Strategic management and budgeting tools
First Claim
1. A method of obtaining increased value and utility from a budgeting process employed within a business organization, comprising:
- selecting a first set of value-adding targets for the business organization obtained from external research of comparison companies within a same industry as the business organization, including;
querying, using a computer, a computer database containing historic data for a plurality of peer companies to compare performance of the peer companies;
identifying value-adding strategies currently utilized within the plurality of peer companies based on high performance within the historic data; and
choosing the first set of value-adding targets from the currently utilized value-adding strategies of the peer companies by factoring shareholder value expected to be returned and peer company performance comparisons;
selecting a second set of value-adding targets for the business organization obtained from an internal evaluation of business opportunities and value drivers existent within the organization, including;
identifying, at a high level within the organization, key value drivers from the potential value-adding opportunities, the key value drivers including drivers expected to substantially affect long term value of stock of the organization;
testing sensitivity of the organization'"'"'s stock price to the value drivers, comprising;
utilizing a stock price valuation model tool to predict future cash flows based on historic data and user inputted financial data, discount the future cash flows over specific time periods to the present day at an appropriate cost of capital, and generate a range of stock prices,wherein the user inputted financial data includes at least one of working capital, value of current inventory including both tangible and intangible assets, depreciation and amortization, accounts receivable, accounts payable, growth in invested capital, capital expenditures, effective tax rate, debt load and debt interest rate, operating expenses, revenue, historic growth, other liabilities, other assets, terminal growth rate for the industry, discount rate, market risk premium, and number of shares outstanding; and
utilizing a sensitivity analysis tool to determine how predicted future cash flows and key financial drivers will impact the organization'"'"'s stock price,wherein the key financial drivers include at least one of sales volume, sales prices, manufacturing costs, distribution costs, administrative costs, tax costs, working capital and capital expenditures; and
selecting one or more targets based upon the stock price sensitivity to the value drivers;
evaluating the first set of value-adding targets and the second set of value-adding targets, including;
producing predictions for an amount of shareholder value to be delivered by meeting the targets,assessing difficulty of obtaining the targets using a value management financial analysis tool;
preselecting targets from among the first and second sets of value-adding targets based on a multivariable approach incorporating at least shareholder value and the difficulty;
selecting organizational targets by the high level management from among the preselected value-adding targets;
communicating the selected organizational targets downward to persons through the organizational hierarchy;
adjusting budgetary priorities within a budget of the business organization as a result of the selected organizational targets;
performing bottom-up budgeting and cyclical forecasting to implement the selected organizational targets within the budget of the organization, including the steps of;
populating, according to the selected organizational targets, budget forms including a plurality of expenditure categories and placeholders within the budget through referencing the selected organizational targets and providing budgetary numbers;
flowing the populated budgets upward through the organizational hierarchy;
obtaining review and approval of a consolidated version of the populated budgets by the high level management of the business organization; and
adopting budgets and forecasts consistent with the selected organizational targets;
employing the populated budgets throughout the organizational hierarchy, thereby allocating money to specified expenditures and projects;
measuring performance of the organization in accordance with the selected organizational targets; and
revising the organizational targets in response to the measured performance and repeating budgetary planning steps within the business organization with implementation of the revised organizational targets.
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Accused Products
Abstract
A target setting, forecasting, and budgeting method and tools are provided in which targets are selected at a high level of management through a process of strategic planning to select targets based on a combination of value expected to be added and manageability of the candidate targets, including computer simulations of increased cash flow expected to be generated by the target strategies. The strategically planned targets are then flowed down to the various levels of management, budgets are constructed around those target strategies, and the budgets are then consolidated and flowed upward. By defining organizational targets and then aligning those targets with strategic goals from the beginning, the number and scope of iterations of budget adjustments can be reduced.
