Advantages and D|sadvantages of 8udget Contro

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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
aLLalnableŦ
@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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