Co-ordination
forces sharing info across organization irons out potential conflicts makes decisions that consider everyone
Motivation
budgets become targets targets are linked to performance evaluations
management by exception
Planning Cycles
Line Executive
Responsible
Strategic Planning
Programming
Operational
Budgeting
Time
Vancil and Lorange HBR 1975
Strategic Planning
Planning that involves:
Long periods of time Large amounts of resources Involves five steps Done at two levels:
Corporate level Business Unit level
Single business
Related Diversification
Unrelated Diversification
Extent of Diversification
Extent of Diversification
?
Cash Use
Low
Build
? Hold
Cash Use
Low
Harvest
High
Divest
Low
Low
Strategic Planning
Develop the corporate vision, mission and objectives Do a SWOT analysis Select strategy(ies) for achieving willed
future
Programming
Identification of specific action programs
focus on any function area or combination must be consistent with strategic plan
must be internally consistent with resource allocation allow for preaction reviews
Budgeting
Short term planning
97% of companies surveyed had a formal budgeting process 91% for one year, balance less than one year
Variations in Practice
Planning horizons Content of Plans Length and Timing of Processes Plan Updating Amount of planning guidance provided Roles of Planners and Controllers