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Discussion on: Importance of setting both strategic and financial goals

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Angel Paudel

Strategic goals provide a sense of direction, a vision. It outlines the goals that the organization would like to achieve (McCann III, Leon-Guerrero & Haley, 2001). As Yogi Berra told, "If you don’t know where you are going, you are certain to end up somewhere else.” A company thus without strategic goals would be without a target and thus have a higher chance to deviate from its motto and fail to deliver on user promises. In addition, financial goals are equally important for a business. As the name suggests, it revolves around money or finances. A business needs to manage their finances to ensure sustainable growth (Ulrich & Lake, 1991). Financial goals help in creating a balanced plan to determine and achieve a company’s short, medium and/or long-term objectives.

Strategic and financial goals are both equally important for an organization to have. Missing out on either one of those wouldn’t simply complete the equation. Strategic goals show a vision of where the company would like to be after ‘x’ number of years. Relating this with an example, Khalti starting to use Kiosk to allow users added method to use their application is a strategy. Let’s consider that the motive of the company here is to increase the transaction using this method. Financial goals help set the finances they would like to add from that method if any. Relating to the same example, Khalti setting a target to increase the total transaction by 40% originating from Kiosk while this medium increasing the overall revenue of the company by 25% by 2020 would be a financial objective. As in the example, each of those goals completes each other. The financial objective also made it possible to gauge the achievement of the goal.

Considering another example where a company wants to move to a new location. For this, the company would need a million dollars. It’s a strategic goal to move to a new location as that provides a better opportunity for the company and it’s a financial goal to dictate how the funds can be generated to ensure the goal is fulfilled. It also ensures that the company is focused on a goal and doesn’t deviate away from it.

Comparing strategic and financial goals, it’s clear that the financial goals are more measurable. The performance can be analyzed, progress looked into and change strategy if need be if the goal is lagging behind. Whereas strategic goals are more focused on the performance and the end result that the company wants to achieve. Strategic goals unlike in financial goals progress can’t be easily trackable and thus financial goals are the one which becomes the focus in most of the board meetings causing heated debates (Khan, 2012). Financial goals even though is the one which is visible in the front, it’s also strategic goals which provides a sense of direction while increasing operational excellence. Thus, both strategic and financial goals are of importance to the organization of any size.

References

Khan, I. (2012). The Balanced Scorecard: Strategic Planning and Management. Prabandhan: Indian Journal Of Management , 5 (5), 47.

McCann III, J., Leon-Guerrero, A., & Haley, J. (2001). Strategic Goals and Practices of Innovative Family Businesses. Journal Of Small Business Management , 39 (1), 50-59.

Ulrich, D., & Lake, D. (1991). Organizational capability: creating competitive advantage. Academy Of Management Perspectives , 5 (1), 77-92.