Role of Budgets and Resource Allocation in Implementing and Executing Strategy - Essay Example

? Role of Budgets and Resource Allocation in Implementing and Executing Strategy Role of Budgets and ResourceAllocation in Implementing and Executing Strategy The process of formulating a strategic plan in an organization requires following of a certain road map; in fact, it also involves making the strategic plan to be a process that is aligned in accordance to the organizational mission statement and the purpose of existence. This is in order to ensure that the strategy is implemented and executed effectively. There is also the need to seek information through making essential consultations with the relevant people. The path that the organization decides to adopt is considered significant as the process of planning and the acquiring of assistance from externally and the organization objective (Hill & Jones, 2008). Nevertheless, the paper will focus exploring significance of and the role of budgeting and resource allocation, and environmental sustainability to implementing and executing strategy. In this case, an organization formulates objectives concerning their budget, whereby they are focus on ways to reach break-even point within a stipulated timeframe, which is identified to be before completion of their action items. Barr and McClellan (2010) argue that for the purpose of achieving this aim, an organization should acquire sufficient capital, which will enable them avoid scenarios in which expenses surpass income leading to a loss during the process of implementing and executing a strategy (Hill & Jones, 2008). Financials of this institution should be established on the basis of a contingency approach to ensure that unforeseen events do not affect school operations. Nevertheless, in case the financial situation persistently delivers losses, Barr and McClellan (2010) argues that a reconsideration of pricing policies. Allocation, monitoring and managing of resources is a responsibility, which is designated to financial managers in an organization and the business administrators. In this case, resources in an organization are categorized in two classes, which include human resources and financial resources. Therefore, members of the management are expected to coordinate and assign teams for addressing concerns regarding these resources. Apparently, budgeting ensure that implementation and execution process has been assessed in order to determine amount of resources need for the process. According to Ireland, Hoskisson and Hitt (2009), the budgeting stage of strategic planning is undertaken based on chronology of activities required for achievement of objectives. In fact, this can lead to enhanced processes in the organization such as effective utilization of resources and establishment of effective management practices (Ireland, Hoskisson & Hitt, 2009). Therefore, there is need for understanding budgeting in a systematic way, which is important in realization of processes that are composed such as establishment of objectives, setting targets, monitoring performance and allocation of resources (Spee & Jarzabkowski, 2011). On the other hand there is need for budgeting with aims of addressing particular areas of strategy, which are categorized under implementation plan, organizational change management strategies, strategic financial management, and risk management plan. Environmental Sustainability Relate to Implementing and Executing Strategy Implementation and execution of a strategy in an organization is highly influenced by various environmental factors; in fact, strategic planning which entails budgeting considers these effects. For instance, an organization operates in a competitive business environment due to importance of effective strategic environmental planning. In this case, an environmental scan can be undertaken through a SWOT analysis, whereby the analysis focuses on strengths and weaknesses, which forms the internal environment of the organization and threat and opportunities that involve external environment (Spee & Jarzabkowski, 2011). In fact, these factors have a significant contribution to strategic planning of the organization and sustainability. Therefore, an organization is expected to manage its internal and external environments by implementing a strategic plan resulting from a careful analysis and its remote environment, thereby establishing ways of sustaining the environment. For instance, an organization should focus on was to sustain a industry environment by focusing on barriers to entry into the market, suppliers bargaining power, buyers bargaining power, availability of substitutes and competitive rivalry; in this case, industry environment is perceived in these dimensions (Spee & Jarzabkowski, 2011). On the other hand, the process of budgeting considers operating environment which entails five segments including competitors, creditors, customers, labour, and supplies. For instance, there are situations where competition decreased significantly due to choices in the financial industry and this has significant effects on budgeting process. On the other hand, budgeting processes can be affected by other environmental factors such as labour shortages in the industry; in fact, numerous organizations are closing as a result of recessions economic, though there are numerous who relies on these organizations. Suppliers in the industry are relevant; in fact, they have a significant impact on the implementation and execution process of a strategy (Hoskisson, 2004). Results from this environmental analysis can be utilized by managers in and organization to assist in making decisions, which involve capitalizing on their strengths and opportunities. On the other hand, this information can enable the managers to indentify the weaknesses, which they should deal with and threats that should be mitigated. Apparently, this can serves a way of facilitating achievement of organizational objectives in order to make effective budgets. Apparently, in the budgeting process the management considers that fact of having no control over the external environment; in fact, they are expected to strategize in a way they can deal with factors affecting in the organization (Henry, 2008). In this case, there is need to focus on opportunities and threats in the external environment in order to utilize the former and deal latter respectively, thereby achieving set objective and organizational goals. Threats emanate from forces beyond the organization’s capability to control; in fact, management has no capacity to control its competitors or influence nature. Furthermore, the business environment is changing radically and due to this dynamic nature of doing business; the levels of competition have revolutionized the nature of doing business (Hoskisson, 2004). Therefore, due to inability of management to influence decisions taken by the customers, it can only hedge itself in the industry by matching up to its competitors’ standards. The other threat is emanating from marketing involves reaching the target customers through their marketing strategies. In fact, there is no possibility of the organization influencing the number of environmental factors; for instance, there are internal factors that can affect the process of budgeting (Hill & Jones, 2008). Therefore, while budgeting organizations considers that every competitor invests substantially in the services offered to customers (Bleak & Fulmer, 2009). This is the only way in which the organizations remain ahead of its competitors and hedge against the natural factors it has no control over. Implementation and execution of a strategy is highly dependent on the opportunities in an organization which are associated with technological development for all industries that are dynamic. Occasionally, new forms of technology are developed and innovated, and investing in technology leads to good results and high quality of goods and services offered by organizations to its customers. Bleak and Fulmer (2009) explains service providers are keen on investing in the best forms of technology available in the market and this is budgeted for during the planning stage of executing a strategy. In conclusion, this essay focuses on exploring the roles of budgets and allocation of resources to implementation and execution of a strategy. It also explores the interrelationship of environmental sustainability to execution and implementation of a strategy. Therefore, it is evident that allocation of resources has a signification impact on the process of implementing and executing a strategy since managers ensures that there are sufficient financial and human resources to support this process. On the other hand, the essay has presented argument regarding sustainability of environment, since it has a significant influence on implementation and execution process. References Barr, M. J., & McClellan, G. S. (2010). Budgets and financial management in higher education. New York: Wiley Bleak, J. & Fulmer, R. (2009). Strategically Developing Strategic Leaders. Duke Corporate Education. Retrieved on 6 October 2013from: http://www.dukece.com/papers-reports/documents/Strategic_Leaders_000.pdf Hill, C. & Jones, G. (2008). Essentials of Strategic Management. New York. Cengage Learning. Print Hoskisson I.H., (2004). Strategic management: competitiveness and globalization. Colorado State University: R. Dennis Middlemist. Henry, A. (2008). Understanding strategic management. Oxford: Oxford University Press. Ireland, R., Hoskisson, R., & Hitt, M. (2009). Analyzing the General Environment. In R. Ireland, R. Hoskisson, & M. Hitt, Understanding Business Strategy. Mason: South-Western Cengage Learning. Spee, A. P., & Jarzabkowski, P. (2011). Strategic planning as communicative process. Organization Studies, 32(9), 1217-1245 Read More