Strategy implementation requires reallocation of budgets – Explanation

Strategy implementation requires reallocation of budgets – Explanation

Effective strategy implementation requires reallocation of budgets –

Organizational units need sufficient budgets and resources to carry out their parts of the strategic plan effectively and efficiently. A strategy manager should keep in mind that too little funding slows progress and hamper the ability of organizational units. On the other hand, too much funding wastes organizational resources and reduces financial performance. Besides, a change in strategy almost always calls for budget reallocations. This is why it is very important for an organization to maintain a link and equilibrium between budget and strategy. Strategic plans should be communicated to all employees so that they are aware of the organization’s objectives, mission, and purpose. It refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. It is used to describe a pathway along which the organization moves towards its goals or objectives.

Needs for budgets reallocation in strategy implementation: Budget reallocation is needed for the effective and efficient implementation of the strategy. However, a budget is needed for the following reasons:

  • A budget for collecting modern technology;
  • The budget for the skilled human resource;
  • A budget for facing the competitors;
  • A budget for changing strategy.