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The Analytical Executive: Budget-Based Strategy Planning

In: Focus

Author

Listed:
  • Vikas Mittal

    (Rice University)

  • Shrihari Sridhar

    (Texas A&M University)

Abstract

A budget-based strategy planning approach emphasizes formal and systematic processes to obtain information, coupled with budgeting, to set strategic goals, allocate resources, and hold employees accountable to meeting financial goals. Due to its reliance on the budgeting process it enables senior executives to focus on operational excellence, budgetary control, and strict financial management. Research shows that elaborate budget-based strategy plans are used more as a signal to external holders, showing them that executives take strategy planning seriously. Evidence from original research shows that budget-based strategy plans tend to make firms more inward-looking, replacing customer focus with a focus on increasing sales and reducing costs through an efficiency focus. Counterintuitively, original research shows that companies with an efficiency focus lead to lower margins because of their inability to cut costs judiciously.

Suggested Citation

  • Vikas Mittal & Shrihari Sridhar, 2021. "The Analytical Executive: Budget-Based Strategy Planning," Springer Books, in: Focus, chapter 6, pages 81-98, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-70720-0_6
    DOI: 10.1007/978-3-030-70720-0_6
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