The difference between traditional budget and strategic budget

1. Traditional budget management has no strategic orientation, and strategic budget management realizes the whole process interaction of budget management. Traditional budget management ignores the existence of strategy. Under the situation that enterprises attach great importance to competitive advantage and strategic management, traditional budget management has gradually lost its own advantages. Strategic budget management is guided by the strategic objectives and strategies of enterprises, based on success factors and key performance indicators, and links the strategic objectives, long-term planning, actual implementation and personal goals of employees to realize the whole process and interactive management of budgets.

2. The cost budget in the traditional budget lacks a solid foundation, and the strategic budget management realizes the combination of financial indicators and non-financial indicators. The defects of traditional budget management are also very obvious. We can't combine long-term strategic objectives with short-term actions, and we can't combine resource allocation with long-term strategy, which is not conducive to the cultivation and maintenance of long-term competitive advantages of enterprises. Strategic budget management links employees' remuneration with key performance indicators and external benchmarks, and pays more attention to how to overcome competitors and enterprises' value creation, which is conducive to achieving the goal of maximizing enterprise value.

3. The foundation of traditional budget is one-sided, and strategic budget management realizes the combination of internal evaluation and market evaluation. The traditional budget only pays attention to the living space inside the enterprise, and often ignores the relationship between the enterprise and the external environment, which makes the enterprise unable to adapt to the changes of the external environment and adjust its production and operation in time. This is very one-sided and will bring serious adverse consequences to enterprises in practice. Strategic budget management has jumped out of the inherent constraints of traditional budget, broadened its horizons and paid close attention to the trends of the whole market and competitors.