The Importance Of A Cultural Framework That Is Suitable For The Modern Dynamic Business Environment

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1.0 INTRODUCTION Budgets are very important part of business environment. They are considered to be essential key drivers and evaluators for planning and control as well as managerial performance since 1920 (Reka et al., 2014). This report aims to investigate how to promote a cultural framework that is suitable for the modern dynamic business environment. Firstly, it will explain the concept of budgetary control, It will then point out advantages and disadvantages of the current traditional system and how some weaknesses can be addressed by implementing Beyond Budgeting (BB) using practical examples of organisations that have been successful and what were the problems that they have encountered. It will also discuss why some organisations…show more content…
2.2 Benefits of Traditional Budgeting Budgeting is a management control technique that can be used as an early warning system. Budgets are of great help as a support performance management (Pietrzak, 2013). It can provide a detailed information insight of the next fiscal year, which allows managers to set performance objectives much more easily, make decisions and plan ahead. For example: When recession hit Europe in 2008, Davis Service Group was able to assess effects and was able to build new and accurate theories for the remainder of 2008. By recognizing and handling risks, Davis has been able to return profits, dividends and cash flow for shareholders in a challenging economic environment. Budgets generate a point of reference, making it easier for managers to accomplish activities with stability. As long as managers can meet the set parameters, budgeting and the use of budget cost centers provide them with the liberty to run their operations (Neely at al., 2003). Budgets are a great communication tool used when obtaining information about company or e.g. activities of its competitors. They also help in expressing ideas, goals and strategies of projects between team members/employees and outside resources or potential investors, motivating employee to drive forward. 2.3 Drawbacks of Traditional Budgeting To make budgets is a very long and time-consuming process, when organisations are trying to get reliable and
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