President Dwight Eisenhower, in regards to military strategy, once said, “plans are nothing. Planning is everything” (cited in CFAR, 1999, p. 1). In the business world there are two main types of planning future courses: strategic and financial; and if applied properly, these two strategies can work to together to set the course for success. For a company, strategic planning is the “why” of an operation, whereas financial planning may be described as the “how”.
Though strategic plans themselves do not necessarily ensure success in their implementation, they are still essential in providing a business with a clear course–allowing decision makers to be concise when choosing the direction of their daily tasks. A strategic plan addresses fundamental questions such as “What do we do?” and “Who do we do it for?” Financial planning answers these questions by constructing the means to meet the growth that strategic planning seeks to achieve. In other words, the “why” is to grow and excel, and the “how” pursues the means to meet the growth. The financial plan usually follows immediately after the objectives of the strategic plan have been established, and involves tasks such as summarizing various costs, creating budgets, optimizing resources, and assessing risks and issues associated with budgets.
Both financial and strategic planning do not guarantee success however. Because a strategic plan attempts to strategize around the unpredictable climate of a market, it is not always a reliable forecast for the immediate future as it may be in the long-term. The risks associated with a strategic plan therefore vary with the predictability of the near future. With the evolution of industry, market pressure, and the size and culture of business, strategists have found themselves planning no further beyond the immediate future. eBay CEO Meg Whitman said, “companies used to have strategy meetings once a year. Now we have them every two weeks”. Large companies such as Wal-Mart Stores, INC. must keep up with this ever-changing climate that dictates strategic and financial planning.
As a member of Fortune’s top ten list of America’s Most Admired Companies, Wal-Mart accredits its success to its focus on customer needs (CFAR, 1999, p.7). Director and former CEO Wal-Mart Stores, INC., David Glass, said, “We have made it to where we are today by appreciating and satisfying our customers and associates—they are the people who make the difference” (PR Newswire, 1999). Wal-Mart thrives through successful planning
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PR Newswire. (February 11, 1999). Wal-Mart Achieves Top Ten Ranking in Fortune’s List of America’s Most Admired Companies. Highbeam Research. Retrieved June 1, 2011, from http://www.highbeam.com/doc/1G1-53864984.html
Stephen, Robert G. (1999, June 1). Measuring and Managing Risk Improves Strategic Financial Planning. Healthcare Financial Management. Retrieved from http://www.allbusiness.com/finance/insurance-risk-management/274716-1.html