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Link Between Strategic and Financial Planning

Relationship between strategic and financial planning:

"Company A" always frames its financial strategies in a way to keep low prices on the counter products to achieve maximum profits. The company makes changes in its strategic planning according to the changing economic environment. For saving the time of its customers, the company has made one stop shopping centers. Another initiative of the strategic planning relates to its responsibility toward the environment. For this purpose, it has made about 145 million energy efficient bulbs and saved energy for three new coal-fired power plants. In addition to this, the company also provides better health insurance policies for its customers, According to the annual report of 2008, "The company has increased its health insurance percentage from 90.4% to 92.7% this year. In its strategic planning, the company also makes some changes in the financial strategies. Its effective financial strategies, the company had an increment of 8.6% in its net sales in the year 2008, in comparison to the previous fiscal year."

Based on the above, How will the initiative affect sales?

Solution Preview

Hi - let's look at each part of this, to see what effect each element will have. This will make it easier for you to determine the impact on sales.

For saving the time of its customers, the company has made one stop shopping centers. -- This will increase sales because it provides convenience. Customers are likely to "save" all of their shopping needs to be fulfilled at one place. They're making this one stop shopping along with low prices. We see this strategy at stores like Super Wal-Mart and other stores that are supercenters with one stop shopping.

It has made ...

Solution Summary

This solution explains the relationship between strategic and financial planning based on the scenario given.