Bidall plc is a discount convenience store chain with a large number of branches throughout the UK. Its stores are mainly found in local high streets, town centres, and attached to petrol stations. Purchasing and distribution are handled by a central service centre but local store managers have some control over staffing, store layout and sales promotions. It also has its own central bakery that supplies part-baked bread and cakes that are then finished in store ovens.

Alan Dee has been the Chief Executive of Bidall for the past 15 years. He trained as an accountant and has always personally set the budget for the whole business by taking the previous year's actual results and then adding 8% to sales and reducing costs by 3%. He then meets with the Operations Director to break the budget down into budgets for each of the individual stores.

The Operations Director is unsure whether this is the best approach to budgeting. In a recent meeting with Alan she mentioned that store managers often complain that they do not understand the point of the budgets that they are given.

Required:

a) Briefly explain the reasons that budgets are produced. (6 marks)

b) Discuss Bidall's current approach to budgeting. Your answer should include:

• Identification of the two main elements of their current approach
• Discussion of the advantages of their current approach
• Discussion of the disadvantages of their current approach

(16 marks)

In the same meeting the Operations Director also commented that some companies had adopted a "Beyond Budgeting" approach and she suggested that they investigate whether it was suitable for Bidall.

c) Outline how a Beyond Budgeting approach differs from traditional budgeting. (8 marks)

Total 30 marks