Reference no: EM131043936

Certainly the principal factor in nearly all budgeting is the demand for goods and services amd therefore the need to be thinking not only of sales potential bu also about production capacity. Tactical budget sales in accordance with the strategic plan identify future production needs and these need to be planned always remembering that, "actually, mission comes first" (Drucker, 1990, p5).

Drucker notes that the mission needs to translated and communicated in both profit and non-profit organizations. Such analysis will then provide everyone with the key monitoring of budgets to actuals so that they can measure their performance.

Thus the mission of a company manufacturing a product will depend on the available production resources. When targets are relatively clear and the production physically verifiable, the mission of the organization will be kept on track. Then the sales budget, the sales of maximum production capacity, will determine the remainder of the budget and in particular the materials, labor and overhead required to accomplish the sales target.