Budget planning is a crucial aspect of any organization’s successful work. A budget is an official document containing the company’s perspectives and expectations regarding the achievements of financial character within a set period of time (Clowes & Scriven, 2011). The budgeting process comprises a set of actions that need to be established and carried out in order to reach financial success. These operations involve:
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- assessing and predicting;
- getting ready the budget records;
- handing out the documents and putting the budget into action;
- comparing actual results to the expectations (Clowes & Scriven, 2011).
The purposes of budget planning may vary, and they are contingent on the company’s structure and types. The budget may perform the following functions:
- stimulating the organization to make a plan for the nearest future;
- reinforcing coordination between different departments of a firm in order to make them work as a single mechanism rather than separate elements;
- creating an instrument for resource allocation between the sections;
- promoting governance over the company’s operations by establishing the criteria for the assessment of actual outcomes;
- providing help in analyzing who is responsible for particular tasks and arranging the conditions for encouragement and appraisal of the accountable persons (Clowes & Scriven, 2011).
Budgeting is one of the crucial components of any organization’s strategic planning (Smith, 2017). Management comprises a variety of activities such as organizing, planning, controlling, and stimulating (Clowes & Scriven, 2011). When performing any of these steps, a manager needs to take into consideration the company’s budget. Strategic planning, as well as budget planning, includes several elements, which are of utmost importance for the organizations. Prior to creating a strategic plan, it is necessary to analyze the market situation and evaluate one’s company’s competitive advantages and disadvantages (Smith, 2017).
Then, the manager should analyze the organization’s team of employees and the prospective customers. The next phase of strategic planning is setting the goals and objectives of one’s work. At this point, the mission and vision of the company are established. A mission statement describes the current work of the company whereas a vision statement demonstrates the future expectations and aspirations (Smith, 2017). Along with these two types of statements, it is necessary to outline the core values, which include the beliefs and preferred types of conduct of a company (Smith, 2017). Additionally, the company should develop the strategies, which it will pursue.
An extremely significant element of strategic planning is SWOT analysis, which comprises a thorough investigation of the organization’s strengths, weaknesses, opportunities, and threats (Smith, 2017). With the help of outlining these four concepts, the manager will be able to see the most advantageous features of the company’s work as well as the limitations that may cause problems for the company. Strengths are the features that provide and maintain the successful work. Opportunities are the issues that may bring more success and profit in the case if they are implemented successfully. Weaknesses are current problems that should be resolved as soon as possible to eliminate losses. Threats are the issues that may cause failures in the future if they are not prevented (Smith, 2017). SWOT analysis is an important phase in creating a strategic plan for any organization.
Budget planning and strategic planning are invaluable components of any company’s work. Managers should pay attention to create their budgets with the consideration of market fluctuations. In strategic planning, it is also necessary to be cautious and not miss any opportunity for achieving the organization’s goals.
Clowes, R., & Scriven, V. (2011). Budgeting: A practical approach (2nd ed.). Frenchs Forest, Australia.
Smith, R. D. (2017). Strategic planning for public relations (5th ed.). New York, NY: Routledge.