Question

1. How are the financial plan and budgets related to a company’s strategic plan?

Answer 1

Planning is an indispensable part of a company's activities and contributes a lot to any firm's success. The 2 major types of planning are Strategic and Financial planning. Though different, they have some links which make it important to understand how they are related and aids us to approach the process of planning as a whole.

Financial planning is the process of planning and managing the finances of the company so that it has the resources to do what it targets to do. Strategic planning, on the other hand, involves defining the direction the company intends to take to achieve its targets, defining the goals and the way these goals will be achieved.

The relationship between Strategic and Financial Planning is such that both affect each other in such a way that they can't be seen in an isolated manner. The finances one has in the business govern what all options one has in terms of strategies. Similarly, strategies govern what all resources and finances will be available for the business in the future. Hence, in this way both are intertwined together.