Budget Essay Example | Topics and Well Written Essays - 1000 words

Budget - Essay Examplencreased interest in research on this topic, and to canvas whether the current approaches of budgeting hinder the effectiveness of modern organizations.Dynamic Business Environment The present barter environs presents a very dynamic situation in front of the managers. In this scenario, budget is seen as a constraint rather than as a planning tool. As a result of this dynamic business environment, the relevancy of the budget is very short lived. Budges result in centralization of the last making process. This delays the decision making and reduces and organizations ability to respond to changing environment. The concept of how a successful telephoner operates in the information age is shifting from make-and-sell to sense-and respond (Haeckel, 1999).Budgeting do in isolation Many managers who argon against budgeting believe that budgeting encourages a myopic planning horizon indicating a delinking of the budget and strategy (Shastri, 2008). Budgets are done in isolation and are not aligned to company strategy and goals. Moreover, the budgeting horizon is not cerebrate to the business cycle resulting in long budgeting periods in rapidly changing industries and short budgeting periods in highly dynamic industries.Hinders Innovation The bureaucracy and controls created as a result of the budgeting process stop the culture of repugn the status quo. virtually of the units focus on operating within the budget thereby reducing the chances of insane asylum. Most of the subunits focus on operating within their own budgets and hence do not take innovation as a philosophy (Hope and Fraser, 2001).Expensive It is often argued that the budgeting process followed at organizations is inefficient. This results in the wastage of time of the superior management. Budgeting is also an expensive exercise in terms of capital required for the budgeting purpose.Sophisticated Budgeting Techniques With the drawbacks of the budget and the budgeting technique s,