Budget Planning and Control Assignment Example | Topics and Well Written Essays - 500 words

Budget Planning and Control - Assignment Example Budgets are highly important in obtaining debts from the financial institutions. Banks and trade creditors usually examine the financial stability of the company to ensure that their debts are well secured by the assets of the company. Effective budgets reflect the plans and cash flows of the company that makes it easier for the creditors to decide whether or not to grant debts (Kemp, 2003). Effective budgets assist the management in determining the costs with accuracy. If the company determines the costs and expenses in advance, it will help them in making pricing decisions and in implementing the cost control policy. Thus it is necessary to prepare effective budgets in order to establish strategies that are important in highly competitive markets. 1. Nordstrom should decide on budget committee and the participants that should be involved in the budget setting process. Participation of managers is essential to consider their point of view while establishing budgets. 8. Review the performance on a timely basis and determine any variation in actual results about budget. Investigate the problem and reasons behind the variation to resolve the matter on efficiently (Shapiro, 2008). An important aspect of budget management is employee participation. Managers of individual departments should be informed on regular basis about any updates and alterations made in the budgets. By getting regular updates, it will become easier for the managers to implement the budgets and changes on a timely basis. Another advantage of the employee participation is that it motivates the employees and create the sense of ownership among them (Donovan, 2005). For long-term and effective implementation of budgets, it is necessary to keep track of resources to determine whether or not they are sufficient to fulfill future needs. In case of lack of resources or destruction of resources, budgets should be altered in such a way