Budgetary control in strategic cost management, its advantages, disadvantages its implimentation procedure?

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budgetary control should be looked at like a check book - if the account is empty you can't spend (if you have any control and want to stay out of trouble).


strategic is longer reaching, overall a bigger picture; tactical is more immediate (almost short term) and with amore precise target.


think of it this way, a jet flys at 30,000 feet and sees much of the earth, but he can't see a guy on a rooftop. the guy on the ground clearly sees the man on the rooftop, but can't read the writing on the jets wing. same reality but different view points.


so startegic plans are from the 30,000 level





the advantages are easy - strategic planning for budgets allows you to stay out of trouble and be fiscally sound (perhaps).


to understand the disadvantage look at 'systems driven' models - resources can best be directed by those doing, not those planning.


any good strategic plan allows for movement within budgets to maintain the bottom-line.


so the disadvantage is simply that managers cannot alter strategic budgets. budgets made at the 30,000 foot level often miss what is obvious at the 5 foot level.


in example: cap ex may need to be increased for new production runs predicted in the next cycle, or new rd for market changes, etc.