Advantages and D|sadvantages of 8udget Contro

Llke oLher contro| methodsţ budgeLs have Lhe poLenLlal Lo help organlzaLlons and Lhelr members reach
Lhelr goalsŦ 8udget contro|offers several advanLages Lo managersŦ Some of Lhese areť
O @he ma[or sLrengLh of budgeLlng ls LhaL lL coordlnaLes acLlvlLles across deparLmenLsŦ
O udgeLs LranslaLe strateg|c p|ans lnLo acLlonŦ @hey speclfy Lhetesootcesţ teveooesţ and acLlvlLles
requlred Lo carry ouL Lhe sLraLeglc plan for Lhe comlng yearŦ
O udgeLs provlde an excellenL record of organlzaLlonal act|v|t|esŦ
O udgeLs lmprove commun|cat|on wlLh employeesŦ
O udgeLs lmprove resources a||ocat|onţ because all requesLs are clarlfled and [usLlfledŦ
O udgeLs provlde a Lool for correcLlve acLlon Lhroughrea||ocat|onsŦ
Poweverţ budgeLs conLrol can also creaLe problemsŦ @he dlsadvanLagesof budgeLs areť
O @he ma[or problem occurs when budgeLs are app||ed mechan|ca||y and rlgldlyŦ
O udgeLs can demoLlvaLe employees because of |ack of part|c|pat|onŦ lf Lhe budgeLs are
arblLrarlly lmposed Lop downţ employees wlll noL undersLand Lhe reason for budgeLed
expendlLuresţ and wlll noL be commlLLed Lo LhemŦ
O udgeLs can cause percepLlons of unfa|rnessŦ
O udgeLs can creaLe compet|t|on for resources and po||t|csŦ
O rlgld budgeL sLrucLure reduces |n|t|at|ve and lnnovaLlon aL lower levelsţ maklng lL lmposslble
Lo obLaln money for new ldeasŦ
@hese dysfuncLlonal aspecLs of budgeLs sysLems may lnLerfere wlLh Lhe aLLalnmenL of Lhe otqoolzotlooƌs
qoolsŦ Cne generally accepLed guldellne for effecLlve budgeLlng ls Lo esLabllsh goals LhaL are dlfflculL buL
@hereforeţ skllled managers who undersLand budgeLs and how Lo use Lhem have a powerful conLrol Lool
wlLh whlch Lo aLLaln departmenta| and organ|zat|ona| goa|s

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