Running Head: CASE STUDY: SKANSKA INTERNATIONAL - BUREAUCRATIC
AND BUDGETARY CONTROLS
1
Case Study: Skanska International - Bureaucratic and Budgetary
Controls Janet Hightower
University of the Rockies
Case Study: Skanska International - Bureaucratic and Budgetary Controls 2
Introduction
In this paper there gives vital information and examples of
budgetary, including the challenges of adhering to a budget and
the benefits of implementing a budget. Understanding
bureaucratic controls that include performance standards by
establishing formal rules, standards, and legitimate authority
where tasks are set and employees work independently.
Highlighting Skanska International, benchmarking performance in
areas of market segment, revenue, income, return on equity and
capital (Appendixes B-D). Including the weakness and strengths
of benchmarking. Without budgetary controls organizations would
not have managerial direction together with essential operating
information for success, therefore the organization will fail
due to lacking financial planning and budgetary control.
Analysis - Part A
Case Study: Skanska International - Bureaucratic and Budgetary Controls 3
The benefits of budgetary consist of management control
with the ability to project the sales and income of the
corporation. There are many areas of budgetary which include
areas of sales (monthly, area, and products), production
(machines, materials and quantities), cost (expenses without
revenue per department and can be fixed or independent), cash
(receipts and expenditures of working capital available),
capital (fixed asset cost investments) and the master budget
(major business activities). Budgets are basic needs for an
organization, it is important to have managers meet to
determine if the organization is meeting the budgets
objectives. After approval of a new budget the organization can
begin implementation into all departments for the new budget.
There are dangers of not having a budget where employees
can ask for larger amounts of money than needed or too low or
request for money. When asking for lower amounts estimating the
budget for reasons of approval. Some arguments can occur during
a budget session with superiors by trying to achieve a monetary
request by attempting to get slack which can affect the
Case Study: Skanska International - Bureaucratic and Budgetary Controls 4
motivation of the organization. Overall there can be selfish
desires of the superiors, managers and employees as each group
is concerned about their own performances and disregards about
the performances of the organization.
Some of the common mistakes in budgeting are basic
ineffective control systems with failure to provide standards,
inadequate information to employees, employees do not approve
the budget, no communication, and single approaches. Inside
effective control systems there needs to be performance
standards by measuring progress of the budget. Often employees
resist a budget due to too many measures, with satisfactory
performance measures employees are able to understand and
accept the budget. By providing feedback communication improves
as well as motivation as employees can achieve the performance
standards and improve self-control which gives them more
freedom to work independently. With a multiple approach
employees can use control systems with financial and
nonfinancial performance goals in preliminary, feedback,
concurrent control.
Case Study: Skanska International - Bureaucratic and Budgetary Controls 5
Analysis
Part B
Benchmarking is the control process of comparing the
practices and technologies of other companies to your
organization’s practices. According to Kerfoot (2005)
organizations need to stop benchmarking against the median or
average, which she calls mediocrity, and wants organizations to
accept a challenge for an error free environment is possible.
On the other hand benchmarking gives an organization huge
benefits by being able to compare like organizations to have a
basis for change. According to Skanska International (2014a) a
viable competitor in the marketplace is Fluor Corporation
located in the United States and an ideal organization to
benchmark (Skanska International (2014a). Fluor Corporation is
similar to Skanska, in the same industry with similar financial
set points and currently benchmarked providing a validation of
efficacy.
APPENDIXES- Part C
Appendix A: Example Balance sheet
Case Study: Skanska International - Bureaucratic and Budgetary Controls 6
APPENDIX A
2009 2010 2011 2012 2013
Assets SEK M SEK M SEK M SEK M SEK M
Cash 87 9 65 117 177
Account Receivables (AR)
4 6 3 6 9
Inventory 32 36 22 65 33
Notes Receivables (NR)
64 56 65 44 33
Fixed Assets SEK M SEK M SEK M SEK M SEK M
Land 61 88 124 140 199
Building 242 442 553 553 553
Machinery/Equipment 43 23 23 43 55
Furniture/Fixtures 3.6 3.3 4.4 4.5 5.0
Leasehold improvements
244 322 322 553 443
Intangibles SEK M SEK M SEK M SEK M SEK M
Research/Development 43 22 54 33 22
Patents 2 - 4 - -
Market research 2 1.4 3.3 - -
Goodwill 3.6 3.3 4.0 3.4 3
Organizational expense
15 12 14 12 11
Other Assets - - - - -
Case Study: Skanska International - Bureaucratic and Budgetary Controls 7
Total Assets 846.2M 1221M 1170.7M 1573.9M 1543M
Liabilities SEK M SEK M SEK M SEK M SEK M
Accounts Payable (A/P)
120 100 98 114 105
Accrued expenses - - - - -
Notes Payable (N/P) 45 34 22 84 22
Current Long-Term Debt (LTD)
533 523 344 643 432
Non-Current Liabilities
2 2.3 9.5 3.4 4.2
Total Liabilities 700M 659.3 473.5 844.4 563.2
Difference 146.2M 561.7M 697.2M 729.5M 979.8M
Figure 1 – Balance Sheet
The balance sheet is a financial picture of an organization
with a specific time frame (Small Business Administration,
2014).
