Quantification of Strategic Plans Through the Business Budget: A Practical Application Using Stochastic Methods

Traditionally, the process of estimating the quantitative predictions of the strategic plan through the budget happens as from the deterministic data, together with analysis of factors of internal and external environments. As from the budget data decisions are made, often before the fact, which cre...

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Bibliographic Details
Main Authors: Marino Luiz Eyerkaufer, Janaina Poffo Possamai, Mirian Buss Conçalves
Format: Article
Language:English
Published: Fundação Instituto de Administração 2014-12-01
Series:Future Studies Research Journal: Trends and Strategies
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Online Access:https://www.revistafuture.org/FSRJ/article/view/178
Description
Summary:Traditionally, the process of estimating the quantitative predictions of the strategic plan through the budget happens as from the deterministic data, together with analysis of factors of internal and external environments. As from the budget data decisions are made, often before the fact, which creates uncertainty as to the assertiveness of forecasts. Combined with the traditional preparation methods of corporate budget forecasts, this study presents an application of stochastic methods where the probabilism is presented as an alternative for the minimization of uncertainties related to the assertiveness of the estimates. It also demonstrates itself, as from a practical application, the use of the Monte Carlo method in the sales forecasting; at the same time it is tested the probability of these sales forecasting be materialized within certain intervals that meet the investors’ expectations, by using the limit central theorem and, finally, by using the absorbing Markov chain, it is demonstrated the overall performance of the system as from the funds input and output. The study was limited to a basic application of stochastic methods as from a hypothetical case which, however, allowed to  conclude that both methods, together or separately, can minimize the effects of uncertainty in budget forecasts.
ISSN:2175-5825