Benefits and drawbacks of setting budgets
- Created by: noormalik
- Created on: 18-10-14 15:38
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- Setting Budgets
- Drawbacks
- 1. Conflicts can arise
- departments may compete for larger parts of the expenditure funds available
- short-term budget cuts may lead to long-term problems for the bus. if sales fall as a result
- 2. motivation impact may fail to be achieved
- very ambitious targets may seem virtually impossible to achieve
- failure of input from budget holders will lead to the motivation impact being lost
- 1. Conflicts can arise
- Benefits
- 1. Controlling finances
- reduces the risk of over-spending
- Allows more money to be allocated to under-performing departments or products
- 2. improving staff performance
- budgets can be used as a financial objective for a department of a business
- Staff motivation increases from being given responsibility to meet a budget
- 1. Controlling finances
- Drawbacks
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