Question

Budgeting has not been criticized as:

		top down.
		making people feel undervalued.
		hindering knowledge sharing.
		bottom up.

Answer 1

Answer-:

It’s fixed and inflexible, and can quickly become irrelevant.The traditional budget starts top down and then becomes a detailed bottom up building process to meet fixed goals set by management—whether realistic or not. Once it is locked down, game over—no more changes. The economy may change, industry or market conditions may change, something specific within the business may change. Regulations may roil the playing field. New entrants or competition may emerge. There may be new concepts, new partnerships, new innovations, or other internal factors with financial repercussions. There are so many things that can (and perhaps should) change, and yet the budget only looks at things as they were back when it was created.

Also, Contrary to the answer by D. Wennlund that “Budgets make people feel undervalued” he emphasized that the budget is directly connected to the organization’s strategy,
helps motivate and control employees. Without the budget, there would be nothing to compare
the actual results with, meaning that it is impossible to understand whether employees have
performed accordingly. Ekholm and
Wallin (2000) argues that without the budget, target cannot be set to control and evaluate
performance. With this said, it can be argued that D. Wennlund considers the positives aspects
of a budget to outweigh its possible downsides. To summarize, we argue that the budget is
indispensable for the banking operations while it plays a less significant role for the insurance
area at LF Skaraborg.

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