I need to respond to classmates discussion post
Question 1: What are the key differences between a strategic and operational plan? Explain.
“Strategics planning are long-term organizational goals that help to convert a mission statement from a broad vision into more specific plans and projects. While Operations planning are daily, weekly, or monthly project benchmarks that implement larger strategic objectives”.(Matt .P & Jayne T, 2019)
According to Surbhi. S , the following are the keys differences between strategic planning and operational planning:
- The planning to pursue the organization’s vision is known as Strategic Planning. The planning to
achieve the tactical objectives of the organization is known as Operational Planning.
- Strategic Planning is long lasting as compared Operational Planning
- Operational Planning is done to support Strategic Planning.
- Strategic Planning takes into account the internal as well as the external environment of business. Conversely, Operational Planning is concerned with the internal environment of business.
- Strategic Planning is done by top level management, whereas the Operational Planning is a function of middle-level management.
- Strategic Planning covers the whole organization, but Operational Planning is done in a unit or department of the organization.
For Instance, in Healthcare services “Operational planning is typically based on a NHPSP that defines the vision, goals and objectives for the health sector. Operation planning is managerial and short term, as opposed to strategic planning, which usually has a 5-10-year horizon, sometimes even longer. Moreover, operational planning deals with day-to-day implementation and often has a one-year time Horizon” (Dean et, al)
References:
Surbhi Sood
Difference Between Strategic Planning and Operational Planning
Dean Shuey, Maryam Bigdeli & Dheepa Rajan
Operational planning: Transforming plans into action
Matt Petryni, & Jayne Thompson
Difference Between Strategic & Operational Objectives
Question2
Compare and contrast zero-based versus incremental budgeting?
Zero-based budgeting requires starting from scratch with no authorized funds to budget for expenses and income. Each activity must be justified each time a budget is prepared. It does not rely on a historical base to determine what expenses and income will be but evaluates all items in order to determine whether they are still relevant (Noreen, Brewer, & Garrison, 2010) . Amounts are only budgeted if the activity can be justified. This method is very time consuming as each expense or activity must be justified. However, the advantage is that it allows managers to gain on understanding of how to prepare a budget from scratch. It is an excellent way to train managers who have never prepared a budget from scratch. It eliminates the need for management to decide how to reallocate budgeted amounts for expenses which are no longer relevant.
Incremental budgeting on the other hand uses a historical base to determine the estimates for income and expenditure (Noreen, Brewer, & Garrison, 2010) . One of the advantages of incremental budgeting is that adding increments to previously estimated amounts does not require a lot of time as managers simply increase expenses in the previous budget by a percentage. However, there are certain disadvantages that need to be noted. Expenses that are no longer relevant to the Trust may still be included. Increasing expenses may not be justified as some expenses are one off expenses. This leaves lower level managers with the task of deciding how to reallocate funds and therefore encourages waste (Noreen, Brewer, & Garrison, 2010). An additional disadvantage here is that the funds may not be reallocated efficiently.
Reference:
Noreen, E.W., Brewer, P.C., & Garrison, R.H. (2010). Managerial Accounting for Managers. 2nd ed. McGraw-Hill/Irwin.
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