Advantages and Disadvantages of Budgeting in Business
Introduction
The development of an economic activity due to a company, the government or any other entity generate a network of financial flows that results in several financial operations at micro and macro level and at a national and at an international level. In order to keep a track of the performance of the business and cash flow of the business, it is necessary to develop such organizational policies that define the scope of organizational activities. Hence, in order to ensure that these policies remain accurate and vital to perform various economic activities, it must identify the financial objectives that are to be achieved by an organization or an entity and to effectively indentify the capital needs of the entity. In order to perform various business operations in a profitable way, budgeting process is used as a tool to predict the payment, expenses, losses and profits for a fixed period of time (Dudin et al., 2015). In this regard, budgeting can be considered one of the most important tool to manage the financial resources of the company (Smith, 2016). The following discussion presents a literature review of different scholars on advantages and disadvantages of budgeting in a business organisation. The objectives and the scope of the project have already been defined in the immediately following sections.
Project Objective
Objective of the project refers to the primary and secondary goals of the study. Objectives provides a pathway to the researcher and also define the scope of the study. In case of this study on the topic advantages and disadvantages of budgeting in business, the following objectives have been developed.
- To understand the concept of budgeting
- To identify various advantages of budgeting in the current dynamic market scenario
(I.C. RS 6112)