16.8 Lamar Bristol plc is a large trading organization with retail stores in most major towns and cities in the UK. The key budget factor is sales; the company’s main board sets the sales budget by agreeing an annual fixed percentage increment which is applied to all of its retail stores. The increment varies from year to year and is dependent upon the directors’ assessment of current economic conditions and competitors’

published sales figures. Generally it varies between 2% and 4%.

Discuss the likely effectiveness and efficiency of this method of setting a sales budget, identifying strengths and weaknesses of the approach.