Ethics and compliance in organizational contexts

¶ … Strategic and Financial Planning

Meeting corporate objectives requires alignment between the strategic and financial plans. While corporate strategy may call for exciting growth opportunities, without a solid financial plan to provide capital resources, the strategic goals cannot be met. Starbucks plans to build upon its recent success and expand its consumer packaged goods projects and create new connection points with consumers to increase daily spending. The company will provide financial support for the new projects by using the increased operating income and cash on-hand that is now available after reducing operating costs at current locations and closing redundant and failing stores.

Strategic Planning vs. Financial Planning

A strategic plan can simply be defined as the steps taken to best allocate a company's resources to achieve an optimal financial return, but the process of strategic planning is much more complex. The strategic plan should define the corporate goals and objectives and provide guidance for achieving competitive advantage, maximizing market position, developing and enhancing goods and services, and creating new business opportunities (Raynor, 2007). Allocating the financial resources required to achieve the strategic goals is a necessary step in strategic planning; however, financial planning is a process that requires a strategy unto itself.

"Financial planning entails collecting sales forecasts from marketing personnel and production plans from operations, and then combining them to make projections of the firm's future financing requirements" (Keown, Martin, Petty, & Scott, 2005, p. 107). A financial plan provides an assessment of long-term and short-term debt and assets and establishes procedures to ensure sufficient capital resources are available to meet the company's strategic planning goals. Comparing opportunity costs, defining financial ratio goals, establishing accounting policies that clearly document corporate activities, and providing cash flow and funding methods for operations are all specific to the financial plan.

Starbucks' Planning Initiatives

After successfully pulling out of recession lows, Starbucks' strategic plan includes enhancements to its cafe experience with new products, connecting with consumers more frequently during the day, and developing a loyalty rewards program to increase current store sales. Diversification with new consumer packaged goods, retail distribution partnerships, and additional store licensing agreements will provide new growth opportunities. In order to provide financial support for the new agenda, Starbucks has reduced operating costs by closing inefficient stores, streamlining its supply chain, and improving in-store procedures. Intent upon maintaining its zero short-term debt position, Starbucks' financial plan is to use operating income to fund new ventures (Starbucks, 2011).

Conclusion