Need to do a brief response to the following:
The type of budget that appeals to me is the zero-base budget. “A zero-base budget requires managers to justify all of their budgeted expenditures, rather than the more common approach of only requiring justification for incremental changes to the budget or the actual results from the preceding year” (Accounting Tools, n.d.).
There are a number of organizations that use this type of budget. One in particular is Boston Scientific. This is a medical organization, their mission statement is as follows: “Boston Scientific is dedicated to transforming lives through innovative medical solutions that improve the health of patients around the world” (Boston Scientific, n.d.). This organization is coming up with new medical equipment that is built to last longer and provide safe treatment and diagnosis for medical patients.
This type of budget appeals to me because in a sense it can be flexible. It allows you to focus on your goals and objectives and if you run into an issue you can still find a different way to solve it. You don’t have to worry about a set budget that you are stuck with and end up with issues piling up financially because you can’t change anything.
The strengths that this budget have in my opinion would be the managers get to experience more hands on tasks within the company and this allows them to learn more in depth on what to do and what not to do financially while running a business. This budget also allows you to narrow down what items are not very successful. For example, if you are running a store and see that there are certain radios or televisions that haven’t been selling at all in the past few months, there is no point in keeping them on the shelves. There could be something else in their place that is actually making the store profit. This budget allowed the manager to see that there was a change needed.
The only weakness that this budget has in my opinion is the amount of time it takes to implement it. In order for this budget to be successful for any organization it has to cover every financial aspect of the organization. The manager would have to go through every single detail in order for the numbers to be accurate. “This is a difficult task even once a year, which causes some entities to only use the procedure once every few years, or when there are significant changes within the organization” (Accounting Tools, n.d.).
Accounting Tools. (n.d.) Zero-Base Budgeting. Retrieved from http://www.accountingtools.com/zero-based-budgeting
Boston Scientific. (n.d.) Our Mission. Retrieved from http://www.bostonscientific.com/en-US/about-us/who…
The question was the following:
Within the Discussion Board area, write 400–600 words that respond
to the following questions with your thoughts, ideas, and comments. This
will be the foundation for future discussions by your classmates. Be
substantive and clear, and use examples to reinforce your ideas:
- Select one of the following budget types that appeals to you:
- Zero-based budgeting
- Target-based budgeting
- Budgeting for results
- Provide an example of an organization that uses your selected budget type, and describe the organization.
- Why does the selected budget type appeal to you? Explain in detail.
- In your opinion, what strengths and weaknesses does your selected budget type contain? Explain in detail.