STRATEGIC FINANCIAL MANAGEMENT

Strategic planning is long-range in scope ahd has its focus on the organization as a whole. The concept is based on an
objective and comprehensive assessment of the present situation of the organization and the setting up of targets to be
achieved in the context of an intelligent and knowledgeable anticipation of changes in the environment. The strategic
financial planning involves financíal planning, financial forecasting, provision of finance and formulation of finance
policies which should lead the firm's survival and success.

The responsibility of a finance manager is to provide a basis and information for strategic positioning of the firm in the
industry. The firm's strategic financial planning should be able to meet the challenges and competition, and it would lead
to firm's failure or succesS.

The strategic financial planning should enable the firm to judicious allocation of funds, capitalization of relative
strengths, mitigation of weaknesses, early identification of shifts in environment, counter ´possible actions of
competitor, reduction in financing costs, effective use of funds deployed, timely estimation of funds requirement,
identification of business and financial risk, and so forth.

The strategic financial planning is likewise needed to counter the uncertain and imperfect market conditions and highly
competitive business environment. While framing financial strategy, shareholders should be considered as one of the
Cònstituents of a group of stakeholders, debenture holders, banks, financial institutions, goverhment, managers,
employees, suppliers and customers. The strategic planning should concentrate on multidimensional objectives like
profitability, expansion growth, survival, leadership, business succe, positioning of the firm, reaching global markets and
brand positioning. The financial policy requires the deployment of firm's tesources for achieving the corporate strategic
objectives. The financial policy should align with the company's strategic planning. lt allows the firm in overcoming its
weaknesses, enables the firm to maximize the utilization of its competenciés and to direct the prospective business
opportunities and threats to its advantage. Therefore, the finance mahager should take the investment and finance
decisions in consonance with the corporate strategy.

A company's strategic or business plan reflects how it plans to achieve its goals and objectives. A plan's success depends
on an effective analysis of market demand and supply. Specifically, a company must assess demand for its products and
services, and assess the supply of its inputs (both labor and capital). The plan must also include competitive analyses,
opportunity assessments and consideration of business threats.

Historical financial statements provide insight into the success of a company's strategic plan and are an important input
of the pianning process. These statements highlight portions of the strategic plan that proved profitable and, thus,
warrant additional capital investment. They also reveal areas that are less effective and provide information to help
managers develop remedial action.

Once strategic adjustments are planned and implemented, the resulting financial statements provide input into the
planning process for the following year, and this process begins again. Understanding a company's strategic plan helps
focus our analysis of the company's short-term and long-term financial objectives by placing them in proper context.