In a car manufacturing firm, estimating and budgeting operations for the upcoming year would be possible by addressing internal and external factors that influence operations. Internal factors affect the productivity of the car manufacturing firm since it requires assessment of overhead expenses, raw material costs, labor costs, and production capacity, all determine budget needs (Cheraghalizadeh et al., 2021). First, overhead expenses greatly influence the firm’s operations, including maintenance costs, insurance, rent, and utilities. All these require a daily assessment to ensure that car manufacturing processes are not affected by interruptions. Implementation of cost savings for overhead costs will ensure no interruption of work in the future. Second, raw material costs can vary depending on supply chain disruptions from different suppliers (Zhang et al., 2018). Raw materials like electronics, plastic, and steel for the car manufacturing process require flexible budgeting so that suppliers obtain the expected materials.
Third, labor costs require strict estimation to determine the workforce that will ensure the daily performance of activities. Managing the labor will then require estimation of training expenses, number of employees, and benefits involved in the entire process. Fourth, production capacity is imperative for review since it affects the process involved in manufacturing many cars within specified time periods. For production capacity to get performed well, it would require resources like skilled labor, equipment, and suitable technology. If all these requirements get accessed, the result is a high quality production capacity.
External factors include legal and regulatory processes, economic conditions, competition, human resources, and market demand which influence how a budgeting process will get handled (Cheraghalizadeh et al., 2021). First, legal and regulatory processes are imperative since they influence how the firm will adhere to restrictions on safety standards, import or export policies, government registrations, and emissions occurring due to the company’s processes. Compliance with all regulations is imperative for the firm so that it does not get any disrupted services. Second, economic conditions like interest rates, performance of GDP, and inflation rates affect how business is conducted at the firm. Performing an economic assessment will ensure a complete review of budgeting processes that do not negatively affect daily activities.
Third, competition can affect performance of different operations in connection to handling market share, pricing operations, and assessment of competitive market operations (Chen et al., 2023). There can be an improvement on how to perform realistic targets of work performance by adhering to market conditions and creating a feasible structure that allows the firm to never lack sales. Fourth, human resources influences the capability of the firm to obtain experienced persons, and this is possible while assessing potential candidates to determine if they possess appropriate expertise for different positions. Fifth, market demand has a strong influence on production of different cars as it influences the capability of obtaining reliable budgets and handling suitable marketing plans (Chen et al., 2023). Alignment of sales processes with market demand can get performed properly using accurate market demand insights.
Departments involved in the budgeting process discussed above include a senior management team and finance professionals working at the car manufacturing company. Such persons have a profound impact on overall performance at the company as it would be possible to validate improvement in effective work progress. A feasible budgeting process would be possible using the teams’ experiences related to performance of work and adhering to strict regulatory processes needed to support an entire company’s daily progress. The finance team can perform a historical review of the company’s budgets and then compare them to existent market conditions to determine the accuracy of a new budget. A careful improvement in a comprehensive budget would be possible when compliance operations get performed by the finance team that then relates the information to senior management for approval.
References
Chen, Y., Pan, Y., & Ding, Y. (2023). How does market competition affect supplier-induced demand? An experimental study. Frontiers in Public Health, 11. https://doi.org/10.3389/fpubh.2023.1024337.
Cheraghalizadeh, R., Olya, H., & Tumer, M. (2021). The Effects of External and Internal Factors on Competitive Advantage—Moderation of Market Dynamism and Mediation of Customer Relationship Building. Sustainability, 13(7), 4066. https://doi.org/10.3390/su13074066.
Zhang, Y., Zhao, C., & Pang, B. (2018). Budget allocation in coping with supply chain disruption risks. International Journal of Production Research, 56(12), 4152–4167. https://doi.org/10.1080/00207543.2018.1430905.
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