Question

Some people suggest that because of the complexities and uncertainties in the business and economic environment, it is pointless to plan and to budget. Based on what you know from your study of management accounting, why is this bad advice? How would you respond to this issue? Make specific reference to relevant issues in the course

Answer 1

Budget & planning needs significant amount of time and energy to prepare and implement. While there are pros to preparing it, there are also cons that cant be ignored. the amount of uncertainity in the finance and business world is growing dramatically with each passing day. You make a budget now according to situations prevailing in the current business environment but the environment is so dynamic and the changes in the next years could be so major that all your planning and budgeting goes into vein. The best plan is no plan. And the mindfulness of the changes in the business can be an alternative to pre planning everything. Its better to be reactive rather than being proactive.