Budgetting

Question 1

Incremental

Answer 1

Existing x %
Not time consuming
Easy to make
Encourages spend more
Why do more than target- agency problem 
Less responsive to changing environments- competitive- globalisation and China manafacturing

Question 2

Critique budgeting

Answer 2

Not responsive to changing environments- globalisation/ tech- General Electric chairman jack welch- most ineffective practice in management

Question 3

Zero based

Answer 3

Start with nothing argue for everything - link tech better AIS- time to spend on budgeting
Other departments may not- conflict

Question 4

Expectations

Answer 4

What think numbers will be based on previous, can use variance analysis.
Encourages thinking about external environment
Link porters 5 forces

Question 5

Pro budgeting

Answer 5

Otley- only process that involves areas of organisation activity

Question 6

Participative

Answer 6

Young 2016- subordinates involved in decision making- motivational- Maslow 1943- self esteem
But agency problem - budgetary slack
Contrast to non financial balanced scorecard and Kasirinen 2002 easy jet example

Question 7

Critique budgeting

Answer 7

Frow et al- debate whether traditional has a place in future macs- competitive, uncertainty, difficult to predict
Restrictive time frames not flexible
Link continuous for future

Question 8

Agency problem

Answer 8

Jensen and Meckling 1978

Conflict between shareholder and manager objectives

Question 9

Environment theory

Answer 9

Systems theory
Closed- doesn’t interact with environment

Open- flexible to change in environment- flexible/continuous budgeting, controls can adapt