Forecasting and funds allocation are critical in overall operations management for any organization. Budgets are usually given to put order and control as far as expenses to support marketing activities and programs to help boost revenue. However, the cost for such should be properly analyzed and compared prior to acceptance, since a company may end up losing from such activities rather than gaining from it.
Appealing as they may seem, advertising and promotional activities always carry corresponding cost with them. The effort and the materials emphasized in the investment opportunity for better exposure will always be something that any company would want to incur. However, the feasibility for such will need to be evaluated first. Some parties who have been accustomed to such would use percentile methods from prior cost allocation, assuming increases by percent to determine the most probable cost of such a program.
Budgeting should not be only cover aggressive marketing tactics, but the administrative factors as well. Utilities, salaries and wages, and equipment should be included in the whole operations mix, since a company cannot provide a service or product purely on word of mouth. The product itself needs to be manufactured, prepared and stored prior to delivery towards the customer. Overall, this is what a business should be all about.
Links and References:
Originally posted on October 10, 2006 @ 9:13 pm