Many organisations fail to link statements of strategic purpose to budgets. Budgets are often seen as an accounting exercise, particularly where incremental budgeting is used. Budgets are the main way in which resources are allocated to ensure that strategic purpose is realised. It is important to identify those components of strategy that are critical in the organisation’s bid to outperform the competition – the Critical Success Factors (CSFs).
Johnson and Scholes list the following steps in CSF analysis are:
- Identify the CSFs for a specific strategy
- Identify the underpinning competences
- Scrutinise the list to ensure that it is sufficient to give competitive advantage.
- Identify performance standards
- Assess the extent to which competitors can imitate each underpinning competence.
- Decide on the impact of potential competitor moves and how these might be counteracted.