Balancing Corporate Resource Allocations | Part 2 – Fund Reallocation Alignment and Contingency Fund

I will include the instructions and I will also include the assignment from last week that was completed as a reference During the course of the year Tyler Toys had a shortfall due to economic challenges that have changed the direction of the resource allocation in the projected budget. You will figure out how to reallocate funds to resolve one assigned internal or external budget challenge. Use the Challenge Generator (opens in a new window) [Original Media] to determine which internal or external challenge you are assigned to address in your budget justification. Make note of this challenge for future reference. Using the Tyler Toys Inc. Annual Budget Mid-Year Review (opens in a new window – select use template). Examine this budget to determine the effects of the internal or external challenge you were assigned in step 1. Consider the following: How will you reduce or reallocate expenditures to address the assigned challenge? How might your decisions affect Tyler Toys’ internal or external stakeholders? How will your decisions affect Tyler Toy’s mission and goals? Create a budget justification to draft a contingency plan. The plan will add to next year’s budget. Use the Tyler Toys Inc. Contingency Fund Budget (opens in a new window – select use template) to develop the contingency plan. Make sure the contingency plan addresses the following: Misalignments from the original budget Unforseen organizational risks The impact on internal and external stakeholders as well as Tyler Toys Inc. mission. Download and submit your completed Tyler Toys Inc Contingency Fund Budget, Tyler Toys Inc. Annual Budget Mid-Year Review, and your budget justification by the specified deadline. Resources Sample Budget Justification (opens in a new window) Tyler Toys’ History, Mission, and Goals (opens in a new window) [Original Media] https://services.hbsp.harvard.edu/lti/links/content-launch Past assignment for reference Mid-Year Budget Review and Financial Management at Tyler Toys Inc. Introduction Tyler Toys Inc. is a toy company whose sole strategy has been to make enjoyable and safe play products for kids. LAPU Digital Learning Solutions (2023) states that the company’s mission is to create quality products meant to develop children while observing sustainability. The company’s capacity for practical resource allocation and the handling of its finances have been very important to the achievement of business objectives and for continuous growth. This report assesses the financial status of Tyler Toys Inc. at the midpoint of the 2022-2023 fiscal year. Budgets of revenue and expenditure projection are compared, misalignment is identified, and recommendations are made to reallocate resources to improve financial stability and prevent the organization from going under by purchasing anything. Revenue Analysis Revenue generation is a critical aspect of financial management at Tyler Toys Inc. At midyear, the expected total is expected to be mirrored at approximately 50% of that expected for the year. The shortfall from the budgeted amount of $200,000 was $5,000, which means we reported $195,000 as revenue for the first half of the fiscal year. A component could be unforeseen fluctuations in the market or changes in consumer spending habits not considered in the projected income for the year. As mentioned by Paiva et al. (2020), changes in the selling environment, including variations in market demand, changes in consumer behavior—and especially on the revenue-generating in industries that are mainly dependent on variables such as seasonal demand aspects and economic factors such as high or territorial economic or high season demand as toy manufacturing. The company should conduct a more detailed analysis of the sources that caused this revenue shortfall. However, the status of special revenue items is not a regular feature in this context, as they may come in and out of existence at any time. The organization also has to be very careful to assess if it is sustainable in the long term, depending on such sources. Although supporting current operations, these funds are an unpromising revenue stream regarding strategic planning and long-range goals. Expense Analysis A solid understanding of how Tyler Toys Inc. spends its money helps operational spending follow a budget consistent with financial goals. For the most part, the company’s fixed expenses, including salaries, overhead, and sanction-related costs, tend to occur on a consistent pattern of activity. The midyear analysis shows the fixed costs were close to projections, except for a $1,200 underspend in salaries and benefits and a $2,000 overspend in repair and maintenance costs. These fluctuations should be carefully scrutinized to determine if they are inefficiencies or adjustments to unanticipated operational requirements during the first planning of the budget period. The gap between expected budget and variable expenses includes marketing, office supplies, and research and development (R&D). However, since marketing expenses were $1,000 above the budget, it implies a push to implement even more aggressive promotional policies. In any case, marketing is critical for pulling in income; however, spending in this class may portray a need for more precise assigning based on anticipated returns. On the other hand, under-expenditure for website maintenance, software, and licensing may suggest that poorer investments in digital infrastructure have left technological improvements underpinned that streamlined operations and enhanced customer engagement. Budget alignment for R&D spending emphasized the importance of long-term competitiveness and innovation. It shows that the company will focus on market positioning and growth in the future. However, it also leads to wondering if the current investment can keep the company competitive in its crowded market. As pointed out by Paiva et al. (2020), in the highly technology-driven toy industry, it is equally essential to accommodate short-term operational goals and long-term strategic investments like R&D while sustaining competitive advantage. Recommendations for Resource Reallocation With the mid-year budget review of financial position misaligned, Tyler Toys Inc. has to reallocate its resources to align with financial performance strategically. Then, the revenue shortfall must be overcome through diversifying the sources of income, for example, by finding new market segments or widening the product range. Further, the company should refine its marketing strategy to target specific customers, for which the returns on investment are higher than conducting blanket marketing spend that might not actually deliver to the targeted consumer base. Moreover, Tyler Toys Inc. is suggested to bargain with the suppliers to avail themselves of the lowest rates of raw material and production costs on the expense side. This would reduce production-related overspending to the level and keep costs close to the budget forecasts. In addition, some energy-saving measures and technology deployment to streamline our operations would also reduce overhead costs, such as utility costs, which are slightly above the midyear target. In addition, discretionary spending, such as marketing and office supplies, should be closely monitored to ensure dollars are spent on initiatives helping to generate revenues and promote the organization’s long-term growth. It is also time for the company to reallocate some resources to strengthen its digitality, such as the alteration of the website or software. Conclusion Tyler Toys Inc.’s mid-year review of its financial status reveals that revenue and expenses significantly differ from the expected budget in several areas. The remaining dynamics of the company, including the company’s fixed cost and the shortfall in revenue compared to the variable expenses spending, point to the need for strategic adjustment. Reallocation of resources targeted marketing initiative, supplier contracts negotiation, and operational efficiency will contribute to Tyler Toys Inc.’s financial stability and long-term sustainability. In addition, the company should always use evidence-based decision-making under a Christian worldview that requires ethical leadership, professional accountability, and stakeholder relationships. References LAPU Digital Learning Solutions. (2023, March 14). Tyler Toys Inc. | mission, vision, and goals. YouTube. https://www.youtube.com/watch?v=7zsS3bGC6JA Paiva, T., Ribeiro, M., & Coutinho, P. (2020). R&D collaboration, competitiveness development, and open innovation in R&D. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 116. https://doi.org/10.3390/joitmc6040116