Budgeting Must Be Integrated in Strategic Process

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Beyond Budgeting > Forum > Budgeting Must Be Integrated in Strategic Process

Budgeting Must Be Integrated in Strategic Process
Satya Narayan, Strategy Consultant, India, Member
Budgeting is not an independent process. It has to be integrated and follows from strategic planning process.
Every corporate should have a vision and long term goals. Strategies are to be developed to achieve such goals. Intermediate goals have to be set to achieve long term goals.
This entire strategic planning process has to be reviewed periodically and changes if required have to be incorporated.
Entire entity have to be mapped to an influence diagram and develop what if scenarios with strategies reviewed/developed with alternative to achieve goals if faced with new scenarios in view of changing environment, organizations strengths and weaknesses.
If need be rolling budgets may be developed.

How to Integrate Budgeting in the Strategy Process
Catherine Palin-Brinkworth, Business Consultant, Australia, Member
We need to establish initial traditional budgets at the outset of any new major projects or organisational start-ups, large or small. This is a baseline only. From then on, the strategy and intended value proposition must rule.
So the budget becomes a working tool, revised frequently for each division, project or entity, to serve guide and support the process, not to limit it.
As a continual discipline to make sure the costs are contained, but not to limit the goal achievement.

Budgeting Must Be Integrated in Strategic Process
Darron Passlow, Business Consultant, Australia, Member
Budgeting is the shorter term (operational) planning and importantly, monitoring process which must be integrally linked to and driven by the long term strategic planning processes. Annual (or shorter term) budget should make you consider your strategic approach more regularly (to make sure your long term focus is still relevant).
So I will continue to use my version of budgeting to keep my businesses on track.

Budgeting Helps to Tests the Strategy
Mackinnon, Entrepreneur, United Kingdom, Member
Strategy is an idea, a theory for competitive advantage. Budgeting is part of testing that theory.
A variation from budget may or may not require adapting the strategy. Integrating strategies with budgets is essential to evaluate the former by the latter as short-term evaluation/observation is needed to assess long-term predictions (which by definition are based on theory).

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