Strategic and financial Planning, IPO, M&A

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1) Discuss the relationship between strategic planning and financial planning. Should they be done in tandem, or separately? Discuss, using examples.

Strategic planning and financial planning are closely related to each other. Therefore, it is extremely important that financial planning should be closely integrated with the overall strategic planning process. Understanding the overall strategic planning is the actually the first step in defining and developing financial planning. Ideally, strategic planning should precede financial planning. Financial planning is done to identify financial strategies and plans to accomplish goals and objectives outlined in the strategic plan. It is concerned with supporting the accomplishment of strategic goals and objectives with plans, tasks, and strategies related to finance in the organization.

Therefore, we can say that strategic and financial planning are highly intertwined with each other and successful accomplishment of goals and objectives outlined in strategic plan depends on the effectiveness of financial plans.

They should certainly be done in tandem with each other to ensure that there is perfect coordination between the two plans and both complement each other in a perfect manner. If they will be done separately, financial planning will not be able to fulfill its objective of providing sufficient finance for other strategic objectives.

Example: For large companies, it is extremely essential to have a sound strategic planning to maintain its leadership position in their respective industries. Huge capital investments in R&D, new product development, human resources and infrastructure is a routine function for large companies to sustain innovation and new product development and to remain competitive against other strong players. Therefore, it is extremely important for such companies to support its overall corporate strategy and strategic plan with a sound financial plan to ensure that its strategic initiatives are not hampered due to shortage of adequate funds. A sound financial planning ensures that all its R&D and infrastructure related investments are well planned in advance and the organization makes optimal use of its financial resource base.

References: No external references have been used for this portion.

2) Compare and contrast IPO and merger & acquisitions growth strategies. Please cite specific examples of failures, and successes for both strategies.

Both the growth strategies have its own advantages and disadvantages and presents different sets of risk and opportunities to companies involved in such strategies.

Let us start with Mergers and acquisitions. M&A is being increasingly pursued by companies as part of its inorganic growth strategy to expand its scale of operations, growth and profitability by acquiring or merging with another company. ...