Financing And The Development And Implementation Of Strategies

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Financing and the Development and Implementation of Strategies SUMMARY The role of finance within the strategic planning process has become more relevant than ever. With the introduction of the balanced scorecard the financial performance of a firm has been emphasized has a key indicator of success and links strategic goals to performance and provide timely, useful information in order to facilitate strategic decisions. The article, The Role of Finance in the Strategic-Planning and Decision-Making Process, by Pedro M. Kono and Barry Barnes discusses how financial goals and metrics help firms implement strategy and track success by breaking down the strategic-planning and decision-making process and the role of finance. First, it is…show more content…
The first step of the strategic-planning process is the vision statement, which is a broad statement about the company’s value, purposes, and future direction. The mission statement conveys eight key components about the firm, including target customers and markets, products and services, geographic domain, etc. The article states, “The finance component is represented by the company’s commitment to survival, growth, and profitability” (Kono & Barnes). The long-term financial goals represent the firm’s commitment to a strategy. The analysis is the third step and comprises of the firm’s business trends, external opportunities, internal resources, and core competencies. Porter’s five forces model, industry evolution model, value-chain analysis, and a SWOT analysis can be used within the analysis step. The next step is strategy formulation, which can be done using Porter’s generic strategies model to help the firm aim for one of the competitive advantages. Lastly, is the strategic implementation and management step, where the balanced scorecard (BSC) has become the most effective management instruments used to implement and monitor strategy execution and align the strategy with expected performance. The BSC stresses the importance of establishing financial goals for a firms employees, functional areas, and business units by translating the strategy into objectives, operational actions, and financial goals by focusing on financial factors,
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