The Budgeting and Financial Planning Approach for A2 Milk Company

Introduction

Dr. Corran McLachlan in New Zealand established A2 Milk Company in 2000. The company was previously known as A2 Corporation before it later changed to its current name. A2 Milk Company is one of the companies that is publicly listed ASX 200, and it is known for producing infant formula, A2 milk and dairy products supplied both locally and internationally. A2 Milk Company conducts its activities in countries such as the UK, US, Australia, and China. Exceptional growth realized at A2 Milk Company thus it is now focusing more on nutritional products. Substantial earnings and revenue recognized in the financial year o at a$305-319 million. In that regard, A2 Milk is planning to continue with its growth in China and further tap into several international markets (The A2 Milk Company, 2018).

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Internal Strategic Goals

One of the internal strategic goals is to develop a robust set of property and to make the a2 brand dairy products distinct. The sturdy set includes trademarks, exclusive rights, and branded procedures. For further enhancement and extension, the property rights are healthy and contain a long duration.

Acceleration of infant formula market investment in China, which is enormous and swiftly growing. The a2 company took this opportunity after the China Farm distribution agreement was time-honored. China State Farm Holdings Shanghai Company was selected as the high-class distributor of a2 make infant formula for China. A2C milk business model is focused on distributing its product throughout China and South East Asia. Joining new international markets especially North America and precise markets in Europe. The entry model may comprise joint venture and use of native on track producer.

Corporate Structure and Resourcing. A2C plans to form a new organization arrangement for proper management of administration and new international events. It will drive to independent and substantial future growth.

Budget types

Science, research, and development budget. A budget of $ 1.1 million omitted to High Vale Nutrition research, which concluded that milk that contains a2 milk company beta-casein protein only, has easy digestion to the human body. The company issues this budget to help researchers make clear the benefits of consuming a2 milk products.

$21.9 million goes to income tax charge

$18.8 million used for trade and additional costs.

$84.7 million for New Zealand operations

$20.5 million for the United Kingdom and the United States

$9.2 million for China operations

The equity raising has a budget of $40 million, which funds the increased working capital linked with the substantial growth in infant formula sales. It is used in running the Company's capital spot through uphold of a conservative approach

Statutory and Regulatory Obligations for Financial Reporting

The company is registered under the New Zealand Company's act 1993, and an FMC reporting company classified under the Financial Market conduct Act of 2013. The entity also listed as a foreign company in Australia under the Corporations Act of 2001. Shares of the company publicly traded in the New Zealand stock exchange (NZX), Chi-X Australia (Chi-X) and Australian Securities Exchange (ASX)

A budget committee made up of top management has overall responsibility for budget implementation. The committee oversees each stage in the preparation of the master budget, decides any departmental disputes that may arise in the process, and gives final approval to the budget. The budgeting team also comprises of departmental heads, accounting heads, corporate executives and board of directors. Members involved in the budget-making process include:

• Managing director, he is responsible for the control of company resources and workforce and monitors the recruitment of the required number of workers that the company needs. Preparation of company plans that may include business plans and progress plans. Provide strategic advice to the chair and board members and maintaining formal links with the major customers
• Chief executive officer; is the main point of communication between operations of the company and board of directors. Managing the overall services and company resources and decide on major corporate decisions to improve the performance and sales of its products.
• Chief finance officer; financial risk management, record keeping and financial reporting and financial planning.
• Chief Marketing Officer; Supervise planning and development of the organization and promote advertising. The primary responsibility is to ensure that revenue generated through an increase in sales. It is done through effective marketing of the entire organization.

The company undergoes different budgeting process from the planning phase to implementation process. It is to ensure that the budget is all inclusive of all areas and ensure that the budget is achievable within the stipulated time. The method includes the strategic phase, decision-making phase, budget production phase, legislative phase and the implementation phase. The decisive stage happens typically between June and December where priorities stipulated regarding the predicted surplus, debt settlement plans, revenue and spending plans. The decision phase usually occurs between January and April. Different departments put forward the initiative that should consider, and the budgeting committee then formulates recommendations that the budget should support. The budget production phase, the various departments follow the decisions of the budgeting committee and prepare all the necessary documents for demonstration during the budget day. It may include the financial strategy reports and approximations. The implementation phase covers any additional funds required during the progress of the fiscal year.

A well thought out budget contingency plan enables a company to launch swift, effective responses to changing economic conditions. Economic conditions, such as recessions and inflation, could further hamper the budgeting process. Other states to consider include, external factors such as laws and governmental regulations. For example, one manufacturing company develops a list of potential projects. Each project has a positive net present value. The economic conditions are favorable. Due to financial constraints, the budget committee has not approved them in the current year's budget. When the company's budget appears desirable, managers seek board approval for additional pre-qualified projects. This type of capital planning prepares the organization to take advantage of upside contingencies quickly

Budget report show income and expenses of a particular period are used to provide a contingency plan for variances in the budget. Variations may vary from up-front and straightforward to refined and more complicated. Favorable differences do not indicate good performance in a company as some activities may not have been executed correctly. Each variance should stimulate a question on why the disparities exist.

The fixed expenses depend on the organization, as some organizations may not have variable administrative costs. Therefore, managers should be careful when identifying the fixed and variable expenses to ensure they include the entire relevant fee when preparing the budget. An operating budget has budget showing the selling expenses. The budget contains information about variable selling expenses and fixed selling expenses. The variable costs depend on the sale dollars. The manager should be familiar with the elements of the operating budget when preparing operating budgets including sales, operating income, and cost of goods sold. Managers are supposed to develop the sales budget before preparing other budgets and state the units they expect to sell. The managers use the information provided in the sales budget to determine the groups they should produce.

The a2 milk company uses privacy policy to process data that is submitted by consumers on the a2 milk company's different sites including a2 milk company newsletters, Facebook page, LinkedIn page and their website. The data collected is used to provide the services requested by the consumer, protection against activities such as identity burglary and fraud, troubleshooting of technical operations.

A2 Milk Company observes and handles financial risks through internal risk reports, which evaluates exposure by the notch and the scale of the threat. The company pursues to reduce the consequence of these risks by revising compliance with strategies and introduction bounds on an unceasing foundation. The company collects feedbacks from shareholders regarding variations of the financial statements to assess areas that need improvement and individual attention...