Analyze The Major Pros And Cons Of Preparing Company Budgets

Analyze the major pros and cons of preparing company budgets. Determine at least two (2) critical budget items that you believe are essential in managing a company. Provide a rationale for your response.A budget is a document that stipulates the estimated revenues and expenditures of an organization. The major benefit of a budget is to encourage forward thinking. The budget forces the management to plan for the future of the organization. Without a budget, the management will find itself planning only with the day to day activities of the company. Secondly, it promotes cohesion within the organization, therefore enabling each department to work towards a common objective (Kemp, 2003). Each department creates a list of activities it intends to carry out and the cost of these activities. The management then selects the best activities depending on the organizations goals. However, a budget can be bureaucratic. Since the activities have to be planned in advance, it becomes extremely difficult to introduce a new project due to the long process. Such bureaucratic may prevent the organization from taking advantage of unplanned developments in the market. A good budget should ensure that the organization operates smoothly are the personnel and equipments and facility.