BUSINESS FINANCE WEEK 3 Flashcards
CHARACTERISTIC OF AN EFFECTIVE PLAN
SMART
S- SMART
M- MEASURABLE
A- ASSIGNABLE
R- REALISTIC
T- TIME RELATED
Target a specific area for improvement
SPECIFIC
Quantify or have an indicator
MEASURABLE
Who will do it
ASSIGNABLE
Results that can be realistically achieve
REALISTIC
Specify when the result can be achieve
TIME RELATED
6 STEPS IN FINANCIAL PLANNING
- Set goals or objectives
- Identify Resources
- Identify goal-related tasks
- Establish responsibility centers for accountability and timeline.
- Establish an valuation system for monitoring and controlling.
- Determine the contingency plans
Identify the 3 level of planning in order highest to lowest
- STRATEGIC PLANS
- TACTICAL PLANS
- OPERATIONAL PLANS
Examples of Strategic Plan
1.developing long-term strategies for achieving growth
2. improving productivity and profitability
3.boosting returns on investments
4. improving customer service
5. finding ways to give back to the community in which it operates.
________________ ___________ are designed with the entire organization in mind and begin with an organization’s mission and vision.
Strategic Plans
______________ __________are the plans that are made by frontline, or low-level, managers.
Operational Plans
Examples of Operational Plans
- scheduling employees
- training for employees
- assessing, ordering and stocking inventory;
- developing a promotional advertisement
- creating a daily/monthly budget
are highly detailed plans that provide a clear picture of how a team, section or department will contribute to the achievement of the organization’s goals.
Operational Plans
are concerned with the responsibility and functionality of lower-level departments to fulfill their parts of the strategic plan.
Tactical Plans
Examples of Tactical Plans
1.testing a new process
2. cost reduction
3. purchasing a better equipment
4.analyzing customer feedback
5. creating a set of calculated actions Examples:
support strategic plans by translating them into specific plans relevant to a distinct area of the organization.
Tactical Plans
are focused on the specific procedures and processes that occur within the lowest levels of the organization.
Operational Plans
is an important aspect of the firm’s operations because it provides road maps for guiding, coordinating, and controlling the firm’s actions to achieve its objectives.
PLANNING
is often defined as the forecasting of a business for future financing requirements and is also about setting goals and identifying ways to achieve them.
FINANCIAL PLANNING
look ahead to where the organization wants to be in three, five, even ten years.
STRATEGIC PLANS
These plans map out the day-to-day tasks required to run a business.
Operational Plans
It is the process of identifying something that is to be accomplished and establishing measurable goals and timeframes.
Set goals or objectives.
Resources include production capacity, human resources who will man the operation and financial resources.
Identify resources
In this step, management must figure out how to achieve an objective.
Identify goal-related tasks
the next important goals step is to identify which department should be held accountable for this task, there must also be timeline for the task.
Establish responsibility centers for accountability and timeline.
. The company must establish a mechanism which will allow plans to be monitored.
Establish an valuation system for monitoring and controlling
Budgets and projected financial statements are anchored on assumptions. If these assumptions do not become realities, management must have alternative plans to minimize the adverse effects on the company
Determine the contingency plans
