Define budget in management11/25/2023 ![]() Preparing a budget requires managers to consider and evaluate.Budgeting requires managers to plan for both revenues and expenses.Budgeting is a formal method to communicate a company’s plans to its internal stakeholders, such as executives, department managers, and others who have an interest in-or responsibility for-monitoring the company’s performance.There are many advantages to budgeting, including: As detailed in Accounting as a Tool for Managers, planning involves developing future objectives, whereas controlling involves monitoring the planning objectives that have been put into place. A good budgeting system will help a company reach its strategic goals by allowing management to plan and to control major categories of activity, such as revenue, expenses, and financing options. ![]() Finally, the company will create, initiate, and monitor both long-term and short-term plans.Īn important step in the initiation of the company’s strategic plan is the creation of a budget. This common analysis is often labeled as SWOT.Īfter performing the situational analysis, the organization identifies potential strategies that could enable achievement of its goals. Many firms at this stage conduct a situational analysis that involves examining their strengths and weaknesses and the external opportunities available and the threats that they might face from competitors. ![]() ![]() Implementation of a company’s strategic plan often begins by determining management’s basic expectations about future economic, competitive, and technological conditions, and their effects on anticipated goals, both long-term and short-term. ![]()
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