Company Budgeting System: Samsung Company. Essay Example.

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George Washington University
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A company's budgeting system determines the way it spends it resources. It also makes it easy to track down all the expenses. Through this, management of assets and incomes belonging to the organization becomes easy and realistic. Budgeting enables a firm to attain the goals and objectives they have set out at the beginning of each financial year. It is also easy to manage the growth and sustain upcoming projects (Song & Lee, 2014). Hence, some of the main roles of budgeting include proper allocation of resources to different projects, planning and defining the goals, as well as the coordination of business activities. All departments in the organization must work together so that they can brainstorm on the best ideas to implement during conduct of business. There are various reasons why companies budget with some of them being forecasting and management of future resources as well as being the backbone of making decisions. Getting out of debt is important for an organization, as they must budget how much they will pay at any financial period (Song & Lee, 2014). For the purpose of the study, it will focus on Samsung Company accessing the type of budgeting system used by the management to manage their resources.

The Samsung Company uses the Master budget to lay down the plans they have for the organization (Song & Lee, 2014). Through this, the management is in a position to design the image they intend the firm to have at the end of each financial year. In addition, the master budget enables the management to plan all the minor expenses by allocating all the resources to different projects. At the beginning of each financial year, strategies are laid down so that sales, assets, and income inlets are arranged according to priority. This means that each performs as an independent factor that contributes to the success of the organization (Song & Lee, 2014). All the management heads are aligned with the goals their departments have to achieve to contribute to the overall goal. Employees too are aware of the allocated budgets so that they can work within the allowed parameters. It helps prevent overspending and helps in pushing the sales forward as they must meet the targets set out for them during each period.

The management is aware that after making the plans, then it is possible to execute the ideas brought forth. For instance, if Samsung has a new product to launch and release to the market, they must allocate some of the resources to spend during the takeoff period. Planned budgets must not surpass the allocated funds, and if they must, only a small percentage should be noted (Song & Lee, 2014). However, if the budgeted amount is not spent in whole, the firm is in a position to make savings and can use the funds for other projects. Comparison of the actual budgets against the projected enables the management to identify variations that take place in the firm. After launching and the product have started selling to the public, then the management is in a position to finance the operations. It must also track the incomes from the product to determine whether it is worth investing more (Song & Lee, 2014). The management must strategize on which areas to venture in since some markets might not meet their targets. Understanding the markets before applying the laid down rules is the guideline the management needs to consider.

The Samsung Company management ensures they meet regularly so that they can plan on the way forward about expanding operations of the firm. Hence, the notable master budgets that took place in the firm was in 2012 when the organization wanted to push forward their operations and increase the rate at which it was growing per year. Hence, at the end of the financial year ending in 2011, a percentage of the total budget was allocated for the growth projects. An estimated amount of more than $40 billion was in place. From this amount, Samsung considered opening up new points of sale in the international market. This would help the management stamp their presence in the market as being the giant leaders in the telecommunications industry (Song & Lee, 2014). Operational managers would help in informing the top management on the performance of the new branches. The budget allocated at that time would help push the new branches before they would stabilize. This meant that new workshops and employees that joined the Samsung Company were accommodated at that time (Song & Lee, 2014). After one year, the outlets were expected to be making profits and being in a position to stand on their own. This enables the management to open more stations in different countries.

Some of the practical ways Samsung uses its budgeting include developing new applications installed in their mobile phones. For instance, introduction of chips in their phones have increased in the recent past as a way to manage new ideas that help push the sales of their products than those of their competitors. It is worth noting that Samsung makes changes and adjusts the allocated budgets on a project if need be. This means that the project managers report any change to the top management and financial advisors to ask for more funds. It helps the firm finish all the projects it undertakes on time and none stops because of limited resources at any one point (Song & Lee, 2014). At the end of each project, the management ensures to make a report to the management. It helps make reports on the progress the firm has made in increasing the clientele base and more profits realized from each department.

In conclusion, Samsung Company owes its success to its ability to budget and plan on how they will spend their resources. This helps them keep realistic goals as well as minimize the amount they spend at each period. Unforeseen circumstances that affect the firm are managed effectively since the firm has excess funds in place for such emergencies. The master budget strategy enables the departments to narrow down their expenditure. Smaller budgets are made depending on the stability of each sector. The headquarters of Samsung Company releases the budget but gives the outlets the power to manage their individual budgets as they make their reports on returns at different times. Further, each branch has different reports on the returns they have earned during each financial year. Throughout the years, the company makes progress and expands their products since it makes proper plans at the beginning before implementing and following up on the progress of each decision.



Song, C. Y., & Lee, K. (2014). The Samsung way: Transformational management strategies from the world leader in innovation and design. New York, NY: McGraw-Hill Education.


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