Based On The Budget Of The Company's Strategic Management

I hold that budgeting is a strategic management mechanism. In strategic management, budgeting as a vehicle plays a fairly important role among the processes of planning, executing and evaluating. In static sense, annual budget, as part of enterprise's planning system, should be based on long – term strategic plans while at same time attained the detail description of concurrent operational activities. In this dimension, budgeting is a supportive and supplement annual snapshot for long – term strategic – plan. In dynamic sense, budgeting is implementing and controlling system, which conduct the business operation under the direction of strategies interactively. Based on competitive control theory (Simons 1995; Kaplan & Norton, 1993), budgeting is not only a passively strategy – implementing system, but also an actively strategy – renewing system. It means throughout budgeting process in business, it does improve the organization structure, expand the resource – allocation efficiency, strengthen the core – business competitive advantage, and lastly re – built – up on –going business strategies.Under such interactive rationale, budgeting is not only a tool of implementing strategies for a specific – term, but also a totally management control system. Right now, this system does not well – perform as expect, and in some case budgeting even hinder the strategic management in worse. The main reasons of this situation could be cut – down of linkage of chains from planning system to budgeting, lacking use of technical skills of strategic management. To solve these problems, three dimensions should be taken into consideration in order to improve the firm strategic budgeting. Firstly, building up a systematic, complete and interactive planning procedures for specific – firm, while at organizational an employee's facet, unitizing the long – term strategic plan, operational plan and annual budgets into a single platform. Secondly, forming a strategic – governance budgeting system, which bears at least two domains. That are: (1) mapping out the frontiers of responsibilities of the shareholders' meeting, the board of directors and CEO based on corporate governance system, purposing at making assure of the strategic business units based on the internal managerial structure, purporting at be assure of goal – congruence at ordinary operational activity's level with annual budget proclaimed. Lastly but not less important, improving the budgeting – management skills, blending and combining other strategic management thoughts, such as the activity – based management, the balance – score card, continuous improvement, with plan and control procedures of budgeting tightly and skillfully.A well – functioned budgeting is through its planning and controlling. As a strategic – oriented management system, it should be relied heavily on the background of governance and structure of a given enterprise. Therefore, a well – defined planning & controlling model of a budgeting should be in the contingent – stated, with changing environment of its organization.