Competition based budgeting

Competition-based budgeting is a financial planning approach where an organization sets its budget based on the spending levels and strategies of its competitors. This method involves analyzing competitors' financial practices, resource allocations, and market positioning to determine how much to invest in various areas. The goal is to ensure that the organization remains competitive, effectively allocating resources to match or exceed industry standards while maximizing efficiency and profitability. However, it can lead to a reactive rather than proactive budgeting approach, potentially overlooking unique organizational needs.