Question

What is a self-imposed budget? What are its advantages and disadvantages?

Answer 1

Self-imposed Budget - The budgeting approach in which managers set up their very own spending estimates is called self-imposed budget or participatory planning. This is by and large viewed as the best strategy for spending readiness. Supervisors at all levels partake and arrange with one another in the budgeting process.

Advantages-

1. People at all level of association are perceived as individuals from the group whose survey and judgments are esteemed by the best administration.

2. Budget estimates arranged by forefront administrators can be more precise and dependable than evaluations arranged by top managers who are more remote from everyday exercises and who have less personal information of business sectors and working conditions.

3. Inspiration is by and large higher when an individual partakes in setting his or her own objective then when the objectives are forced from above. Deliberate spending plans make responsibilities.

4. On the off chance that an administrator can't meet the financial plan and it has been forced from over, the chief can simply say that the monetary allowance was nonsensical or improbable to begin and, in this manner, was difficult to meet. With a purposeful spending, this reason isn't accessible.

Disadvantages -

1.It may result in disappointment, defensiveness and low confidence among employees, who must implement the budget.

2. The feeling of team spirit might disappear.

3. The acceptance of organizations goals and aspirations could be limited.

4. The sense of the budget as a disciplinary tool could arise.