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Why Strategic Planning and Budgeting is significant for success

The strategy is embodied in the drafting of a strategic plan with a horizon of three to five years. Strategic planning generally involves the projection on the future of the company, both in terms of its competitive position that the intrinsic characteristics of his craft.

Criticism of the planning concern stiffness (it would interfere with responsiveness) on its formalism (if used to legitimize decisions already made and not to anticipate changes in the environment) and on the partitioning between different functions that it would strengthen.

The budget is the economic expression of action plans for the coming year in order to allocate the necessary resources to achieve the objectives. Each decision center is assigned objectives consistent with the overall objectives of the company, which theoretically derives its budget. Budgets are built both a hierarchical logic, business logic, and a project approach (the intersection of the horizontal and vertical logic can lead to matrix budgets). Budgets are normally subject to revision to reflect unanticipated environmental developments and occurred during the year.

The ideal model of coordination between the budget and the plan is a rational and hierarchical approach to business management.

■ Strategic planning makes an overall indicative and quantification of targets.
■ Operational planning includes action plans and activity quantified objectives globally.
■ The budget is the annualized translation of activities under operational planning. Budget summary documents are those whose level of detail and accuracy is the highest.

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