To understand the relationship between strategic and financial planning we first need to determine both of their meanings. The definition of strategic planning states that it is a “systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them.” Strategic planning is a management tool that helps an organization focuses its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization’s direction in response to a changing environment. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. (Adapted from Bryson’s Strategic Planning in Public and Nonprofit Organizations) From these definitions and quotes we can understand that strategic planning allows a company to develop goals easily so that they can keep the company prospering. Financial planning is similar to strategic planning because both types of plans are used to help the company reach its overall goals. The definition of financial planning states that it is “a comprehensive evaluation of an investor’s current and future financial state by using currently known variable to predict future cash flows, asset values, and withdrawal plans.” This definition helps us to understand that a financial plan determines the total worth of a company and can be used to help predict the future revenue that would come in or go out of the business. Now that we understand the meanings of both a financial and strategic plan we can recognize the relationship between the two. Both a strategic and financial plan almost always work together and they usually work even better when a company uses them together. For example a strategic plan helps the company determine what methods or...
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