Budgeting
There might be issues that will be treated with more planning approach, whereas there might be others treated with a more control approach.
The budget is a financial instrument to put strategy into action.
As long as market conditions may prove to be very different in some cases, really very different from the original expectation, the unit's tactical plan will have to be revised. And, in return possibly all the company's strategy may have to be also adjusted. This defines what we could call a reactive planning cycle.
So, the efforts in budgeting process will depend on the scope of the strategic guidelines. If the scope includes more detailed guidelines, probably, the assumptions discussions will be a flow through process in the company. On the other hand, if the guidelines are in a broad sense with not much details, managers will have to invest more time in
... See moreWe can see how strategy may connect to budget. It does so through the strategic guidelines, which gives the basis for the assumptions that managers will discuss and eventually apply in the decision making process within the budgeting activity.
If your company is in a stable business sector then you may choose to invest more time in planning. Should your company be in a very dynamic business sector, then you may choose to invest less time in planning and more time in monitoring and controlling.
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