Strategic management system and methods of controlling as key elements of military expenditure policy‐making process

The purpose of this paper is to propose a conceptual approach to determining an optimal strategy development process and controlling of the defence spending, by utilizing the decision‐making system adopted in the Republic of Estonia.

The author offers a part of the Balanced Scorecard model named “Management and Control Perspective” as one of the improvement tools for the system of planning military expenditures and effective utilization of budgetary funds.

The results show that the Balanced Scorecard application, using the “utility function”, will allow the Estonian Defence Forces to overcome important barriers to strategy implementation by interrelation of military planning and budgeting processes.

One suggestion for further research might be established as a way of improvement and development of methods directed to application of the utility function in the decision‐making process. This approach will improve calculations of strategic perspective plans and will reveal the essence of the budgetary policy on the whole by taking into consideration expenses features of the business and non‐profit organizations.

By using the Balanced Scorecard the paper offers a new strategic method of planning and controlling the military expenditure in the Estonian Defence Forces.

The present paper provides direct evidence of the alternative methods forecast measures and the possibility of using mathematical models in the strategic planning process.