Describe the relationship between strategic and financial planning. Include the following:
- A strategic planning initiative for Microsoft and identify an initiative discussed in the organization's annual report.
- How the initiative affects the organization's financial planning.
- How will the initiative affect costs?
- How will the initiative affect sales?
- Risks associated with the initiative and financial effects they may have.
Strategic planning is a very broad business concept that involves developing a plan that defines an organization's overall purpose and long-term goals. It also includes initiatives on how those goals will be achieved through an analysis of the organization's culture, problems, products, and even structure. It incorporates areas such as the organization's vision and mission, which contributes to its broad characteristics. Given the broadness of strategic planning, it naturally also includes finances. Strategic planning, regardless of how well it is defined or formulated, cannot be implemented without the appropriate financing. Therefore, there is a clear relationship between strategic planning and financial planning. Financial planning incorporates all areas of expenses, revenue, and profits, and sets the boundaries and limitations for realistic strategic planning. A strategic plan that overstretches the budget developed through financial planning, will end up being a poor strategic plan. Together, both, strategic and financial planning, create a realistic and feasible picture for an organization's long-term vision.
When analyzing Microsoft's 2011 annual report, there are a number of identifiable strategic planning initiatives in place. (The report can be found at: http://www.microsoft.com/investor/reports/ar11/shareholder_letter/index.html). Microsoft includes the details of the strategic plans as a letter to investors, as a strategic plan identifies to investors how Microsoft intends to grow and expand over the long-term. One of the clearest strategic plans in the report is Microsoft's strategy of partnerships and acquisitions. Those partnerships ...
The solution analyses financial and strategic planning as it relates to Microsoft and the acquisition of Skype specifically.