The Relationship between Strategic Planning and the Budgeting Process
To fully understand and appreciate the functional relationship between strategic planning and budgeting, it is important to understand the purposes of strategic planning. For early-stage companies, business plans typically are seen as marketing tools in the capital formation process. As the company matures, strategic planning evolves into a process of assessing and responding to industry change. However, it may still be used to raise capital. As the company matures to Fortune 1000–100 status, the strategic planning process will become an institutionalized function designed to direct and control growth and direction, and it might be used to raise capital.
This chapter examines the strategic planning process from the perspective of organizational, managerial, operational, marketing, and financial impacts. The role of budgeting in planning as well as in plan implementation and monitoring is explored.
HOW TO PLAN
Strategic planning must not be viewed merely as an expedient way to raising capital. First of all, sophisticated capital providers and their professional representatives will quickly understand and dismiss a business plan born of such reasoning. Perhaps the management team with such a limited view denies itself the opportunity to manage and control the company’s growth and development objectively and methodically by requiring ...