Relationship between financial and strategic planning
Planning contributes largely to the success of an organization or a company. There are two types of planning that companies or organizations use, that is financial and strategic planning. Each type of planning focuses on specific functions and operations of a company or an organization; hence they are unique and distinctive from each other. However, these concepts or ideas have two major links. The links associated with financial and strategic planning have major impacts on how companies or organizations approach their planning process. Therefore, this paper will look into the relationship between financial and strategic planning techniques and the strategic allocation of financial resources.
Definition of the techniques or concepts
Financial planning is the process through which a company or an organization manages its finances in such a manner that all the needs of the functionality and operations are met. Strategic planning, on the other hand, can be defined as the process through which a company determines the direction to take, determine goals of the company, and how such goals are to be meet (Edward et al., 2012). These concepts or techniques include the definition of objectives, analysis and collection of information, monitoring results, and implementing plans.
Link 1
After developing a strategic plan for an organization or a company, the amount of capital available determines what options a company can entertain. For instance, if a company has a budget of $10,000 and there are three options expected to cost $6,000, $8,000, and $12,000, then the company knows that it cannot afford to spend $12,000; hence such an option can not be entertained. The company, therefore, can either develop the other options depending on the ease of its implementation as well as immediate needs for certain or specific controls (Kent, 2018). Therefore, the company’s finance if the first and foremost item that should be examined in order to figure out which kind of strategy has to be implemented.
Link 2
The main aim of strategic planning in companies is to determine a road map towards the effective functionality and success of a business. With a good plan for a company to follow, then it is possible and easy for a business to eliminate areas that are considered to be inefficient. Ultimately, this can either decrease or increase the company’s revenue. In case this happens, the company or the organization ends up making more money that can be used to sustain the business (Chwolka & Raith, 2015). This implies that there is enough or large budget that can company can use during the next budget period, and a company can be able to do better than before. Lenders and investors do view strategic planning as a shred of evidence for growth and stability in business.
Conclusion
Ideally, financial and strategic planning are normally intertwined in businesses, working with each other in a cyclic manner. Changes in business functionality call for a reevaluation of strategies in place. Many times when there are changes in the company’s budget, the company needs to also change its managerial techniques and strategies. Therefore, if a company wishes to alter all strategies, then the company must first confirm whether there is enough capital or how much capital can be gathered.