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.)?

Answer 1

1. The company's strategy is based on the financial planning and is outlined in the budget. Let us take an example. If a company "A" had a strategy to introduce automation in the manufacturing. They have to have financial plan with regard to how to implement is based on the financial budget. For example if the total cost of automation is $ 2 Million and they had a budget of only 500,000 for this year, the company should plan financially to automate over four years assuming there would be a budget of 500,000 each year.

2. The financial planning allocated costs and benefits to each department and each department will work as an independent accounting entity. Examples: The market departs will have its targets to meet, the operations will have to sale up or scale own production based on sales forecast.