Top management perceptions of rolling forecasting: case study of a Finnish industrial enterprise
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School of Business |
Master's thesis
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Authors
Date
2017
Department
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Mcode
Degree programme
Accounting
Language
en
Pages
67
Series
Abstract
Objectives of the study The objective of this study is to understand how the transformation from annual budgets to rolling forecasting could be made smoother and more successful. This will be done by asking top-level managers their thoughts and expectations on the change. Finding out what benefits the managers expect will help in selling the change inside the company. Respectively, knowing what challenges are expected will help in decreasing the resistance towards the change and making the transition smoother. Research methods The study was conducted as a case study. The main method was interviews with top-level managers representing different business areas and different functions. The interviews had two parts: first a semi-structured interview, and after that a short questionnaire. In addition, access was gained to the case company’s internal materials. The theoretical framework used is based on Dannemiller and Jacob’s (1992) change formula. Results Based on the results of the study, the attitude towards the change among the interviewees is already fairly positive. The main benefits that the interviewees expect the change to bring are a better ability to react to changes in the environment, a continuous dialogue throughout the year, and transparency of information. In addition, even though the amount of work required is similar, rolling forecasting is expected to provide more useful information than annual budgeting, making its cost-benefit ratio better. With rolling forecasts, targets could also be changed more frequently, so that the targets would be on a more motivating level at all times. The two clearly biggest challenges were the confusion of how target setting and performance evaluation should be arranged, and unsuitable software and tools. These issues should be kept in mind when designing the new process further in order to avoid major pitfalls.Description
Thesis advisor
Niemi, LasseHuikku, Jari
Keywords
forecasting, rolling forecasting, budgeting, rolling budgeting, organizational change, accounting change