Management and Organizational Studies 2310A/B Chapter 4: Long Term Financial Planning and Corporate Growth

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Stacey Hann

Document Summary

Chapter 4 long term financial planning and corporate growth. A statement of what is to be done in the future. Growth on its own is not a reasonable goal. Planning horizon the long range time period the financial planning process focuses on, usually the next two to five years. Aggregation the process by which smaller investment proposals of each of a firm"s operational units are added up and treated as one big project: combine smaller capital budgeting decisions into one big project. Assumptions and scenarios: make realistic assumptions about important variables, run several scenarios where you vary the assumptions by reasonable amounts, determine at least a worst case, normal case and best case scenario. Examining interactions: helps management see the interactions between decisions. Exploring options: gives management a systematic framework for exploring its opportunities. Avoiding surprises: helps management identify possible outcomes and plan accordingly.