Submitted by: Submitted by Fizzs
Views: 10
Words: 314
Pages: 2
Category: Business and Industry
Date Submitted: 04/17/2016 05:29 AM
Identify the problems that appear to exist in Ferguson & Son Manufacturing Company's budgetary control system and explain how the problems are likely to reduce the effectiveness of the system.
The control system of budgets is very important tools during planning and control of business activities in a company. In fact boom and recession in company is largely dependent on effective the planning and efficient management. In taking control of the budgetary system of the organization, the organization needs to do a comparative analysis of the budgeted figures and the actual figures. in this case the company has failed to flex the actual figures with the budgeted figures. This issue caused inconvenienced allocation of resources, hence affecting the budgetary control system of the organization (Albright, 2011).
The company faced another main issue that was lack of common goals among all the employees. Based on the case information, Emory had been meant to believe that provision of high quality goods was the main goal of the company, but a closer analysis of the company revealed that low cost and high profit had been the major goal. With this form of confusion, employees do not know what the main goal of the company is; hence, they were unable to attain the goals set by management.
Budgetary control for the company does not motivate the employees at any level. The system did not consider significant factors needed for evaluating performance of staff. Due to absence of these factors, it becomes ineffective to evaluate the performance of employees and device ways through which goals can be attained.
There is a deep effect of the unmanageable factors in the budgetary control system. In the company, many factors has affected the operation like rush orders and improper maintenance have greatly affected the system. With these factors, the company has been unable to coordinate its departments, leading to ineffectiveness (Albright, 2011).