Traditional Budgeting: An Overview of the Online Discussion Essay (Article)

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The online discussion states that traditional budgeting is a thing of the past and the Beyond Budgeting Roundtable is a new technique that helps management to overcome economic and social barriers. I suppose that the discussion does not take into account the fact that budgets are both planning and control mechanisms that, although essential to control (particularly cost control), serve as a balance between planning and control. The Beyond Budgeting Roundtable model will not be able to meet changing demands and needs of the business. Suppose that the authors of online discussions misunderstand the role and functions of budgeting. Similar to the proposed model, budgets refer to future periods, and translate company plans into financial resources. They furnish a guide for future expenditures, and by helping to guide actual performance toward budgeted performance, assist in the achievement of objectives. The rolling forecast is a part of any budget aimed to meet the unique demands of customers and respond to economic changes. Top management should not discard the traditional budgets because they are the core of business and development. Budgets establish expected relationships among some factors in need of control, such as expenses for advertising, product planning, personal selling, and product development. They may be thought of as short-run aspects of planning. As control mechanisms, budgets establish standards that, if achieved, direct a company to objectives. Through a check of actual against budgeted performance, discrepancies can be noted, the reasons for them analyzed, and the need for adjusting marketing activity pointed out. In this way, effective control can be maintained and the profit position of the company estimated. The budget as a control tool is effective only when it embraces all major activities of the company.

The discussion pays much attention to drawbacks and limitations of budgets and negative impact of traditional budgeting on accompany. Thus, it does not fairly evaluate positive issues and advantages of traditional budgeting process. Budgets serve to keep the marketing mix in balance, for it is through them that expenditures on diverse marketing activities are kept in line with the overall plan. Budgets integrate and coordinate marketing activity and marshal marketing resources to realize desired outputs. Marketing also plays a key role in total budgeting. A significant item in a budget is estimated sales, which are based on the sales forecast. Given estimated sales, the anticipated expenditures necessary to generate and support the sales volume are presented. Any organization will not be able to succeed on the market without a budget. The case of Southwest Airlines is only an example of successful implementation of the Beyond Budgeting Roundable, thus it does not prove that this model is applicable to all business organizations. Since sales and expenses are interrelated, forecasts in turn depend on supporting marketing programs. Thus, interrelated planning is involved. For instance, an increase in the sales of a territory may require an increase in the supporting marketing program and hence additional expenditures on advertising, sales promotion, and personal selling. Determining the appropriate levels of expenditures to achieve desired results is complicated. Given the human variable and great degrees of uncertainty in marketing, the development of budgetary controls is highly dependent on executive judgment and value decisions. To be successful, budgeting requires the participation and backing of management in the principal functional areas.

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IvyPanda. (2021, October 27). Traditional Budgeting: An Overview of the Online Discussion. https://ivypanda.com/essays/traditional-budgeting-an-overview-of-the-online-discussion/

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"Traditional Budgeting: An Overview of the Online Discussion." IvyPanda, 27 Oct. 2021, ivypanda.com/essays/traditional-budgeting-an-overview-of-the-online-discussion/.

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IvyPanda. (2021) 'Traditional Budgeting: An Overview of the Online Discussion'. 27 October.

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IvyPanda. 2021. "Traditional Budgeting: An Overview of the Online Discussion." October 27, 2021. https://ivypanda.com/essays/traditional-budgeting-an-overview-of-the-online-discussion/.

1. IvyPanda. "Traditional Budgeting: An Overview of the Online Discussion." October 27, 2021. https://ivypanda.com/essays/traditional-budgeting-an-overview-of-the-online-discussion/.


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IvyPanda. "Traditional Budgeting: An Overview of the Online Discussion." October 27, 2021. https://ivypanda.com/essays/traditional-budgeting-an-overview-of-the-online-discussion/.

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