Relationship between strategic and financial planning - Assignment Example

Strategic and Financial Planning Lecturer Strategic and Financial Planning Strategic planning is a process that entails drawing up of an organization’s goals and a description of what activities it will carry out to achieve the goals, both in short and long term. Financial planning analyses an organization’s opportunities for investment considering the future effects of current financial decisions. Financial planning forms a part of strategic planning in the sense that it is important to allocate an organization’s resources prudently if the strategic planning is to succeed (Chorafas, 2007, p. 14). A strategic plan involves one of the following: raising or lowering an organization’s activities, responding to changing customer demand and preferences, countering competitors, technological adjustments and responding to globalization (Chorafas, 2007, p. 5). While Starbucks takes the initiative of expanding its business outside the United States, there will be an obvious need to adjust its financial resources.

This will directly reflect on its financial plan. In a business world guided by the principles of competition, Starbucks should strive to have sound financial planning to raise its competitive advantage and prevent underperformance now that it aims market outside the United States. Its strategic planning should be aimed at producing innovative and high quality products and services. This will immensely contribute on easing the strains, which may be experienced in financial resource planning. Financial risk is a factor related to strategic and financial planning that any able organization needs to thoroughly plan around.

Chorafas advises that an organization should strive to attain a low cost of staying in business (Chorafas, 2007, p. 22). Losses or insufficient profits will reduce funds available to cater for expanded Starbucks’ operation expenses such as production cost and payment of employees. This threatens Starbucks’ financial stability and jeopardizes its further expansion and growth.ReferenceChorafas, D. N. (2007). Strategic Business Planning for Accountants: Methods, Tools and Case Studies. Elsevier, pp. 5-22.