Strategic goals are more concerned with the internal and external aspect of how the business is to be run. It deals with operations, mid-level management and higher level decision making aspect. This may be clear as to what to achieve and how to achieve it but it will be incomplete without understanding and setting goals for financial aspect such as capital budgeting, asset management, cash flow etc.
Depending upon the past financial statement of a company alone, to set financial objective may not be without error as well. Future is unknown and a poor performer may be able to bring huge positive changes while good performers can falter into difficulties. Therefore future financial performance depend on good strategic objectives and are two sides of the same coin. (Gamble, Peteraf, & Thompson Jr, 2015)
It can be said that strategic and financial goals will not be complete without each other as strategic goals are made to increase shareholders wealth. Strategic performance measurement system (SPMS) is being used more and more these days to evaluate the performance or return on investment. Managers should target achieving financial and strategic goals if they are to envision improvements in financial performance. (Webb, 2001)
Let us take an example of a restaurant. If the owner wants to improve cash inflow, it is not in the financial statements of the past years that will help and guide them out. The sales record, preferred dish, cost of production etc. will not matter as much as what the customer thinks of the food in the restaurant or the ambience. Satisfied customer are loyal customers that bring cash inflow. Therefore cost reduction and pricing may be a financial goal but strategic goal will be to understand customer perception and satisfying them. Both are important for the success of the restaurant.
References
Gamble, J. E., Peteraf, M. A., & Thompson Jr, A. A. (2015). Essentials of Strategic Management The quest for competitive management. NewYork: McGraw-Hill Education.
Webb, A. R. (2001). Managerial goal commitment in a strategic performance measurement system: The effects of causal-linkages and non-financial goal achievability. Ann Arbor: ProQuest Dissertations Publishing. Retrieved from proxy.lirn.net/MuseProxyID=mp03/Mu...
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Strategic goals are more concerned with the internal and external aspect of how the business is to be run. It deals with operations, mid-level management and higher level decision making aspect. This may be clear as to what to achieve and how to achieve it but it will be incomplete without understanding and setting goals for financial aspect such as capital budgeting, asset management, cash flow etc.
Depending upon the past financial statement of a company alone, to set financial objective may not be without error as well. Future is unknown and a poor performer may be able to bring huge positive changes while good performers can falter into difficulties. Therefore future financial performance depend on good strategic objectives and are two sides of the same coin. (Gamble, Peteraf, & Thompson Jr, 2015)
It can be said that strategic and financial goals will not be complete without each other as strategic goals are made to increase shareholders wealth. Strategic performance measurement system (SPMS) is being used more and more these days to evaluate the performance or return on investment. Managers should target achieving financial and strategic goals if they are to envision improvements in financial performance. (Webb, 2001)
Let us take an example of a restaurant. If the owner wants to improve cash inflow, it is not in the financial statements of the past years that will help and guide them out. The sales record, preferred dish, cost of production etc. will not matter as much as what the customer thinks of the food in the restaurant or the ambience. Satisfied customer are loyal customers that bring cash inflow. Therefore cost reduction and pricing may be a financial goal but strategic goal will be to understand customer perception and satisfying them. Both are important for the success of the restaurant.
References
Gamble, J. E., Peteraf, M. A., & Thompson Jr, A. A. (2015). Essentials of Strategic Management The quest for competitive management. NewYork: McGraw-Hill Education.
Webb, A. R. (2001). Managerial goal commitment in a strategic performance measurement system: The effects of causal-linkages and non-financial goal achievability. Ann Arbor: ProQuest Dissertations Publishing. Retrieved from proxy.lirn.net/MuseProxyID=mp03/Mu...