A budget is allocated each year to your company to cover its expenses in R&D, marketing, distribution and corporate projects. Your budget is linked to the success of your company in the previous year. Your budget for decision Round 2, for example, will be equal to a fixed percentage of your revenues in decision Round 1. However, there is a maximum level of revenues above which resources are reallocated to other business units in order to maximize the return on investment at the global level. Similarly, there is a minimum budget level for each year. If you are not generating sufficient contribution internally, global headquarters may subsidize your business unit so that you can continue operations.
In general, your budget will be between 70 and 300 million dollars. You will have to work within this given amount. If total spending exceeds the allocated budget, you will receive an error message.
Figure 14 – Sample Budget Form
You do not have to worry about budget calculations as BOSS does that for you. You may consult the budget chart at any time; it provides details on how you have decided to spend your budget in the upcoming year, based on your current decisions. A warning message will appear if the budget is exceeded. This message should not be ignored.
Note that if your objective is to maximize your return on investment, you should not necessarily spend your entire budget in every situation. If you have an outstanding performance, you may be granted a large budget. However, spending it completely might be a waste of resources.