As the CFO of a relatively new and fast growing business, you and the other top managers have previously emphasized technical and marketing innovation and creativity over planning and budgeting. But now with growing competition and the maturing of the company's products, you recognized that a culture of better financial planning must be established if the company is to succeed in the long run. You feel that the financial staff has the best expertise and understanding of the business to prepare effective budgets, but you are concerned about the motivational effects of excluding the lower-level managers from the process and are seeking advice.
A) List the three ways in which the budget coordinates short term activities within the organization.
B) Explain whether the organization should adopt a top-down or bottom-up (participating) approach in its budgeting system.