Pom Cat 2 Important Que

Pom Cat 2 important que
1.planning and budgeting in organization performance

Planning, budgeting and forecasting is typically a three-step process for
determining and mapping out an organization’s short- and long-term
financial goals.
Planning provides a framework for a business' financial objectives — typically for the
next three to five years. Budgeting details how the plan will be carried out month to
month and covers items such as revenue, expenses, potential cash flow and debt
reduction.
Importance of Planning
Planning helps an organisation in the following ways:
 Planning provides direction: Planning provides direction and a sense of

purpose for the organisation. Without plans and goals, organisations merely
react to daily occurrences without considering what will happen in the long-
run. Plans avoid this drift situation and ensure that short-range efforts will
support and harmonize with future goals. It helps an organisation decide what
to do and when to do it. It reduces aimless activity and makes action more
meaningful.
 Planning provides a unifying framework: A plan helps people to set

priorities and put effort accordingly. A plan tells everyone what the
organisation hopes to achieve and what the contribution of each department
must be, and who is to utilize resources to achieve the goals. Plans help in
coordinating effort at various levels. In the absence of a plan, the organisation
would be pulled in different directions, creating confusion and
misunderstanding at various levels.
 Planning is economical: Effective plans coordinate organisational work and

eliminate unproductive effort. Guess work is banished. Facilities are employed
to the best advantage. Waste motions and idle facilities are removed By
focusing attention on what is to be done, how and when it is to be done, plans
help an organisation to economically utilize the physical and financial
resources. This, ultimately, improves efficiency of operations.
 Planning reduces the risks of uncertainty: Planning helps an organisation to

cope with an uncertain future. It helps management to anticipate the future and
prepare for the risks by making necessary provisions to meet the unexpected
turn of events. Planning minimizes the chances of mistakes and unpleasant
surprises because objectives, policies and strategies are formulated after a
careful scrutiny of internal as well as external environment. Planning, thus,
seeks to minimize risk while taking advantage of opportunities.
 Planning facilitates decision making: Decision-making involves searching of

various alternative courses of action, evaluating them and selecting the best
one. Planned targets serve as the criteria for the evaluation of different
alternatives so that the best one may be chosen. If there are no plans for the
future, there are few guidelines for making current decisions. For example,
decisions have to be made in present for a product to be introduced three years
in the future. When future plans exist, decisions consistent with the future
plans are made. Further, without plans, people will make decisions according
to their own preference rather than those of the organisation.
 Planning encourages innovation and creativity: Planning involves looking

ahead and preparing for the future. The process of looking ahead, forces an
organisation to be alert of opportunities and threats in the environment. It
forces managers to find out new and improved ways of doing things in order to
remain competitive and avoid the threats in the environment. It compels the
managers to be creative and innovative all the time. Planning helps managers
to visualize problems early and take suitable remedial steps. It helps them
exploit opportunities and come out as ‘winners’ in a competitive world.
 Planning improves morale: Once members know what is expected of them,

they can contribute better. When goals are properly defined, work assignments
can be fixed and everyone can begin to contribute to the achievement of these
goals. This produces improvements in morale. Further, planning permits
employees to participate in the thinking process. This helps them develop a
broad mentality. Also, when the plan is actually translated into action, they
feel that it is their own plan. Positive attributes are, thus, developed.
 Planning facilities control: Planning and controlling functions are said to be

‘Siamese twins’ (inseparable twins). There is nothing to control without
planning and without proper control, planning proves to be a wasteful and an
unproductive exercise. Plans serve as yardsticks for measuring performance.
They help in channelizing behaviour in the right direction. They help in
preventing mistakes, oversights and deviations.
Budgeting is an essential tool for any organization, large or small,
for-profit or non-profit. The importance of budgeting in an
organization cannot be overemphasized.
By creating a budget, an organization can plan for the future,

allocate resources efficiently, and track its financial performance.
Budgeting helps an organization to achieve its financial and

operational goals, and can also serve as a valuable communication
and accountability tool for the stakeholders or investors.
You will agree with me that having a good budget will allow your
business to make informed decisions about how to allocate its
resources, and at the same time help to identify potential issues
before they become significant problems to the business
Honestly speaking, budgeting is a critical component of successful

financial management and is essential for any organization looking
to thrive in today’s competitive business environment.
I know you may be wondering, “what exactly is the meaning of

budget, and what will my business gain from it? ” Not to worry, all
these questions and much more will be answered as I walk you
through the process.
Without further ado, let’s get started!