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Citations
21 Claims
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1. A method of obtaining increased value and utility from a budgeting process employed within a business organization, comprising:
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selecting a first set of value-adding targets for the business organization obtained from external research of comparison companies within a same industry as the business organization, including; querying, using a computer, a computer database containing historic data for a plurality of peer companies to compare performance of the peer companies; identifying value-adding strategies currently utilized within the plurality of peer companies based on high performance within the historic data; and choosing the first set of value-adding targets from the currently utilized value-adding strategies of the peer companies by factoring shareholder value expected to be returned and peer company performance comparisons; selecting a second set of value-adding targets for the business organization obtained from an internal evaluation of business opportunities and value drivers existent within the organization, including; identifying, at a high level within the organization, key value drivers from the potential value-adding opportunities, the key value drivers including drivers expected to substantially affect long term value of stock of the organization; testing sensitivity of the organization'"'"'s stock price to the value drivers, comprising; utilizing a stock price valuation model tool to predict future cash flows based on historic data and user inputted financial data, discount the future cash flows over specific time periods to the present day at an appropriate cost of capital, and generate a range of stock prices, wherein the user inputted financial data includes at least one of working capital, value of current inventory including both tangible and intangible assets, depreciation and amortization, accounts receivable, accounts payable, growth in invested capital, capital expenditures, effective tax rate, debt load and debt interest rate, operating expenses, revenue, historic growth, other liabilities, other assets, terminal growth rate for the industry, discount rate, market risk premium, and number of shares outstanding; and utilizing a sensitivity analysis tool to determine how predicted future cash flows and key financial drivers will impact the organization'"'"'s stock price, wherein the key financial drivers include at least one of sales volume, sales prices, manufacturing costs, distribution costs, administrative costs, tax costs, working capital and capital expenditures; and selecting one or more targets based upon the stock price sensitivity to the value drivers; evaluating the first set of value-adding targets and the second set of value-adding targets, including; producing predictions for an amount of shareholder value to be delivered by meeting the targets, assessing difficulty of obtaining the targets using a value management financial analysis tool; preselecting targets from among the first and second sets of value-adding targets based on a multivariable approach incorporating at least shareholder value and the difficulty; selecting organizational targets by the high level management from among the preselected value-adding targets; communicating the selected organizational targets downward to persons through the organizational hierarchy; adjusting budgetary priorities within a budget of the business organization as a result of the selected organizational targets; performing bottom-up budgeting and cyclical forecasting to implement the selected organizational targets within the budget of the organization, including the steps of; populating, according to the selected organizational targets, budget forms including a plurality of expenditure categories and placeholders within the budget through referencing the selected organizational targets and providing budgetary numbers; flowing the populated budgets upward through the organizational hierarchy; obtaining review and approval of a consolidated version of the populated budgets by the high level management of the business organization; and adopting budgets and forecasts consistent with the selected organizational targets; employing the populated budgets throughout the organizational hierarchy, thereby allocating money to specified expenditures and projects; measuring performance of the organization in accordance with the selected organizational targets; and revising the organizational targets in response to the measured performance and repeating budgetary planning steps within the business organization with implementation of the revised organizational targets. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9)
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10. A non-transitory computer-readable medium comprising a plurality of code segments for obtaining increased value and utility from a budgeting process employed within a business organization, comprising:
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a code segment for selecting a first set of value-adding targets for the business organization obtained from external research of comparison companies within a same industry as the business organization, including; querying, using a computer, a computer database containing historic data for a plurality of peer companies to compare performance of the peer companies; identifying value-adding strategies currently utilized within the plurality of peer companies based on high performance within the historic data; and choosing the first set of value-adding targets from the currently utilized value-adding strategies of the peer companies by factoring shareholder value expected to be returned and peer company performance comparisons; a code segment for selecting a second set of value-adding targets for the business organization obtained from an internal evaluation of business opportunities and value drivers existent within the organization, including; identifying, at a high level within the organization, key value drivers from the potential value-adding opportunities, the key value drivers including drivers expected to substantially affect long term value of stock of the organization; testing sensitivity of the organization'"'"'s stock price to the value drivers, comprising; utilizing a stock price valuation model tool to predict future cash flows based on historic data and user inputted financial data, discount the future cash flows over specific time periods to the present day at an appropriate cost of capital, and generate a range of stock prices, wherein the user inputted financial data includes at least one of working capital, value of current inventory including both tangible and intangible assets, depreciation and amortization, accounts receivable, accounts payable, growth in invested capital, capital expenditures, effective tax rate, debt load and debt interest rate, operating expenses, revenue, historic growth, other liabilities, other assets, terminal growth rate for the industry, discount rate, market risk premium, and number of shares outstanding; and utilizing a sensitivity analysis tool to determine how predicted future cash flows and key financial drivers will impact the organization'"'"'s stock price, wherein the key financial drivers include at least one of sales volume, sales prices, manufacturing costs, distribution costs, administrative costs, tax