In 1954, Robert C. Golgotha answered a help-wanted advertisement for a chemical engineer in a Havana newspaper and,went to work for The Coca-Cola Co. Twenty-six years later, the Cuban-born executive triumphed in a bruising battle for Coke’s top job. Named-president In May of 1980 and elected Chairman and chief executive 10 weeks later,

Ghettoize had overcome long odds and bested worthy rivals to command one of the Wordsworth enterprises. But Ghettoize could hardly afford to rest on his laurels. The company he headed was mired in a hodgepodge of unrelated ventures, from shrimp farming lovemaking. Its crucial boulder system was badly decayed with important markets left in the hands of weak operators. There was no strategic vision, and creatively was stifled~by a blind adherence to tradition and.a refusal to take risks. Worst of all, Coke’s stock had fallen by half, and the company was barely turning a profit.The Spanish Inquisition started innocently enough.

 Coke executives from around the world were accustomed to flying into Atlanta each fall for a two-week business review. There they discussed’their five year plans and were handed a list of objectives that corporate managers had drawn up as their next year’s budget. The budget meetings were full of cheer leading, wish lists, and hopeful promises, but there was little hard-nosed planning and almost no accountability.

Ghettoize would have none of it. Five-year plans, he felt, were a waste of time. No one could predict with any accuracy what the world would look like in five years. He wanted three-year plans, and he told the executives that he would hold them accountable for meeting their three-year targets.

He demanded that managers file their plans early Schultz he could dissect them. And instead of waiting passively for headquarters to dictate the year’s goals, each division chief now had to present his own brief and be ready to, defend it. Source: I’d Like to Buy the World a Coke: The Lite and Leadership of Roberto Ghettoize, David Singeing, © 1998. Reprinted by permission of John Wiley & Sons, Inc. Also excerpted in Business Week, April 13, 1998, pp. 70–76, Reprinted Dy’ special permission, copyright © 1998 by The Calligraphic Companies, Inc.

during his first year as CEO..The chief executive of Coca-Cola used the budget (1) to assign decision-making authority over the company’s resources, (2)’ as the major tool for coordinating and emplacement plans, and (3) as the primary device for holding’employees accountable for their decimalization results.

In this chapter, we will show you how to construct responsibility budgets and use those budgets to assign decision-making authority and hold employees accountable tor their conclusion making. The master budget and its many componentsare detailed. Using the master budget as a means to ,implement planning and control through flexible budgeting is explained. By the time you finish your study of this chapter, you should appreciate the role of budgeting as a cornerstone of successful business activity.

Posted on November 24, 2015 in operational budgeting

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