Using budgets


	Using budgets
	Advantages Control finances- reduced risk of over spending, allows allocation of money to under performing products/departments Improve staff performance- gives employees a clear focus/ target, can be motivational Regular check against performance in terms of objectives	Disadvantages Departments may compete which may damage the efficiency of the workforce as not working as a team Short term budget cuts to meet targets may have a very negative long term effect eg cutting promotional budget may reduce sales in the long term Easily inaccurate if the person does not have adequate expertise, knowledge which may lead to over ambitious targets Little input from employees lower down in the hierarchy may cause lack of motivation (self actualisation- Abraham Maslow)
	Evaluation

Control finances- reduced risk of over spending, allows allocation of money to under performing products/departments
Improve staff performance- gives employees a clear focus/ target, can be motivational
Regular check against performance in terms of objectives

Departments may compete which may damage the efficiency of the workforce as not working as a team
Short term budget cuts to meet targets may have a very negative long term effect eg cutting promotional budget may reduce sales in the long term
Easily inaccurate if the person does not have adequate expertise, knowledge which may lead to over ambitious targets
Little input from employees lower down in the hierarchy may cause lack of motivation (self actualisation- Abraham Maslow)

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