Question

Budgets are designed to keep decision makers informed of progress compared to company plans. An important theme of this book is the need for managers to be flexible so that they can adapt quickly to rapidly changing conditions. This often means modifying previous plans. How do managers stay within the confines of budgets when they must shift gears to accommodate a rapidly changing world?

State your opinion on this critical thinking exercise. Support your assessment with at least one academic source (not a website or blog post but an academic journal article).

Answer 1

answer-

Managers can stay within the confines of budgets when they must shift gears to accommodate a rapidly changing world by doing planning and analysis of environment under which company is operating. This helps managers to identify risks and threats in the environment which can be come due to changes in the world then they can make a plan to mitigate those risks. Budget is the part of planning because under this manager make forecast how much funds would be needed for spend or how much expense is required so managers have to do accurate planning in order to make things come under the budget even environment is changing.

Second they always have backup plan in such conditions when they know that their main plan may not work under budget so backup plan can be used to accommodate under changing world environment. The felxibility of budget and plan also help managers to deal in such conditions because when budgets are rigid and hard to change then it would only create loss for management and company so managers always focus on felixibility of their budget plan in order to make some changes if outside changes are impactful on current budget.