Case study

The question was : All Hoggard Organics' shop managers in the UK will be expected to draw up cash flow forecasts and budgets for their individual shops.To what extent might the use of these techniques increase the company's chance of success?

My answer is:

Cash flow forecast is detailed estimate of a firm's future cash inflows and outflows per month. And a budget is a forward financial plan usually involving a cash flow forecast ,forecast sales and forecast costs. So in this case we have "Hoggard Organics "is a multiple shop which has a chain of 100 shops across Canada and the USA.Now it also want to develop in the UK. First let talk about cash flow we all know that cash flow is very important for a business .You can know how much the money coming in and going out of the business. Because you have to keep enough cash in your business otherwise when you want to improve your business then you cannot.So it is necessary to do a cash flow forecast.Cash flow forecast can help the business attract more invest to make more confidence in a business .Because they need enough cash to run the business well and to dealing with the possible problems during running the business .And then about the budget I think to run a business at least you have to have a budget for your business ,to make you think how much are you going to cost and how mush are you going to sale also how much profit are you going to make etc.Then you will like have a target and you will try to achieve the biggest profit. After all no matter is the cash flow forecast or the budget ,they are all very important and necessarily in a business .
So the question said they need to draw up the cash flow forecast and the budget for their individual shops .Yes I think they should be do that because each shops indifferent area may have a different situation.So The better thing for them is each shops can have their own plan.that will be more concentration on the particular problem for each shop.
To do a cash flow forecast and a budget helps them to know their business and more confident for running the business and the will able to face the risk in the future . Sounds very good .But there also are so problems with this if the calculate the cash flow wrongly they will get everything wrong about the cash spending which will affect a lot in the business for example they thought if they buy some new equipments they still have enough cash for something else but actually they don't ... It may be make a fail in the business so the same in budget For instance if the actual figure are smaller then what they thought it will be demotivating for the labour.... So something like those about if they made a mistake...
At the last I should say do a cash flow forecast and a budget could increase the changes of success if they do it correctly.



OOO~ my answer is over . Is the answer any good ? Please give me some comments on it . I still not sure how should I consider about question like that still don't know how to discuss and how to evaluate questions ... Because I am just start thinking of business....Actually It is difficult T_T... So please give me more help about my poor business... Thanks a lots!!!