Appendix B: Skanska Balance Sheet
APPENDIX B
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Figure 2 – Skanska Balance Sheet (Skanska International, 2014b)
Case Study: Skanska International - Bureaucratic and Budgetary Controls 9
The balance sheet includes assets, liabilities and equity
for stockholders (Bateman & Snell, 2013).
Appendix C: Profit and Loss statement
APPENDIX C
Figure 3 – Skanska Profit and Loss statement (Skanska International, 2014b)
Case Study: Skanska International - Bureaucratic and Budgetary Controls 10
Budgetary control includes profit and loss statement which
can be used for goals where performance can be measured
against the goals or standards (Bateman & Snell, 2013).
Appendix D: Skanska International Financial Ratios Statement
APPENDIX D
Figure 1 – Skanska Example Financial Ratio Statement –
Construction (Skanska International, 2014b)
Case Study: Skanska International - Bureaucratic and Budgetary Controls 11
Figure 2– Skanska Example Financial Ratio Statement –
Residential Development (Skanska International, 2014b)
Case Study: Skanska International - Bureaucratic and Budgetary Controls 12
Figure 3 – Skanska Example Financial Ratio Statement –
Commercial Property Development (Skanska International,
2014b)
Figure 4 – Skanska Example Financial Ratio Statement –
Infrastructure Development (Skanska International, 2014b)
The financial ratio statement can help organizations find
possible strengths and weaknesses within the operations,
additionally checking the total performance to use specific
financial ratios (Bateman & Snell, 2013).
Summary
Case Study: Skanska International - Bureaucratic and Budgetary Controls 13
When comparing the financials factors of Skanska
International to Fluor Corporation, Fluor Corporation was near
certain trends similar to Skanska, therefore they were a good
choice for benchmarking. The Skanska International balance
sheet, Skanska International profit and loss sheet, Skanska
International loss statement, and Skanska International
financial ratios statement are all public information which can
be available to all stakeholders. With budgetary controls
Skanska International can and will exceed the success they have
achieve worldwide setting them apart from the competition. With
a stronghold Skanska International can use benchmarking gaining
benefits into understanding the competition enabling them to
set goals and gaining a basis of the marketplace.
Conclusion
With the concepts contained in the paper an organization
can get some insights and understanding of bureaucratic and
budgetary control. The impressive Appendixes display success
of Skanska International revenues increasing by 3 percent with
goals to increase to 7 percent (SEK 136.3 billion), Skanska
Case Study: Skanska International - Bureaucratic and Budgetary Controls 14
International (2014b) With budgetary controls Skanska
International has an edge on the competition for leveraging
success in the construction marketplace, success comes by
financial planning and budgetary control which is an asset to
the organizations worldwide.
References
Bateman, T. S. & Snell, S. A. (2013). Management: Leading and
collaborating in the competitive world (10th ed.). New York: McGraw-
Hill/Irwin
Kerfoot, K. (2005). Expertise isn't the only answer to
leadership in safety. Nursing Economics, 23(2), 100-2.
Retrieved from
http://search.proquest.com/docview/236934952?
accountid=39364
Skanska International. (2014a). Skanska. Retrieved November 24,
2014, from Skanska/
Investors/Shareholder-Information/Competitors
http://www.group.skanska.com/en/investors/shareholder-
information/competitors/
Case Study: Skanska International - Bureaucratic and Budgetary Controls 15
Skanska International. (2014b, February 7). Year-end report,
January - December 2013 [Press release]. Retrieved from
http://www.group.skanska.com/cdn-cf23d2b41755ea/Global/Inve
stors/Reports/2013/Skanska-q4-2013-EN.pdf
Small Business Administration. (2014). Finance Your Business- Preparing
Financial Statements [Article]. Retrieved November 24, 2014,
from sba.gov website:
https://www.sba.gov/content/financial-statements#Equity
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