In this video we talk about advantages and disadvantages of Business Budgeting.
Advantages of Business Budgeting
- Determination of goals
- Clear cut delegation of Authority and Responsibility
- Development of cooperative and coordinating attitude
- Improvement in communication
- Performance evaluation and control
- Optimal utilisation of resources
- Cost consciousness
- Increase in employee's morale and productivity
- Measurement of efficiency
- Management by Exception
- Since input is required from multiple units, it promotes coordination, planning, and sharing
- Allows a firm to anticipate problems so that corrective action can be taken early
Limitations of Business Budgeting:
- Based on Estimates
- Danger of Rigidity
- Budget execution is not automatic
- Internal Struggle
- Encouragement to dictatorial tendency
- No substitute of management
- Expensive system
- Time consuming
