Budgeting as a Management Tool for Improving Effectiveness of an Organization

A major problem often faced by company executive is how well accurate plans for the future can be made in a world where change is taking place almost daily. In the midst of the changing nature of the business environment, company management must still make decisions about the future if profitability is to be sustained. The entire process of making these plans is referred to as budgeting. The issues relating to the efficient/effective running of organizations as addressed by the study included the meaning and role of budgets, responsibility for preparation, what it takes to prepare 'a useful budget, how budgets are used for control purposes as well as gains from budgeting. The paper concludes that for a budget to serve as a meaningful and effective tool of management the organization must know where it is heading and its goals and objectives. Budgets serve as a tool; not a substitute for management. Good management and a good budget can do much together; a good budget can do very little by itself