Sources of Revenue
The primary source of revenue for the organization is from the sale of goods, particularly construction materials. The organization also derives significant revenue from service fees charged to customers who hire contractors, engineers and technicians. Lastly, the organization gets revenue from training programs that target construction startups and individuals.
Strengths and Weaknesses of Line-Item and Program Budget Formats
Line-item budgeting is popular among organizations since it is easy to create and analyze, meaning there is no need for an accounting background. However, this budget format presents a challenge considering that it cannot be adjusted without approval from the top management in case of discrepancies as they are rigid (Abdalla, 2020). Similarly, these budget formats have no room for justification since they do not include columns for revenues and profits. Thus, if a line item surpasses the budget, there is no way of justifying if it results from an increase in revenue. On the other hand, program budget formats are preferred because they help organizations prioritize projects, thus increasing efficiency. Nonetheless, this budget format is disadvantageous since they require much time to determine all the needed resources (Petroia, 2017). On top of that, the slightest discrepancy would cause an increase in overall costs and delays in implementation.
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Pros and Cons of Long Range-Range Planning
Long-range is beneficial since it is associated with less risk as it allows organizations to fund future initiatives without weakening their current financial position or operations. According to Bryson et al. (2018), strategic planning is practical considering that organizations implement changes in phases and more manageable segments. This strategy paves the way for testing the market to ensure that the organization is cushioned from losses when it commits to rolling out its changes on a larger scale. Conversely, long-range planning means that there will be a more significant strain on the infrastructure and documentation, thus the likelihood for an overall increase in costs. Long-term planning means that stakeholders have to deal with multiple and conflicting objectives, which may cause delays and disagreements.
References
Bryson, J. M., Edwards, L. H., & Slyke, D. M. (2018). Getting strategic about strategic planning research. Public Management Review, 20 (3), 317-339. doi: 10.1080/14719037.2017.1285111
Abdalla, A. (2020). Line item budgeting on labor costs to the level of income. Journal of Asian Multicultural Research for Economy and Management Study , 1(1), 27-32. https://doi.org/10.47616/jamrems.v1i1.5
Petroia, A. (2017). On the essence and efficiency of programme budgeting. Eastern European Journal for Regional Studies, 3 (2), 109-122.
