Strategy and Budgeting Alignment

This paper seeks to gain an understanding of some of the processes of control that operate within organizations, especially those involved in parent-subsidiary relationship. It provides information about how a Telecommunications company is complementing and interacting budgeting and nonfinancial performance measures, aligning budgeting with strategy in a highly customer-driven environment. It is based on a case study using the framework of Ferreira and Otley (2009) to gain a comprehensive view of Performance Management Systems (PMS) and identify strengths and weaknesses of the systems in place. Using the “discursive” framework of Morgan and Sturdy (2000), it also provides a comprehensive description of how the company was able to improve the budget, make it a more efficient and reliable process, and align it with strategy. This was achieved through good communication, enhanced responsibility, feedback flows, and great recourse to non-financial key performance indicators. The contribution of this paper is threefold. First, the paper explains how Vodafone, working in a competitive environment, has improved its budgeting system to enable the organization to stay alert and detect changes in time. Second, the research provides information on how the organization has linked budgeting to nonfinancial performance measures in order to provide a broader and more varied pattern of control and how discursively individuals explain themselves, their actions and organizations – both to themselves and to others. Finally, the paper discusses the usefulness of Ferreira and Otley’s (2009) framework in order to obtain a comprehensive and integrated view of PMS.