Provision of Information for the Purpose of Ex Ante Judgment

‭PROVISION OF INFORMATION FOR THE PURPOSE OF EX ANTE JUDGMENT‬ ‭ x ante judgment formation serves both to support decisions and to later be‬ E ‭able to test the consequences of these decisions against the set goals.‬ ‭Decision making can be strategic, tactical and operational in nature and‬ ‭therefore requires information about various aspects of business operations‬ ‭in different time periods. The outcomes of the decision-making processes‬ ‭about the desired future developments for the organization are recorded in‬ ‭strategic plans. Budgets and budgets reflect judgments at tactical and‬ ‭operational levels and have a task-setting or authorizing character. During‬ ‭the ex ante assessment phase, the expected cost prices of the products are‬ ‭also calculated.‬ ‭Both the budget and the cost prices will largely rely on standards‬ ‭that can be determined with greater or less certainty.‬ ‭It is important to recognize the hierarchy of the strategic, tactical and‬ ‭operational plans and the relationship between the sub-plans of the‬ ‭organizational units derived from them in order to ensure the consistency of‬ ‭the information used for decision- making at a lower hierarchical level or‬ ‭with regard to to ensure implementation for the ex post assessment.‬ I‭n addition to a risk analysis (see Chapter 3), the use of models can greatly‬ ‭improve the substantiation of the plans. Models that reflect reality in an‬ ‭econometric or more intuitive manner can support decision-making.‬ ‭Introduction‬ ‭ he future-oriented judgment (the ex ante judgment) concerns both the objectives to be‬ T ‭achieved in the future and the manner in which and the means by which these objectives‬ ‭are to be achieved.‬ ‭ he need for information regarding the future and the possibilities of the‬ T ‭information system to meet this need‬ ‭In order to make decisions about future developments, management at every level‬ ‭of the organization needs information that supports this decision-making. We can‬ ‭distinguish three organizational levels, namely:‬ ‭-‬ ‭Strategic level;‬ ‭-‬ ‭Managerial level (tactical level);‬ ‭-‬ ‭Operational level.‬ ‭ raditionally, plans, budgets and estimates are at all levels in the organization‬ T ‭financial‬‭in nature‬‭. In addition to financial data,‬‭however, other quantitative data‬ ‭and even qualitative descriptions can also have a function in the management and‬ ‭c ontrol of specific process characteristics so that the formulated objectives are‬ ‭achieved. Many organizations now therefore have not only financial information‬ ‭systems, but also information systems that are referred to as management‬ ‭information systems (MIS), executive information systems (EIS) and early warning‬ ‭systems. The purpose of these systems is to support management in making ex‬ ‭ante and ex post judgments by providing information about all kinds of aspects‬ ‭relevant to management and control at strategic, management and operational level.‬ ‭ he Balanced Scorecard (from Kaplan and Norton): a substantively defined form of‬ T ‭information that can support the implementation of the strategic and management‬ ‭control processes in the organization and that can also provide direction to the content‬ ‭of the data to support the implementation of operational activities. The‬‭Balanced‬ ‭Scorecard Is‬‭an instrument with which management can view the performance of the‬ ‭organization from various angles and has been compared to the set of instruments in‬ ‭the cockpit of an airplane (see cover of the book Starreveld).‬ ‭ o use the Balanced Scorecard it is necessary to formulate performance‬ T ‭indicators so that actual results can be compared with them. Designing‬‭indicator‬ ‭scan‬‭, for example, can be supported by a method developed‬‭by Van Snellenberg,‬ ‭Van Nijhuis and Van Woerkom. This consists of five steps:‬ ‭-‬ ‭Inventory of critical success factors (SWOT analysis);‬ ‭-‬ ‭Inventory of organizational processes;‬ ‭-‬ ‭Confronting critical success factors with the organizational processes (which‬ ‭processes influence a critical success factor);‬ ‭-‬ ‭Making the control variables operational (measuring points within a process that indicate‬ ‭whether the critical success factors are met);‬ ‭-‬ ‭Determine reporting format and frequency.‬ ‭ he meaning of standards and their recording‬ T ‭Setting‬‭standards or expectations is‬‭essentially an‬‭ex ante judgment. Many‬ ‭standards and expectations are laid down in financial-economic‬‭standards and‬ ‭expectations‬‭(Key Figures). Not only must the standards‬‭and expectations‬ ‭themselves be clearly established, but also the circumstances under which they‬ ‭apply and the manner in which they are established. The latter is necessary so‬ ‭that when testing reality against standards and expectations, any differences‬ ‭c aused by external influences can still be explained.