Question

“Strategy, plans, and budgets are unrelated to one another.” Do you agree? Explain.

Explain how the manager’s choice of the type of responsibility center (cost, revenue, profit, orinvestment) affects the behavior of other employees.

Answer 1

No, I don't agree with this statement as all the three strategies, plans and budgets are interrelated with each other and all three are used in the business purpose. As all the terms are interrelated and are necessary for decision making, so each of these affects others in different ways. Business coordination is being affected by the budgeting process which can help to evaluate the performance as well as motivating the employees and managers. It is also one of the most important elements when using a company's strategy. The strategy of an organization is the analyzing and matching of its abilities with its opportunities in a particular market. This will help to fulfill its plan by accomplishing the goals and objectives. In basic form, strategic analysis is used to prepare for the plans for an organization whereas planning leads to the formulation of the budget. Managers use different feedbacks from budgets to revise the strategic plans.

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