Strategic Management: Formulation and Implementation

Tools For Allocating Resources

BCG product portfolio matrix is one of the tools that strategists can use to link resource allocation decisions to choice of strategy. These tools and other I shall discuss in Volume II.

Most organizations will seek to quantify the allocation process and use some form of budgeting. Budgets are financial statements of the resources required to achieve a set of finite objectives or put into action a formulated strategy.

Pearce and Robinson distinguish between three types of budget: capital budgets, revenue budgets, and expenditure budgets, which are described in detail in Chapter 6.

Resource allocation as expressed in the budget needs to be carefully linked to strategy. Figure 2-3 shows one explanation of how these can be linked in a multiple-SBU firm. In series of negotiation among managers at the final output is a set of budgets which give force to the overall plan. The allocation of resources at either the corporate or the functional levels may well imply change, and the issues involved in the management and implementation of change are discussed in Chapter 5.