costs, working capital and capital expenditures; and selecting one or more targets based upon the stock price sensitivity to the value drivers; a code segment for evaluating the first set of value-adding targets and the second set of value-adding targets, including; producing predictions for an amount of shareholder value to be delivered by meeting the targets, assessing difficulty of obtaining the targets using logic from a value management financial analysis tool; a code segment for preselecting targets from among the first and second sets of value-adding targets based on a multivariable approach incorporating at least shareholder value and the difficulty; a code segment for selecting organizational targets by the high level management from among the preselected value-adding targets; a code segment for communicating the selected organizational targets downward to persons through the organizational hierarchy; a code segment for adjusting budgetary priorities within a budget of the business organization as a result of the selected organizational targets; a code segment for performing bottom-up budgeting and cyclical forecasting to implement the selected organizational targets within the budget of the organization, including the steps of; populating, according to the selected organizational targets, budget forms including a plurality of expenditure categories and placeholders within the budget through referencing the selected organizational targets and providing budgetary numbers; flowing the populated budgets upward through the organizational hierarchy; obtaining review and approval of a consolidated version of the populated budgets by the high level management of the business organization; and adopting budgets and forecasts consistent with the selected organizational targets; a code segment for employing the populated budgets throughout the organizational hierarchy, thereby allocating money to specified expenditures and projects; a code segment for measuring performance of the organization in accordance with the selected organizational targets; and a code segment for revising the organizational targets in response to the measured performance and repeating budgetary planning steps within the business organization with implementation of the revised organizational targets. - View Dependent Claims (11, 12, 13, 14, 15, 16, 17, 18)
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19. A system for obtaining increased value and utility from a budgeting process employed within a business organization, comprising:
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a component for selecting a first set of value-adding targets for the business organization obtained from external research of comparison companies within a same industry as the business organization, including; a component for querying, using a computer, a computer database containing historic data for a plurality of peer companies to compare performance of the peer companies; a component for identifying value-adding strategies currently utilized within the plurality of peer companies based on high performance within the historic data; and a component for choosing the first set of value-adding targets from the currently utilized value-adding strategies of the peer companies by factoring shareholder value expected to be returned and peer company performance comparisons; a component for selecting a second set of value-adding targets for the business organization obtained from an internal evaluation of business opportunities and value drivers existent within the organization, including; a component for identifying, at a high level within the organization, key value drivers from the potential value-adding opportunities, the key value drivers including drivers expected to substantially affect long term value of stock of the organization; a component for testing sensitivity of the organization'"'"'s stock price to the value drivers, comprising; a component for utilizing a stock price valuation model tool to predict future cash flows based on historic data and user inputted financial data, discount the future cash flows over specific time periods to the present day at an appropriate cost of capital, and generate a range of stock prices, wherein the user inputted financial data includes at least one of working capital, value of current inventory including both tangible and intangible assets, depreciation and amortization, accounts receivable, accounts payable, growth in invested capital, capital expenditures, effective tax rate, debt load and debt interest rate, operating expenses, revenue, historic growth, other liabilities, other assets, terminal growth rate for the industry, discount rate, market risk premium, and number of shares outstanding; and a component for utilizing a sensitivity analysis tool to determine how predicted future cash flows and key financial drivers will impact the organization'"'"'s stock price, wherein the key financial drivers include at least one of sales volume, sales prices, manufacturing costs, distribution costs, administrative costs, tax costs, working capital and capital expenditures; and a component for selecting one or more targets based upon the stock price sensitivity to the value drivers; a component for evaluating the first set of value-adding targets and the second set of value-adding targets, including; producing predictions for an amount of shareholder value to be delivered by meeting the targets, assessing difficulty of obtaining the targets using a value management financial analysis tool; a component for preselecting targets from among the first and second sets of value-adding targets based on a multivariable approach incorporating at least shareholder value and the difficulty; a component for selecting organizational targets by the high level management from among the preselected value-adding targets; a component for communicating the selected organizational targets downward to persons through the organizational hierarchy; a component for adjusting budgetary priorities within a budget of the business organization as a result of the selected organizational targets; a component for performing bottom-up budgeting and cyclical forecasting to implement the selected organizational targets within the budget of the organization, including the steps of; a component for populating, according to the selected organizational targets, budget forms including a plurality of expenditure categories and placeholders within the budget through referencing the selected organizational targets and providing budgetary numbers; a component for flowing the populated budgets upward through the organizational hierarchy; a component for obtaining review and approval of a consolidated version of the populated budgets by the high level management of the business organization; and a component for adopting budgets and forecasts consistent with the selected organizational targets; a component for employing the populated budgets throughout the organizational hierarchy, thereby allocating money to specified expenditures and projects; a component for measuring performance of the organization in accordance with the selected organizational targets; and a component for revising the organizational targets in response to the measured performance and repeating budgetary planning steps within the business organization with implementation of the revised organizational targets. - View Dependent Claims (20, 21)
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Specification