Performance Analysis (3) Flashcards
Top down budgeting is relevant for (organisaitons)
In newly formed organisations
Top down budgeting is relevant for (small)
In very small businesses
Top down budgeting is relevant for (hardship)
During periods of economic hardship
Top down budgeting is relevant for (budgeting skills)
When operational managers lack budgeting skills
Top down budgeting is relevant for (co-ordination)
When an organisation’s different units require precise co-ordination
Advantages of top-down budgeting (strategic)
Strategic plans are likely to be incorporated into planned activities
Advantages of top-down budgeting (co-ordination)
Enhance the co-ordination between plans and objectives of divisions
Advantages of top-down budgeting (awareness)
They use senior management’s awareness of total resource availability
Advantages of top-down budgeting (decrease the input)
They decrease the input from inexperienced or uninformed lower-level employees
Advantages of top-down budgeting (decrease period of time)
They decrease the period of time taken to draw up the budgets
Disadvantages of top-down budgeting (dissatisfaction)
May be dissatisfaction, defensiveness and low morale among employees
Disadvantages of top-down budgeting (team spirit)
The feeling of team spirit may disappear
Disadvantages of top-down budgeting (acceptance)
Acceptance of organisational goals and objectives could be limited
Disadvantages of top-down budgeting (punitive device)
The feeling of the budget as a punitive device could arise
Disadvantages of top-down budgeting (unachievable budgets)
Unachievable budgets for overseas divisions could result if consideration not given to local operating and political environments
