• Created by: christaj
  • Created on: 12-01-16 20:59



Benefits of budgets:

  • Ensures that spending is spent on the aims of the business instead of the individual themselves
  • If the budget is spent on purposes matching the aims, it will make it easier for the workforce to understand where the budget is being allocated and why.
  • Staff will become much more motivated.
  • This is because the responsibility of staying within the budget and the recognition of meeting budget targets is seen a job enrichment.
  • This theory is brought about by Mayo and Herzberg.
  • The use of budgets will improve the efficiency of a business because, budgets are constantly monitored and reviewed. This means that the causes of success or failure can easily be identified and standards can be established. Therefore, the result from the reviews can be used to make future decisions within the business. For example, what department is going to be allocated the highest budget.

Drawbacks of budgets:

  • They are difficult to monitor fairly because the manager will hold his trust…


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