1. Strategy, Budgetary Planning
and Expenditure Management
Tonderayi Chikanda
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2. SKILLS
STAFF
SHARED
VALUES
STRATEGY
STRUCTURE
STYLE
SYSTEMS
Seven S Model of Implementation

3. ‘Seven S’ Model
1. Strategy – Plan or course of action leading to the allocation of firm’s resources
to reach identified goals.
2. Structure – The ways people and tasks relate to each other. The basic grouping
of reporting relationships and activities. The way separate entities of an
organization are linked.
3. Shared Values – The significant meanings or guiding concepts that give
purpose and meaning to the organization.
4. Systems – Formal processes and procedures, including management control
systems, performance measurement and reward systems, and planning and
budgeting systems, and the ways people relate to them.
5. Skills – Organizational competencies, including the abilities of individuals as
well as management practices, technological abilities, and other capabilities that
reside in the organization.
6. Style – The leadership style of management and the overall operating style of
the organization. A reflection of the norms people act upon and how they work
and interact with each other, vendors, and customers.
7. Staff – Recruitment, selection, development, socialization, and advancement of
people in the organization.

4. What is Strategic Planning?
 Strategic planning is an organization's process of
defining its strategy, or direction, and making decisions
on allocating its resources to pursue this strategy.
 What do want to do?
 How do we best excel?
 Where do we want the company to be?
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5. What is Strategic Planning…
cont’d
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• Process to establish priorities on what you will
accomplish in the future
• Forces you to make choices on what you will do
and what you will not do
• Pulls the entire organization together around a
single game plan for execution
• Broad outline on where resources will get allocated

6. Why do Strategic Planning?
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• If you fail to plan, then you plan to fail – be
proactive about the future
• Strategic planning improves performance
• Counter excessive inward and short-term thinking
• Solve major issues at a macro level
• Communicate to everyone what is most important

7. Important Considerations
 Gather all facts
 When making decisions it is always best to have the maximum
amount of information available.
 SWOT Analysis
 Gather inputs from stakeholders, company performance analysis of
the your organization
 internal and external limitations
 social and economic trends .
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8. Important Considerations… cont’d
 Among the most useful tools for strategic
planning is SWOT analysis internal and
external of the organization.
 Strengths
 Weaknesses
 Opportunities
 Threats
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9. The 4 Key Elements
• Vision
• Mission
• Values
• Strategy
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10. Fundamental Questions to Ask
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Where are we now?
(Assessment)
Where do
we need to
be? (Gap /
Future
End)
How will we close the
gap (Strategic Plan)
How will
we
monitor
our
progress
(Balanced
Scorecard)

11. A Good Strategic Plan should . . .
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• Address critical performance issues
• Create the right balance between what the
organization is capable of doing vs. what the
organization would like to do
• Cover a sufficient time period to close the
performance gap
• Visionary – convey a desired future end state
• Flexible – allow and accommodate change
• Guide decision making at lower levels –
operational, tactical, individual

12. Pre-Requisites to Planning
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• Senior leadership commitment
• Who will do what?
• What will each group do?
• How will we do it?
• When is the best time?

13. Effective Budgeting and
Cost Control
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14. MIND OPENER
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15. A SOLUTION
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16. Activity-Based Budgets
 ABB begins with output and then determines
the resources necessary to created that output.
 ABB works backwards from activities and
their drivers to the underlying costs
 Traditional budgeting relies on functional-based
line items (salaries, supplies, etc.)
 Flexible budget uses cost behavior to split
functional-based line items into fixed and variable
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17. Activity-Based Budgets
Steps to construct an ABB
1. Determine the unit’s output
2. Identify the activities (and related drivers) needed
to deliver the output
3. Estimate the demand for each activity
4. Determine the cost of resources required to
produce the relevant activities
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18. The Behavioral Dimension
of Budgeting
 Characteristics of a good budgetary system
 Frequent feedback on performance
 Monetary and nonmonetary incentives
 Participative budgeting
 Realistic standards
 Controllability of costs
 Multiple measures of performance
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19. Budget Preparation
 A full understanding of the budget planning and
preparation system is very essential, not just to
derive expenditures projections but to be able to
advise policymakers on the feasibility and
desirability of specific budget proposals from a
macroeconomic or microeconomic perspective.

20. Budget Preparation… cont’d
 Understand the framework in which budget
decisions are made.
 Appreciate who is responsible for planning and
preparing the budget and what are the basic steps
thereof.
 Identify and address the typical weaknesses in
the planning and preparation procedures.
 Consider how changes in budget plans can be
programmed.

21. Requirements for Budget Planning
 Budget planning and preparation should be at
the heart of good expenditure management.
 It requires the following:
 Control of aggregate expenditure to ensure
affordability i.e. consistency with thee
macroeconomic constraints.
 Effective means for achieving a resource
allocation that reflects expenditure priorities.

22. Requirements for Budget
Planning…cont’d
 Productive efficiency – efficient delivery of
services.
 Minimization of the financial costs of
budgetary management – efficient budget
execution and cash and debt management
practices.
 Budget preparation is the principal mechanism
to achieve the above.

23. Assessing the Soundness of the Budget
1. Comprehensiveness – ascertain the complete
coverage of operations by the budget.
2. Transparency – consider how useful is the
budget classification and the ease of
connecting policies and expenditures through
a program structure.

24. Assessing the Soundness of the Budget
cont’d
3. Realism
• Is the budget based on a realistic financial
management framework?
• Are estimates based on reasonable revenue
collections?
• Are the financing provisions realistic?
• How far are spending priorities determined and
agreed under the budget process?

25. Budget Implementation and
Control Strategies
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26. KEY RESULT AREA(KRA)
KRA refers to general areas of outcomes or outputs for
which a role is responsible.
Defines the key area that the employee needs to produce
in his specified field.
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27. KEY PERFORMANCE
INDICATORS(KPI)
• KPIs describe the indicators of performance or
success for an employee.
• KPI also called as Key Success Indicators (KSI),
help an organization define and measure progress
toward organizational goals.
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28. COST CONTROL
 Executive Action by given members of an undertaking to
maintain the cost with budget and/or standards established.
 According to CIMA “ it is the regulation by an executive
action of the costs of operating an undertaking particularly
where such action is guided by cost accounting.
 Requires close monitoring and management

29. Cost Control Process
1) Establishment of a Budget and/or standards.
2) Appraisal of performance
3) Corrective Action
4) Planning Again

30. Importance of cost control
 Enables firm to achieving defined objective
 Proper utilization of firm’s resources
 Growth and survival of a firm
 Make the organisation efficient

31. Cost Reduction
 It is a systematic effort to improve profit (business
performance) margins by eliminating all forms of waste and
unnecessary expenses without, at the same time, impairing the
generation of revenue.

32. Importance of cost reduction
a) Improves the competitive capabilities and
ensures survival, growth and prosperity
b) Optimum utilization of the resources
c) Provides reasonable prices to consumers
d) Preservation of the nations scarce resources
e) Keeps the price under control charges to
consumer
f) Helps local government in controlling
inflation.

33. Exercise
1. Draw up an analysis of your authority’s expenditure
management system and develop some
recommendations of value-driven systems and
operational efficiency that could facelift the system and
make it more effective and efficient.
2. Identify challenges associated with the implementation
of your recommendations and how they can be
mitigated.
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34. THANK YOU
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