Special report - Strategic planning

This is encouraging, as strategic planning is probably one of the most interesting parts of the job. Deciding what business and which markets the organisation wants to be in, where to grow and where to withdraw is the driver of business - and the finance function needs to be involved. But it is important to recognise that the strategy belongs to the chief executive officer (CEO) and it is the role of the finance director (FD) to support him/her. This support, of course, should not be unquestioning - the FD should be neither the 'abominable no-man' nor a simple 'yes-man'. Using the analogy of a racing car, the FD is the engineer who ensures the car is fit for purpose, but it is the CEO who drives it.

Shaping the process

And it is the CEO who is most likely to be injured if the car crashes. A new report from the International Federation of Accountants' Professional Accountants in Business Committee (free from www.ifac.org ) examines what went wrong - and right - in a number of recent high-profile business cases, looking in particular at strategy and governance. The lesson is that business needs good governance, but it must also have the right strategy in place - and the FD plays an integral part in shaping and managing strategy, as well as in explaining it to investors and other external stakeholders. Indeed, the FD must be able to understand the strategy and communicate it to all interested parties.

This special report provides both the theory and the practice you need to fulfil your role. We asked Tony Grundy, senior lecturer in strategic management at Cranfield School of Management and a well-known author of books on strategy, to look at some of the key practical areas to consider. His article is followed by an examination of the role of the FD in each stage of the strategy process, written by Judith Shackleton and myself.

Managing change

Finally this special report offers summaries of the theory behind strategic planning. This section is based on the series of 12 Management Quarterly articles published by the Faculty, all of which are available as PDFs on our web site. These summaries begin with the question 'what is strategy?', and then turn to strategy at the corporate level, competitive strategy issues and ways in which the wider environment can have an impact on the business. Strategic choice is another key area for both managers and their financial advisers. We explore how decisions are made in organisations, and the process of managing organisational change. We conclude with the international perspective and a vision of the future.

Published by the Finance and Management faculty (SR3 - May 2004)