Definition Of Budget
Budgeting is the process of creating a plan for how you will allocate
your income and manage your expenses. It involves setting financial
goals and determining how to achieve them by carefully planning
and monitoring your spending.
Some examples of budgeting include: creating a plan to pay off debt,

having a clear idea/breakdown of what a project would cost, saving
for a down payment on a house, or setting aside money for
emergencies.
Budgeting can also involve tracking your spending to ensure that

you are not overspending in any one area and making adjustments
as needed to stay on track.
It might interest you to know that one of the numerous

advantages /importance of budgeting in an organization is that it
can help you to take control of your finances, stay within your
means, achieve your financial goals, avoid overspending and reduce
financial stress.
Types Of Budgets
There are many different types of budgets that individuals and

organizations can use, each with its own specific approach to
allocating income and managing expenses. Some common types of
budgets include:
1. The 50/30/20 Budget:
This budget allocates 50% of your income to needs, such as housing,

groceries, and utilities. 30% goes towards personal spending,
including dining out, entertainment, and other non-essential
expenses. The remaining 20% is for financial goals, such as saving
for retirement or paying off debt.
1. The Zero-Based Budget:
This budget involves allocating all of your income to a specific

category so that your income minus your expenses equals zero. This
helps ensure that you are not overspending and allows you to see
exactly where your money is going.
1. The Cash Envelope System:
This budget involves dividing your expenses into categories, such as

groceries, gas, and entertainment, and then allocating a specific
amount of cash to each category. You can then use the cash in each
envelope to pay for expenses in that category, helping you stay on
track and avoid overspending.
1. The Reverse Budget:
This budget involves starting with your savings and financial goals
and then working backwards to determine how much you can spend
on non-essential expenses. This helps ensure that you are meeting
your financial goals and saving for the future before spending on
non-essentials.
1. The Value-Based Budget:
This budget involves prioritizing your spending based on your values

and goals. You can determine what is most important to you, such as
charitable giving or travel, and allocate your money accordingly.
This helps ensure that you are spending your money in a way that
aligns with your priorities.
1. The Fixed Budget:
This budget involves allocating a fixed amount of money to each

expenditure category, regardless of how much you actually spend.
This can be helpful for managing expenses that vary from month to
month, as it provides a consistent benchmark for comparing actual
spending to budgeted amounts.
1. The Flexible Budget:
This budget involves adjusting the allocated amounts for each

expenditure category based on actual income and expenses. This
allows you to be more responsive to changes in your financial
situation, as you can adjust your spending as needed to stay on
track.

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Pom Cat 2 important que

1.planning and budgeting in organization performance

 Planning provides direction: Planning provides direction and a sense of

 Planning provides a unifying framework: A plan helps people to set

 Planning is economical: Effective plans coordinate organisational work and

 Planning reduces the risks of uncertainty: Planning helps an organisation to

 Planning facilitates decision making: Decision-making involves searching of

 Planning encourages innovation and creativity: Planning involves looking

 Planning improves morale: Once members know what is expected of them,

 Planning facilities control: Planning and controlling functions are said to be

By creating a budget, an organization can plan for the future,

Budgeting helps an organization to achieve its financial and

Honestly speaking, budgeting is a critical component of successful

I know you may be wondering, “what exactly is the meaning of

Without further ado, let’s get started!

Some examples of budgeting include: creating a plan to pay off debt,

Budgeting can also involve tracking your spending to ensure that

It might interest you to know that one of the numerous

There are many different types of budgets that individuals and

This budget allocates 50% of your income to needs, such as housing,

1. The Zero-Based Budget:

This budget involves allocating all of your income to a specific

1. The Cash Envelope System:

This budget involves dividing your expenses into categories, such as

1. The Reverse Budget:

1. The Value-Based Budget:

This budget involves prioritizing your spending based on your values

1. The Fixed Budget:

This budget involves allocating a fixed amount of money to each

1. The Flexible Budget:

This budget involves adjusting the allocated amounts for each

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