carry out the innovation in some enterprise to obtain the first data, conclusion drown in the article will have more persuasive power.