Advantages of Traditional Budgeting Systems

Advantages of Traditional Budgeting Systems Traditional budgeting is one the first budgeting systems created. Traditional budgeting system is still commonly used in many organizations today. The reasons why organizations still using traditional budget, this is due to framework of control. The role of the budget is to give focus to an organization, and help the coordination of activities and enable control. Large companies might struggle to plan, coordinate and control their dealings without a budgetary system. Even smaller companies can benefit from the budgetary system to ensure the direction of the business, and how it can reach its goals. Second reason is its organizational culture; for the fundamental method of operating, it may not be possible for the organization to move away. Moreover, by their nature, budgets are a centrally coordinated activity within a business, and often the only one which brings together all aspects of the company. Budgets are often the one process which covers all areas of organisational activity (Otley, 1999). Third reason of an organization still using traditional budgeting system is the need to decentralise; this is recognized that banks institutions and other financial institutions are more suitable candidates for decentralisation than other types of businesses. For an example, Norman Macintosh observed that branch managers at Transamerica Finance Corporation had a great deal of freedom to run their operations according to standard operating procedures. Similarly, another example is Svenska Handelsbanken, the largest bank in Sweden sets parameters for branch managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ discretion and then motivates its staff using competitive devices such as branch league tables (Alexa Michael and Technical Information Service, 2007). This approach can be successful in organizations where people work in similar but in independent units. However, it does not follow that this level of decentralization can be adopted by all organizations. Every organization is unique and it may be impossibl e to change the company culture to provide the necessary decentralisation. Successful decentralisation also depends on a great deal of trust being invested in teams throughout the organisation. Due to economic uncertainty, traditional budgeting has its limit. The disadvantage of traditional budgeting is it has insufficient external focus. Traditional budgeting is seldom focusing on strategy and is often conflicting. Besides that, it is time consuming and costly to put together, and also limit responsiveness and flexibility, whereby this is not good for economic uncertainty situation. This is because it often discourages change and only adds little value, budget tend to be bureaucratic and discourage creative thinking and requires too much valuable management time. Traditional budgeting system has an adverse impact on management behaviour, which can become dysfunctional with regard to the objectives of the organisation as a whole. Johnson (2005) explains that most budgets are not based on a rational, causal model of resource consumption, but are often the result of protracted internal bargaining processes. Conformance to budget is not seen as compatible with a drive towards continuous improvement. Under economic uncertainty, inflexibility is somehow seen as the key failing factor of traditional budgeting, and organizations are being urged to move towards continuous budgeting systems to enable speedy and coordinated adaptations to actual and anticipated changes in the economic (Neely et al, 1997). Continuous budgeting system gives companies the agility and capability to follow changes in market situations, and to cope with economic uncertainty while keeping an eye on strategic objectives (Lorain, 2010). Continuous budgeting system solves problems associated with infrequent budgeting and hence results in more accurate forecast. It is also more responsive to changing circumstances under economic uncertainty. Some companies use a continuous budget which means that a ongoing 12 months budget is presented by consecutively adding a new budget as each current month expire, such a process allow management to work at anytime, within the present 1 month component of a full 12 month annual budget. Continuous budgeting system make the planning process less irregular, rather than having managers go into the budget getting period at a specific time, managers are continuously involved in planning and budgeting process. The advantages of a continuous budget under economic uncertainty situation include, eliminating a fiscal year mind set by recognizing that business is an ongoing operation and should be managed accordingly. It also allows management to make corrective steps as forecast business cond ition change such as in economic uncertainty. It helps to reduce or eliminating the budget planning process that occurs at the end of each fiscal year. Another recent survey jointly conducted by the American Productivity Quality Centres and IBM Global Business Services has found that companies focusing on planning, budgeting and forecasting as a business strategy are higher performers in all area than those focusing on cost accounting, control and cost management. The study also showed that high performing organizations tend to complete their budgeting cycle in 30 days compared to 90 days in low performing organizations and most of the high performers used continuous budgeting system when the economic in uncertain (Kinney and Raiborn, 2008). Another example in the article author has mention how Kenyan business sail through under economic uncertainty. Kenyan have experience challenging times with business struggling to plan and price their product carefully so as not to erode the profit margins that they had planned for. Having exchange rate problems. Smart cfos employ a budgeting, principally a set of procedures used to develop budget. Author mention that Kenyan organization have limited resources and and they need to effectively plan and use them. This is why they implement budgets to help provides a means to achieve this. Budgets provide a useful benchmark of performance and help control profit and operations when compared to actual performance. The resulting variance guide management in appreciating what they need to do in the subsequent period. Employee performance and managerial performance is usually measured on qualitative terms, but budget gives a new meaning to evaluate performance through numbers and helps in r ewarding high performers and correcting the low performers. Due to the economic downturn, a number of well run companies have adapted to their specific circumstances and prepare master budget that comprises of performance financial statement, a capital budget, and a financial budget. However, some organizations have adapted to the concept of continuous budgets. With the fluctuation of the dollar, business are emploting a variety of techniques of budgeting to ensure that they make profits.

