Chapter 6. Strategy and Financial Planning


Item 1

Explain the role of the strategic plan in budgeting.

Item 2

Identify the sources of value creation.

Item 3

Describe what is meant by a comparative advantage and a competitive advantage of a company.

Item 4

Explain the relationship between strategy and maximization of shareholder value.

Item 5

Distinguish between operational budgeting and long‐term financial planning.

Item 6

Relate the different types of budgets to the budgeting process.

Item 7

Explain the different tools that can be used for sales forecasting and budgeting.

Item 8

Describe the role of financial modeling in financial planning.

Item 9

Relate the performance measurements of economic value added and the balanced scorecard to the strategic planning process.

Item 10

Identify sources of value creation and relate these sources to Porter's Five Forces.

Item 11

Explain the role of the CFO in a company's strategic plan.

Abusiness that is able to deploy its assets to the best possible use creates value and advances the effcient allocation of resources for society as a whole. Owners, employees, customers, and anyone else who has a stake in the business enterprise are all better off when its management makes decisions that puts its assets to their best use. But just as there may be alternative routes to a destination, there may be alternative ways to allocate resources. A strategy is a plan of action of how to reach an objective. And just as some routes may get you where you are going faster, ...

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