UGB106 - Budgeting: Sequence, Process & Behavioural Implications

This essay provides a comprehensive overview of the budgetary process, including planning, approval, implementation, and evaluation, within an organizational context, using Tesco as a case study. It delves into the sequence of the budgetary process and highlights potential behavioral issues that can arise, such as dysfunctional behaviors, excessive pressure, lack of top management support, and inter-departmental conflicts. The essay emphasizes the importance of aligning managerial goals with organizational objectives and maintaining moderate standards to motivate employees and improve overall performance. It concludes that a well-managed budgetary process is essential for effective financial resource management and achieving organizational goals, while also addressing and mitigating potential behavioral challenges.

Behavioural aspects of
budgeting and Sequence
of the budgetary process

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Explain the budgetary process and depict issues of connection in behavioural aspects of
budgeting process.........................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
Budget system is the process which is used in the management for decision making
purpose regarding financial resources. It is also used for the planning & control in the
management function. Organizationals follow the budgetary process in order to ensure that
company have effective administrative budgetary process (Abaluck, Gruber and Swanson, 2018).
Basically, budget or budgetary process is very essential for the organizations in order to manage
their resources and perform business activities accordingly. For the better understanding of this
report, Tesco selected which is UK based company. Tesco founded in 1919 by the John Cohen
and it is the largest retail sector organization. This assessment include the budgetary process and
the issues which related to the budgetary process.
MAIN BODY
1. Explain the budgetary process and depict issues of connection in behavioural aspects of
budgeting process
Budget is the financial plan which is prepared for the single period and it estimate the
sales volume, expenses, revenue, resources required, assets, liabilities etc. These financial
aspects are very important to analyse and it will consider in the budget so managers and
employees able to perform their task. Every organization produce budget in order to minimise
the efforts of performing task. For example: Managers of Tesco produced budget which include
all the relevant aspect such as overall expenses and revenues. With the help of budgetary
process, organisation able to produce effective budget and it include some steps which discuss
below.
Budgetary process is the process where organizations follow some steps and execute
their plans and further evaluate the performances. Every phase of budget is valuable for the
company and managers ensure that how it will impact the profitability of the business as well.
Budgetary process include the four steps that is planning, approval, implementation and
evaluation. These process discussed below:
Prepare budget: It is the initial process of budgeting where managers evaluate each and
every function which required to perform in order to achieve business goals & objectives. After
analysis that how much activity they have to perform, managers estimate the cost for the
completion of task and they ensure to minimise the cost in order to maximise their profit margin.

Budget include the anticipated expenses such as employee's salary, material & operational
expenditure, administration, transportation, distribution etc. For example: Tesco, staff members
salary, store maintenance expenses, transportation, distribution, other expenses etc. These aspect
included in the budget and with the help of it, managers evaluate the estimated sales in order to
recover their overall cost (Daumoser, Hirsch and Sohn, 2018). Further they target to sell
budgeted sales volume in order through developing effective strategy.
Get approval from the top management: After preparing budget, managers need to get
approval from higher authorities because they sanction the fund for the further process or
implementation of the budget. Top authority check the reliability of the budget and they ensure
that estimated amount for each functions will be suitable. They check that, value does not over or
under value for the each function that can further affect the entire production as well as
profitability. For example: Tesco approve the budget for the current period and further
management need to ensure that, they complete all the activities in the specific cost. Undervalue
budget affect the functions which automatically affect the profitability as well.
Execution of budget: After approving budget, it is time to execute budget where
managers have to spend on valuable activities and focus on those functions which generate more
revenue for the company. Mostly organizations follow the budget and spend accordingly, but
making strategy and shape their spending which reduce the overall cost or maximise the profit
margin that is most beneficial for the organizations. For example: Tesco follow the budget and
they set the fund for the transportation. So its supply chain managers responsibility to build
strategy that how they can minimise its cost by using shortcuts to deliver goods and reduces the
numbers in a day to deliver products to the retail stores. Along with this, managers also need to
build strategies regarding risk which can be organization face at the time of performing their
task. So only implementing budget is not sufficient, they have to build strategy to minimise the
relevant risk.
Evaluation of budget in terms of growth or performance basis: It is very essential for
the organizations to evaluate the budget time to time. Because at the time of implementing
budget, managers need to adjust various elements such as revenue due to change in the cost of
products & services (Ho, 2018). On the basis customer feedback, organization implement
changes in the business operations and modify their budget accordingly. After completing work,
it is also important to evaluate the performance and make sure that all the activities will be done

