Week 2 Discussion Questions
How do you define strategic planning? What are some differences between strategic and financial planning? What financial problems might an organization encounter when implementing a strategic plan?
I believe strategic planning is the process, which takes place to set organizational goals to meet the expectations of the mission and direction of the organization.
Strategic planning focuses on the long-term goals of an organization, therefore it differs from financial planning. Financial planning may also focus on long-term goals, but unlike strategic planning, financial planning focuses on short-term goals as well. It takes a strategic plan to develop a financial plan. Personnel must use a strategic plan to identify what direction the organization is going to go in its specific business industry. Once the strategic plan is implemented into the development of the organization, a financial plan can be developed to gain capital for organizational growth.
A financial problem, which can be encountered by an organization when implementing a strategic plan, is the lack of capital to put the plans in motion. If the organization does not have the financial ability to back its strategic plan, both plans will not be successful.
What information is needed to prepare a cash budget? What is the relationship between an operating and a cash budget? Why is it important for an organization to prepare a cash budget?
According to "Cliffnotes.com" (2012), “The cash budget is prepared after the operating budgets (sales, manufacturing expenses or merchandise purchases, selling expenses, and general and administrative expenses) and the capital expenditures budget are prepared. The cash budget starts with the beginning cash balance to which is added the cash inflows to get cash available. Cash outflows for the period are then subtracted to calculate the cash balance before financing. If this balance is below the company's required...