Question

Effects of budgets (atleast one paragraph)

Answer 1

To start with the good, one of the key benefits of budgeting, as also mentioned in the beginning, is the fact that it forces management to think long-term. Too much focus can be lost in the day to day management of a company. Budgeting creates a venue for management to consider planning orientation, and a chance to build Model Scenarios, or what if situations, estimating the financial results of various strategic decisions. On a more conceptual level, it also offers management the opportunity to reflect upon why the company is in business at all, what is the environment like, how is it changing, how will the business, or parts of it, be affected further down the road.