Global Business topic mastery

A&P budget management

큰 회의에서 중요한 분들과 대화하다 보면 간단한 질문에도 머리속이 하얘질 때가 있다.

대부분의 질문은 예측 가능한 business fundamentals에 관련된 것들이니 평소에 생각을 정리해두기.

Problem: Due to uncertainty in the business environment, our 2H sales boost plan, allowing an extra A&P budget investment, concerns CFO due to risk in P&L. We proposed a stage-gating approach. However, the head of Finance expressed concerns as the quarterly review may not guarantee us to manage the budget with agility.

Zoom-out: It is an ROI question - How to secure proper returns within the fiscal year of the investment?

Maximizing ROI - the formula is simple. Maximize numerator (returns), Minimize denominator (total A&P budget globally)

Solution (focusing on HOW)

1. Controlling denominator: Find A&P shift from many scattered, low ROI investments to selective, high leverage programs, action by Mxxxx

2. Ensure maximizing returns: Review / stage-gate the ROI on a few selective programs (US, CN, WEU)

3. Other factors in the P&L: synergy/fringe benefit in cost coverage (e.g., A: Volume increase of high-end Sxxx would save cost-coverage in Dxx factory, B: Inventory reduction in US or WEU decrease cash flow risk)