Financial planning and strategic planning by difference approaches implied to promote the features in the performance of the business. The strategic plan is used to illustrate the mission, vision, and strategic objective of an organization, and it is also comprised of the specified expectation that a firm has to utilize its all financial and human resources. On the other hand, the financial planning is used to set specific objectives and purposes or say aims are having a similarity of the financial capital structure.
Harley-Davidson, the motorcycle manufacturing company of U.S., is listed on the New York Exchange. The company is a vertically integrated company and needs more to focus on innovation in manufacturing and producing. Also, to enhance the total efficiency, it is required to guarantee that the products manufactured are aligned with the consumer’s demand for various aspects of motorcycle as product in the global scenario (Harley, 2014).
The company’s annual report of 2013 says that the firm is undertaking some strategic initiatives in order to increase company’s efficiency level. Surge production project to launch at York PA was one of the plan mentioned that was important in building the increase in production processes since the company marched towards the spring season. Also the plans and initiatives for surge production in the whole US has been setup. This strategic choice of the firm shows some implications. Hence, all the stakeholders of the firm like employees and the shareholders hence need to get ready for the effects due to surge manufacturing. It can be noted that for a common circumstances and conditions, the manufacturing and production based on seasonal demands has effective impact on the production efficiency that helps in increasing the wealth of the shareholders by increasing the return on equity (Harley, 2014).
There is also the effect on the financial planning due to the strategic plan of the company. Harley-Davidson is much dependent upon the efficiency of its manufacturing. If the company is investing in acquiring new plant and equipment, then they should ensure in decreasing the variable cost in making the new bikes. Return on Asset (ROA) Ratio acts as an important tool that indicates the revenue generated from the total asset of the firm. The firm has used the robots and upgrading of the IT system that has granted firm for advancing the plant assets of the firm (Harley, 2014). Financially, it can be said that upgrading new plant usually increases the leverage and thus increases the risk of the company’s shareholders.
On the other hand, the process of implementation of the new process in manufacturing requires new demand on the purchase by suppliers and more complex working capital to maintain the balance. Procurement of more supplies and materials for maintaining enough liquid assets will be required to serve the needs and interests of the customers in that financial year. It is further required for the firm to be ready in engaging employees for overtime work in the duration of peak production and be prepared for overtime salaries and wages. (Harley, 2014).
There are also the ethical issues to be dealt with the company. The main ethical concern is related with the employees’ relation while setting up the initiatives. The firm might face problem as the employees have been working since long period and the time and cohesion have established the good working relation and this new manufacturing process initiative to cut down the cost and increase the efficiency might ruin it all. This might probably happen as the new initiative may force the firm to cut down the employee working hours, reducing the wages and cutting the jobs (Harley, 2014). The other ethical issue that the firm must deal with is the environmental sustainability issue due to a new surge in production. The increase in the energy consumption for the new production process puts company in the position in installing the renewable source of energy which will help in decreasing the variable cost of the firm with respect to the energy in the long run.
Harley Davidson Inc. (2014) Harley-Davidson Annual Report retrieved from: http://www.annualreports.com/Company/1140