Chapter Twelve

Implementing Strategy:

Budgets, Policies, Best Practices, Support Systems, and Rewards

Linking Budgets to Strategy

1. Budgets are crucial to successful strategy implementation because

a. Each organization unit should have the resources needed to perform its part of the strategic plan;

b. They protect the firm's financial conditions and eliminate the wasting of cash;

c. Too little funding deprives sub-units of the capacity to carry out their piece of the strategic plan;

d. Too much funding wastes organization'l resources and reduces financial performance;

e. Changes in strategy often require shifting resources from one are to another;

2. New strategies often entail budget reallocations because

a. More money will be needed to create an information system to support a new strategy.

b. The accompanying policy revisions and compensation incentives tend to require different levels of funding than before.

c. The value chain activities and org'l units central to the old strategy are not necessarily center-stage in the new strategy.

d. The task of empowering employees is usually expensive.

3. Forceful actions to reallocate operating funds and move people into different org'l units

a. Signal a strong commitment to implementing strategic change and help give the credibility to the implementation process.

b. Can be dysfunctional in trying to implement a new strategy because of anxiety and insecurity.

c. Tend to impede the task of empowering employees and shifting to new culture.

d. Are rarely necessary in implementing a new strategy unless the new strategy entails a racially different set of value chain activities.