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  • Created by: kaylin
  • Created on: 01-05-11 19:37

Benefits of Budgets

  • provide direction and coordination: spending is geared towards the aims of the business 
  • Motivate Staff: Mayo and Herzberg ... motivated by the responsibility and recognition of meeting budget targets.
  • They improve effciency: by monitoring budgets the business can evaluate the causes of any successes or failures and improve in the future.
  • Assess forecasting ability: budgeting encourages careful evaluation of the future possibilities and realistic planning. 
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Drawbacks of Budgets

  • Allocations may be incorrect: budgets are predictions, there will always be unforeseen changes. insufficent budgets may demotivate staff. 
  • Savings may be sought that are not in the intrest of the firm: buying cheaper materials may lower the quality of the end product, causing cutomer discontent. 
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Features of good budgeting

  • Be consistent with the aims of the business
  • Be based upon as many opinions as possible
  • Set challening but realistic targets: SMART 
  • Be monitored regularly 
  • Be flexible: incase there are any unforseen changes in the business a budget needs to be flexible so if necessary it can be adjusted to a more realistic level. 
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Gabby Tracey

it was ok

Hana Salah


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