on the basis of budgeted amount. These information further helps in making future strategies and
policies and managers able to make decisions in respect of the organizations which maximise the
productivity as well as profitability. Managers of Tesco evaluate the entire operational activities
and adopt changes accordingly.
With the help of above discussion it has been evaluated that organizations has to follow
budgetary process for the effective results. Managers of Tesco has to follow these process in well
manner and have to more focus on planning part which is essential. Estimation of expenses need
to be accurate otherwise it further affect the production or profitability.
At the time of preparing budget, several issues affect the process and it is important for
the business to identify or resolve the issues because it affect the productivity as well as
profitability (Kar and Zerriffi, 2018). Managers need to formulate budget and further strategies
accordingly which helps in achieving business gaols & objectives.
There are various issues that is relevant to the behavioural aspect of budgetary process
and some of them discussed below:
Dysfunctional behaviours: This budget carry out the positively among the people when
managers goals found in the conformity with the business goals & objectives. Managers of the
company feel happy to produce budget when they see that their personal goals are similar to the
business goals and it will enhance the participation in the budget making process. This budget
further motivate people to perform excellent or improve the overall performances.
Excessive pressure created by budget: organization need to ensure that, budget should
not prepare under pressure on the people who working in the organization. In order to reduce the
stress, management not to set standards too high or too low. If goals are too high then motivation
become poor and unable to achieve target which increase the frustrate level which can result
poor performance (Lee, Seo and Kim, 2018). On the other hand, low goals can be easily
achieved which further reduces the interest of managers which decline the performance as well.
Top management support: Lower or middle level management goals & objectives
based on the participation, support and coordination from the top management side. Top
manager's actions will build a environment which leave strong impression on their subordinates
and further make them supportive or commitment towards their work. If top management does
not follow the budget properly then it will affect the planning & controlling and subordinates
think that their top managers are not sincere about using budget.

Inter Department conflict: At the time of producing budget in the organization, it
become so complicated because different department managers complete for business resources.
Basically it is the process where managers bargain the budget for their departmental activities.
These aspect will generate issues which affect the budgeting process (Miller, 2018). So
management need to resolve it otherwise it affect the production as well as profitability.
Above mention behavioural issues affect the budgeting process so management have to
set moderate standards & goals which maintain the interest of managers or make them able to
motivate others. Employees motivation are very important for the organization because it helps
in maximising performance which leads to the productivity and then improve profit margin for
the company.
CONCLUSION
From the above discussion it has been concluded that budget is essential element for the
organizations. In the current scenario, business unable to perform without any budget and it help
the corporation and their staff members to perform business activities accordingly. It is the
financial plan which included that which function required how much money for the completion
of task. Basically, it helps in managing financial resources and it will be distributed in which
term that maximise growth of the company. For the effective results, company should follow the
proper budgetary process and evaluate the performance as well. There are various issues which is
related to the behavioural aspect of budgeting process such as conflict between department, top
management support, excessive pressure etc.

REFERENCES
Books & Journals
Abaluck, J., Gruber, J. and Swanson, A., 2018. Prescription drug use under Medicare Part D: A
linear model of nonlinear budget sets. Journal of public economics. 164. pp.106-138.
Daumoser, C., Hirsch, B. and Sohn, M., 2018. Honesty in budgeting: a review of morality and
control aspects in the budgetary slack literature. Journal of Management Control. 29(2).
pp.115-159.
Ho, A. T. K., 2018. From performance budgeting to performance budget management: theory
and practice. Public Administration Review. 78(5). pp.748-758.
Kar, A. and Zerriffi, H., 2018. From cookstove acquisition to cooking transition: framing the
behavioural aspects of cookstove interventions. Energy Research & Social Science. 42.
pp.23-33.
Lee, J., Seo, W. and Kim, D. W., 2018. Effective evolutionary multilabel feature selection under
a budget constraint. Complexity. 2018.
Miller, G., 2018. Performance based budgeting. Routledge.