Strategic Financial

Management

Module 1

By: Prof. Anup Kumar Hazra

 Meaning
Strategic financial planning is the process of determining how a business manages
itself financially to ensure it achieves its goals and objectives for both the short-term
and long-term. Sound planning considers every aspect of a business' operations and the
impact each has on the overall financial position of the company.

PLANNING: Planning is “Thinking before the action takes place”. It decides

beforehand what, when, and how the task is to be accomplished. It is not exactly the
same as strategy, which is nothing but “a comprehensive plan.” The strategy is all
about using a trick to gain success for a particular purpose. It is the skill of managing
the affairs of the enterprise.

STRATEGY: The strategy is a master game plan designed to achieve the objectives of
an organization. It is a mix of competitive moves and actions made by the top-level
management for the accomplishment of goals successfully. They are dynamic and
flexible in nature.
Difference Between Planning and Strategies
Meaning Planning is thinking in advance, for the Best plan opted for achieving the desired
actions which are going to take place in the outcome.
future.

What is it? Planning is a road map for accomplishing any Strategy is the path chosen for achieving the
task. objectives.

Related to Thinking Action

Basis Assumptions Practical considerations

Term Depending upon the circumstances. Long Term

Nature Preventive Competitive

Part of Management Functions Yes Sub-part of Decision Making

Sequence Second First

Key Differences Between Planning and Strategy
The major differences between Planning and Strategy are as under:

• Planning is anticipation and preparation in advance for uncertain future events. The
strategy is the best plan chosen among the various alternatives for accomplishing
objectives.
• Planning is like a map for guidance, while strategy is the path which takes you to
your destination.
• Strategy leads to planning, and planning leads to programs.
• Planning is future-oriented, whereas Strategy is action-oriented.
• Planning takes assumptions, but Strategy is based on practical experiences.
• Planning can be for short-term or long-term, depending upon the circumstances,
unlike Strategy, which is for the long term.
• Planning is a part of the managerial process. Conversely, Strategy is a part of
decision-making.
Financial Forecasting Techniques Every Entrepreneur Needs

• Qualitative Forecasting
• Quantitative Forecasting: Quantitative forecasting is one of the
advanced financial forecasting techniques for analysts. It depends on
the use of static information in financial forecasting operations, but
when experience is weak, financial forecasts will be doomed to fail.
a) Straight Line
b) Linear Regression
c) Moving Average
Straight Line

• One of the most straightforward techniques used in quantitative forecasting is

the straight line. It is a steady path, requires a little experience in economic
mathematics, and makes logical predictions.
• In short, it does not require excellent skills because you can make future
predictive predictions by referring to past indicators of the company. Despite
this, there are changes in this time, which affect profits.
• Accordingly, you can take this model within the framework of defining the
company's financial goals in the short and long term, determining the
budget, applying cost control techniques, and analysing and planning what
the company will achieve in the coming days.
Linear Regression

• Simple linear regression is part of the statistical forecasting tools and

techniques. You can do this by using the data represented in line graphs and by
plotting a linear relationship between several graphs, using the coordinates of
the points (X, Y), by creating a linear regression for them.
• The relationship with the impact of each on the other becomes apparent.
• Through this regression, it is possible to know the company's fate, develop a
financial forecast for it, and better plan for the results. These steps are worth
helping the leader in the decision-making process to grow work performance.
Moving Average

• It is the average performance of a particular measure over a limited period. Its

strategy depends on evaluating the company's profits, sales percentage, types
and components, and everything related to financial matters, whether they are
increasing or declining.
• It is also helpful for further understanding the company's advanced financial
trajectory.
• The moving average also helps to choose the right direction of changes or
challenges in accounting in the company. If a fixed trend is unclear in a
specific field, it explains the financial planning lists within a limited period.
CLASS DISCUSSION

Financial Planning Process and

Decision making and Problem solving Process
(Discussed in class)