‬ ‭ reparing forecasts, estimates and budgets‬‭The‬ P ‭objective of the budget includes:‬ ‭-‬ ‭Obtaining a general insight into the course of events in the relevant period,‬ ‭partly with a view to answering the question of whether the budget is‬ ‭acceptable;‬ ‭-‬ ‭Determination of the (financial) calculation standards; Basis‬ ‭-‬ ‭for the budgets to be derived from the budget.‬ ‭ udgets support efficient implementation of the processes and are generally (at the‬ B ‭same time) task-setting or authorizing in nature. In addition, budgets are an‬ ‭instrument to coordinate activities in the organization.‬ ‭ udgets Are‬‭preparations derived from the aforementioned‬‭budgets, often‬ B ‭c lassified by responsible officials and/or departments. Budgets have more of the‬ ‭c haracter of one‬‭task assignment‬‭. Fixed Budgeting occurs when costs do not‬ ‭vary with business pressure, such as general costs and research costs. Bee‬ ‭Variable Budgeting rates are determined per performance unit for the various‬ ‭activities.‬ I‭n companies where the 'bottleneck' of business activities lies in the sales market, the‬ ‭sales budget is the starting point for the budgets for other business activities:‬ ‭production and purchasing as well as the budget for personnel and other costs.‬ ‭ or households that make goods or services available for the direct satisfaction of‬ F ‭their members without market intervention (so-called consumer households),‬ ‭the‬‭needs budget‬‭activity‬‭budget instead‬‭of the sales budget‬ ‭ he preparation of the various budgets and their consolidation into a budget for the‬ T ‭entire organization is one iterative‬‭(= recurring)‬‭process in‬‭which the various‬ ‭sections of the organization participate. The desired coordination between the‬ ‭various organizational units is achieved through the budget process. Furthermore, the‬ ‭budgets and rates provide ex ante information against which developments in reality‬ ‭c an be assessed so that adjustments can be made. Furthermore, the budgets‬ ‭authorized by management in a certain sense represent the powers within which the‬ ‭responsible officials have a certain freedom of action.‬ ‭Further explanation of 'plans'; risk analysis‬ ‭ arrying out a risk analysis as part of the planning activity is important to gain insight‬ C ‭into:‬ ‭-‬ ‭The possible effects of risks to the objectives detailed in the planning‬ ‭ ecisions and the activities intended to achieve these objectives. This is‬ d ‭especially important for those parts of the planning that relate to:‬ ‭-‬ ‭Decisions that (must) be taken well before the implementation period;‬ ‭-‬ ‭Decisions that involve a long implementation period and that concern‬ ‭longer-term objectives;‬ ‭-‬ ‭The‬ ‭most‬ ‭effective‬ ‭and‬ ‭efficient‬ ‭manner‬ ‭these‬ ‭r isks‬ ‭c an‬ ‭be‬ ‭dealt‬ ‭with‬ ‭( it‬ ‭is‬ ‭preparing‬ ‭and‬ ‭arranging‬ ‭risk‬ ‭management‬ ‭measures‬ ‭and‬ ‭monitoring‬ ‭and‬ ‭adjusting the implementation of these measures).‬ ‭ risk analysis can be carried out according to the method of Louwman and Steens. This‬ A ‭method consists of five steps, namely:‬ ‭1.‬‭Define the scope;‬ ‭2.‬‭Make an inventory of the risks;‬ ‭Quantify the risks;‬ ‭ .Assess and select the‬ 4 ‭risks;‬ ‭5. Formulate risk control measures.‬ ‭3.‬ ‭Ad 1)‬ D ‭ efine the scope:‬ ‭The scope of the risk analysis is formed by those business processes, organizational‬ ‭components and/or specific areas of interest (such as critical success factors and‬ ‭certain quality requirements) that may be influenced by the implementation of the‬ ‭decisions prepared in the plan.‬ ‭Ad 2)‬ I‭nventory the risks:‬ ‭Inventory of the risks and systematic recording of the risks.‬ ‭Ad 3)‬ ‭Quantify the risks:‬ ‭ or each risk, the possible (negative) effects are quantified in terms of possible‬ F ‭damage amounts and the associated weighting factors, probabilities or frequencies.‬ ‭Ad 4)‬ A ‭ ssess and select the risks:‬ ‭In this step of the risk analysis, the risks are first assessed and selected based‬ ‭on the assessment and selection criteria and the management's risk‬ ‭management. Criteria for the assessment and selection may be: the possible‬ ‭damages, the chances of possible damages, the expected value of the‬ ‭damages, etc.‬ ‭Ad 5)‬ F ‭ ormulate risk control measures:‬ ‭For the risks with measures are being formulated with sufficiently high priority.‬ ‭Ultimately, those (clusters of) measures are chosen for which the ratio between the‬ ‭burdens (the expenditure associated with the measures) and the benefits (which in‬ ‭particular includes the limitation or even the elimination of the expected damage) is‬ ‭the most favorable.‬