Exploring budgeting as an underlying guidance tool for the management of externally induced crises

University essay from Mälardalens högskola/Akademin för ekonomi, samhälle och teknik; Mälardalens högskola/Akademin för ekonomi, samhälle och teknik

Abstract: Date: 02.06.2021 Level: Bachelor thesis in Business Administration, 15 cr  Institution: School of Business, Society and Engineering, Mälardalen University  Authors: Naomi Akafare Akelmu                      Mihaela Dafinova Mihaylova                          (90/08/18)                                                  (98/01/17) Title: Exploring budgeting as an underlying guidance tool for the management of externally induced crises Tutor: Leanne Johnstone Keywords: crisis management, sensemaking, strategy, strategizing, organizational learning, budgeting Research question: How can budgeting assist crisis management during the Covid-19 pandemic, using the aviation industry as an empirical context? Purpose: Drawing upon the contingencies of managing externally induced crises and thus, the inherent lack of a single effective approach, this research attempts to uncover the role of budgeting in assisting crisis management practices, by marrying management and accounting literature. Method: Using the crisis of the Covid-19 pandemic in the aviation industry as an empirical context, a mixed-method research design was employed, with both qualitative and quantitative techniques. Primary data was collected through interviews with managers for a thematic analysis, and secondary data from interim financial reports was used for statistical accounting analysis. Conclusion: The alternative budgeting process provides possibilities for forecasting and reference during crisis management and thus, managers can receive practical guidance on their performance. That, in turn, minimizes the complexities (uncertainty, threats and time pressure) of crises and reduces crisis’ impact on organizations. Key contribution: Employing alternative budgeting methods in managing externally induced crises increases the measurability of reactions through budgeting’s functions, by quantifying the sensemaking process, strategizing process, and organizational learning, which are discovered to occur simultaneously during crisis management.

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