Macbeth Character Analysis Essay -- essays research papers

Character Analysis   Ã‚  Ã‚  Ã‚  Ã‚  In the tragedy Macbeth, written by William Shakespeare, many character traits are portrayed through the various characters throughout the play. Macbeth was one of Shakespeare’s greatest tragedies. It was completed in 1606 and was most likely first performed before King James I and his royal family at Hampton Court. King James I is believed to be a direct descendent of the character Banquo. Probably the most potent character trait expressed in Macbeth would be integrity or the lack there of. Integrity could be defined as doing the right thing at all costs no matter what the consequences or what would be in the persons best interest. In this play the person that displays the most of this character trait would be Macbeth himself. Macbeth shows his lack of integrity in many ways throughout the entire play through his actions towards the other characters, this trait helps to personify what kind of person Macbeth was and what kind of person he was becoming.   Ã‚  Ã‚  Ã‚  Ã‚  In the beginning of the play Macbeth is portrayed as an upstanding citizen to Scotland and a man with unending courage. He could do no wrong in the eyes of the king and because of this was presented with many honors. As with any person when they are recognized for what they have done Macbeth became somewhat greedy in his newly found fame and this greed also spread to his wife, Lady Macbeth. With this greed, as you can expect, came a want...

Bourgeoisie & money

The pictures represent the emotion of the people. Not only are they struggling to maintain what they have and who they are – they are still seeking. In their eyes they are looking for a way – a way forward – or a way out of their situation. The images reflect that control the Bourgeoisie had over the working class. They controlled the money and the industry. Those who did the labor to make the production levels – received very little reward for their efforts. Neither monetarily or in satisfaction of what they were doing. This is reflected in many of these pictures.A person in the industrial working class often lived a life of want. Never having enough income or wealth to move out of the social class they were in. Resentment was a common emotion towards the Bourgeoisie from the industrial working class. This emotion is what Marxism used to build a movement around, The working class felt there was nothing they could do to get up to the next level of what the y perceived as social classification. The latter nineteenth century gave birth to a generation who was resentful of where they were at in social class.A generation who wanted more than the Bourgeoisie were willing to part with. The Bourgeoisie had control – and were very protective of the control they enjoyed. The working class was hoping for a way out of their situation – they wanted more control and more freedom that increased control and wealth could give them. The pictures identify clearly the emotion of this segment of society – and the yearning for something different. There are no answers in their eyes, only questions and confusion. The answers and clarity they were seeking was still a generation away.

Essay Business Ethics - 624 Words

Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. Examples: What would you do? • You are in a head-to-head battle with your arch competitor, Evil Enterprises. One of your co-workers approaches you. He has recently joined your company after having worked for a second competitor for several years. He suggests, I made notes on all of Evils bids when I could get the data. They use some clear cost standards. Would you like me to bring my notes to the office tomorrow and let you look through them? How do†¦show more content†¦A business may be a multi-million seller, but does it use good business ethics and do people care? There are popular soft drinks and fast food restaurants that have been fined time and time again for unethical behavior. Business ethics should eliminate exploitation, from the sweat shop children who are making sneakers to the coffee serving staff who are being ripped off in wages. Business ethics can be applied to everything from the trees cut down to make the paper that a business sells to the ramifications of importing coffee from certain countries. In the end, it may be up to the public to make sure that a company adheres to correct business ethics. If the company is making large amounts of money, they may not wish to pay too close attention to their ethical behavior. There are many companies that pride themselves in their correct business ethics, but in this competitive world, they are becoming very few and far between. Code of Ethics: What is it? A code of ethics is a set of guidelines which are designed to set out acceptable behaviors for members of a particular group, association, or profession. 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