Sample Essay On Strategic And Financial Planning:

Microsoft Corporation

Strategy of a company has to do with identification of the strategic objectives and designing a plan of how to achieve them. Usually, strategic planning is done through assessing the company’s position in the market, competition, and it is performed in the form of a SWOT analysis. Then, based on opportunities identified, the strategic options are selected. The annual report of Microsoft (2014 annual report) shows that penetration and expansion into mobile devices segments remain one of the strategic objectives of Microsoft. In its turn, the financial planning has an objective of planning company’s financial resources (cash, debts, securities issue etc) in order to support the strategy implementation.
As discussed in the competition analysis section of the annual report, “the Windows operating system faces competition from various software products and from alternative platforms and devices, mainly from Apple and Google”. One of the classical responses to competition is tapping the new markets, which is clearly pursued by Microsoft as it has indicated that Windows Phone would be one of the focuses of its further development. To implement this mobile strategy, Microsoft acquired Nokia’s mobile devices business in 2013 for consideration of cash of USD 7 billion and Nokia’s repurchase of bonds in the amount of about USD 2 billion. This acquisition has been viewed to help Microsoft accelerate its growth in the strategically important mobile devices business. However, this strategy was supported by the related financial planning in the form of cash flows, budgeting, securities (convertible notes) issuance. The section of the annual report talking about debt clearly demonstrates this financial planning as it says that the company has issued debt at the favorable price and the funding received from these issuances was to be used for general corporate purposes, which include, among other things, acquisitions.
The above example of Microsoft clearly demonstrates that though important as it is, the strategic planning has to be supported by other planning elements including financial planning. The example of Nokia acquisition described above shows that financial planning has to take note of the strategic objectives of the company and ensure that necessary funds and financial instruments are available at the optimal cost for the company to achieve its strategic objectives.

Reference

Microsoft Corporation (2015). 2014 Annual Report. Retrieved from
http://www.microsoft.com/investor/reports/ar14/index.html