Strategic Planning for Budgeting

SPB400T
Chapter 9

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 •Chapter 1: Strategic management essentials
•Chapter 2: Global issues affecting strategic planning
Jan •Chapter 3: Ethics/social responsibility/sustainability

•Chapter 4: Types of strategy

•Chapter 5: The business vision and mission
Feb

• TEST
• Chapter 6: External assessment
• Assignment 1
Mar • Chapter 7: Internal assessment

•Chapter 8: Strategies in action

ASSIGNMENTS
Jul

•Assignment 2
•Chapter 9: Implementing strategies – Management and operations issues
Sept

•Test 2
•Chapter 9: Implementing strategies: Marketing, finance, R&D and MIS issues
Oct •Chapter 10 & 11: Strategy review, evaluation and control
 • Turn strategic plans into series of tasks

• Ensure that the tasks are executed in such a

way that the objectives of the strategic plan
are achieved

Performing Adoption Interpretation of

plans

Communication
 Leadership
style

Organisational Organisational
culture structure

Strategy

Resource Reward
allocation systems
 Leadership

1.Leadership Leadership

2.Organisational culture
Leadership
3.Rewards systems
4.Organisational structure Organising

5.Resource allocation
Organising
 Strategic Leadership – Ability to anticipate,
envision, maintain flexibility and empower
others to create strategic change
 Strategic Leadership – Ability to articulate
vision and to motivate others to buy into it
 Strategic Leadership – Managing through
others and influencing human behaviour to
achieve goals
 Class discussion

- Examples of good leaders?

- What makes them good leaders?

 Self awareness – Awareness and control of
own emotions, strengths and weaknesses
 Self regulation – Control over emotions,
feelings and impulses
 Motivation – Deep desire to achieve, driven to
exceed expectations
 Empathy – Consider employee’s feelings in
the process of making decisions
 Social skills – Ability to network and interact
with different people
 Very important that the style is aligned to
type strategy
 Example: Growth strategies need a leader
who can communicate and manage
relationships
 Example: Decline strategies need task
oriented leadership
 Beliefs
 Assumptions
 Behaviourial norms
 Values

NB: Shared by members of the organisation

 Affects how employees approach problems
 Affects how decisions are made
 Can determine values = Do’s and Don’ts
 Influences policies
 Influences stakeholder relations
 Influences ethical behaviour
 Strong -Values, norms and beliefs are deeply
ingrained and difficult to eliminate
 Weak – Few traditions, beliefs and values are
shared. Large existance of subcultures
 Unhealthy – Politicised internal environment,
hostile resistance to change, polarised.
 Adaptive - Employees share belief that
organisation can exploit opportunities and
overcome threats with ease. Innovation and
experimentation order of the day
 Strategy must be aligned to the culture or
 The culture must be redefined to match
strategy
 Example: Growth strategies need an adaptive
culture
 Example: Need to manage unhealthy
Organisational culture when business going
into new markets
STRATEGY OR CULTURE?
 Motivate managers and employees to support
the implementation of strategy
 Use rewards to generate commitment to
implementation
 May be monetary or non monetary

What non monetary examples can you think of?

 Share options – Help to create long term view,
create personal ownership and reduce staff
turnover
 Golden handcuffs – Pay bonuses in installments
that are forfeited should one leave, which helps
retain specialised skills
 Golden Parachutes – Attracts skills because
rewards exist regardless if employee leaves
because they are fired or resign or business
performs or not
 Performance Bonuses – Bonuses paid out based
on performance of the organisation
 Need to ensure there is alignment to type of
strategy and the reward system utilised
 Example – Growth strategies could use
performance bonuses
 Example – Golden parachutes useful to retain
talent during decline stage of business
 1. Framework within which the strategic process must operate
in order to achieve the organisation’s objectives

2. Framework for setting short term objectives, tactics &

policies and resource allocation

Identify tasks Ensure

Specify who is
necessary for Group the coordination Achieve
responsible for
strategy together between the strategic goals
the tasks
implementation tasks
 Entrepreneurial
 Functional
 Divisional
 Matrix
 Network
 Simple structure of owner-manager and
employees
 Owner involved in day to day operations
 Inexpensive, easy communication and easy to
communicate within organisation
 As organisation grows, difficult for manager
to coordinate and control
 Divides the company based on specialty. This is
your traditional business with a sales
department, marketing department, customer
service department, etc.
 The advantage of a functional structure is that
individuals are dedicated to a single function.
 These clearly defined roles and expectations limit
confusion.
 The downside is that it’s challenging to facilitate
strong communication between different
departments
• Activities and responsibilities split
according to divisions, products or
projects
• Decentralisation of power, creates
focus for each division and clear
accountability
• Loss of economies of scale,
duplication of resources, costly and
difficult to achieve Consistancy
 The matrix structure is a bit more confusing, but
pulls advantages from a couple of different
formats.
 Under this structure, employees have multiple
bosses and reporting lines. Not only do they
report to a divisional manager, but they also
typically have project managers for specific
projects.
 Matrix structures come with a lot of flexibility
and balanced decision-making.
 This model is also prone to confusion and
complication when employees are asked to fulfil
conflicting responsibilities
 The network structure is a newer type of organizational structure
viewed as less hierarchical (i.e., more “flat”), more decentralized,
and more flexible than other structures.
 In a network structure, managers coordinate and control
relationships that are both internal and external to the firm.
 The concept underlying the network structure is the social
network—a social structure of interactions. Open communication
and reliable partners (both internally and externally) are key
components of social networks.
 Proponents argue that the network structure is more agile than
other structures. Because it is decentralized, a network
organization has fewer tiers, a wider span of control, and a
bottom-up flow of decision making and ideas.
 A disadvantage of the network structure is that this more fluid
structure can lead to more complex relations in the organization
 Resources determines efficiency and
effectiveness of an organisation
 Allocate resources in a way that it
supports the achievement of
organisational goals
 Budgets are used to allocate resources
 Financial

Physical Human

Resources

Technological Information
1. People barrier – resistance to change,
demoralised workforce, lack of motivation etc.
2. Resource barrier – inadequate resources,
outdated infrastructure, lack of access to
resources etc.
3. Vision barrier – Lack of clear vision, lack of clear
mission, lack of buy in from employees etc.
4. Management barrier – poor leadership, lack of
top management commitment, weak
management information systems etc.

The Balance Scorecard Collaborative

 Translate the
Compare
objectives into
actual
Set the a set of Measure the Draw up plans Initiate
performance Identify
standards of standards actual to correct the corrective
to deviations
performance which describe performance deviations action
predetermined
the desired
standards
state