Coca Cola Strategic Initiative

Strategic Initiative

The Coca-Cola Company is the world's largest beverage maker, but the company could not have attained this status without sound planning in the financial realm. An explanation of the relationship between strategic and financial planning will further the reader's understanding of the company's planning for financial matters involved with its future endeavors. Displaying an organizational initiative (and its effect on cost, sales, and risk) will illustrate the connection between company strategy and financial planning.

The relationship between strategic and financial planning is simple but distinct. According to Known, a strategic plan is a general description of the firm and its business environment. The plan covers general information or questions about the company. For example, the plan answers the questions: who are we and what do we produce? Who are our customers and what do they desire? Who are our competitors, what do they produce, and how can we compete with them? For years, Coca Cola's main mission has been sustainable growth, or meeting short-term commitments while investing to ensure the company meets long-term goals. The company uses its organizational vision and clear goals to guide itself toward long-term growth.

The purpose for the company's financial plan is to align its day-to-day activities to support general goals and objectives while establishing a process to help managers prepare for the future. The long-term financial plan usually covers a three to five year period and includes income statements and balance sheet estimates for each year in the scope of planning. These forecasts are called pro forma financial statements. The long-term financial plan has more detail than the strategic plan, and it displays operational data to the division level or company level. The short-term financial plan covers a period of one year or less and is a very detailed description of the company's projected cash flows. The short-term financial plan typically uses a cash budget format (detailed cash flow projections by month or even week).

An example of a Coca-Cola strategic planning initiative is 2012 capstone initiative: It reads, "Build the fundamental strengths in marketing and innovation, drive increased efficiency and effectiveness in interactions with the system and generate new energy through core brands that focus on health and wellness" (Coca-Cola, 2011).

Initiative Effects on Coca Cola's Financial Planning

Strategic initiative financial planning will increase Coca Cola costs. Coca Cola's strategic financial planning affected cost in a quarter by increasing growth by 6%, according to "Coca Cola" (Coca-Cola, 2011). Coca Cola will continue to cross brand and innovate new ideas to continue to be the leading beverage maker. A set in the financial planning process is establishing goals. This organization has surpassed the long-term goals set, for example increasing growth by 6%. Their global drive advances with strong volume growth ahead of their long-term target and comparable EPS growth in line with the long-term target. Because the growth has increased beyond their plans, the costs will continue to increase because the organization has a firm plan to continue innovating non-alcoholic beverages.

Strategic initiative effect of costs and sales for Coca Cola's financial planning are "hand and hand." Strategic initiative financial planning will also increase the Coca Cola organization sales. The strategic and financial planning will affect sales by increasing the sales from year to year. As of September 30, 2011, the sales for Coca Cola increased from over $6,000 in October 2010 to over $15,000 in sales, according to the financial report. The organization will continue to lead the non-alcoholic beverage sales community with the aggressive strategic sales financial planning.

The financial planning processes includes developing operating expenses and staying within a safe margin, therefore limiting the contact to the impacts of essential or unexpected business risks. The relationship between costs and sales is the organization ability to initiate new ideas and production. Strategic and financial planning always is intertwined in an organization. Any significant change to the company's revenue or profit compels a reevaluation of the current strategy in place. Coca Cola is successful because of the strategic financial planning; the sales and costs provide the information.

Risks and financial effects of the initiative

Coca-Cola is known to be of the most prestige of companies. Coca Cola's success comes from a strong strategic plan. Coca-Cola had to have constructed the company