Question

1. How is the financial plan and budget related to a company’s strategic plan?

2. How do the various functional departments of an organization use financial planning (i.e. marketing, operations, sales, executive management, finance, etc.)?

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Answer 1

1.) The Financial plan and budget is related to company's strategic plans in the following ways:

As the budget itself is a wide and a comprehensive financial plan for achieving the various goals like financial and operational goals of an organization, by creating budget company is developing its main objectives for the acquisition and use of it's resources. Once a budget is created it plays a vital role in operating the whole company in effective and efficient way and it becomes helpful to determine how the management took steps to ensure that all objectives are achieved. In creating budget it also provides the assignment of decision making responsibilities and increases the management responsibility.

To create an effective budget is a difficult task and it also involves the employee management communication process. It leads to group agreement of the budgeted goals and process of creating the budget with the team is a opportunity given to the team to share their opinions and ideas and to share the company's goal with them.

And Financial planing involves a master plan for the organization in a well mannered and organized structure so that company in hurry will not take any step which will prove disastrous to the itself and thus the financial planing is necessary so that the company's finance is totally figured for the tenure for which the financial plan is prepared. A plan involves all decision makers working towards the same goal for carrying out the process in the most efficient and effective manner.

Both Budgeting and Financial planing is the crucial parts and fully related to the strategic planning of the company and also to keep in mind about he technology while preparing the budget because now-a-days the due to technology like cloud computing and instant communication it becomes easier to develop the budget also and while creating the budget process remember that it is a technique or a tool which translate the organizational goals and strategies into the money(DOLLAR).

2.) The various functional departments such as (marketing, operations, sales, executive management, finance) of an organization use financial planning in the following ways:

a. Planning- To prepare the long term as well as short term goals to achieve in defined period of time.

b. Organizing - The operations of the business in effective way and to use the optimum resources available in an efficient manner.

c. Controlling- To have control on the deadlines and to meet the work obligations and deliver the best possible outcome by efficiently managing the team.

d. Leading - This involves a leader like manager who leads the team and motivates the team to complete the task within deadlines and submit their work with high quality of work.

With these activities mentioned above helps in using the financial planning because if the company is financial sound and has a good financial strength with good financial plan so the other functional department's manager seeks on applying those decided terms which were decided with the top management, in a marketing department such as how much budget was decided for the team to spent on the advertisement and posters to enhance sale in the market so this is well known to the manager of the marketing department only and he will take the necessary actions to implement the plan into his team to control expenditure and to maximize sale.

While in operations, manager of the team will implement the financial plan and to make understand the team to work on the processes and to oversee the day to day business.

And in Finance, manager plan for both short-term and long term financial capital needs and analyze the impact that borrowing will have on the financial aspect of the business.