Financial and strategic planning is by distinction two different that are meant to upgrade the aspect of business performance. The main aim of a strategic plan is to illustrate the mission, vision and the tactical objectives’ of any corporation. Besides, the plan further includes the stated expectation of a firm to use all its resources that include human resource and financial resources. The financial resource in contrast makes specific objectives or aims that are similar to the availability and structure of the financial capital.
Harley-Davidson is a Motorcycle production firm that is currently listed in the New York Stock Exchange. Being a vertically integrated, the company must concentrate more on the innovative aspect of the manufacturing and production processes. Furthermore, to ensure total efficiency, the firm must ensure the process of manufacturing its products are in line with the global motorcycle demand (Harley, 2014). In its 2013 annual report, the firm indicated several strategic initiatives meant to increase the company’s efficiency level. The plans included surge production launch at the York PA, which was essential in ramping up more production processes as the company headed into the spring season. The firm has further set up plans and initiatives for surge production implementation in the entire United State. Based on the firm’s strategic direction, the implementations of these plans are set to carry some implications. All the firms’ personnel such as the employees and the shareholders will, therefore, have to get prepared for the effect of surge manufacturing on their firm. It is worth noting that in any common circumstances, the manufacturing and production of products based on their seasonal demands will effectively provide production efficiency and shareholders will be able to acquire higher return on their equity (Harley, 2014).
The strategic plans have further effects on the firm’s financial planning. In the first instance, the firm depends too much on the manufacturing process efficiency. In the process of making an investment in an equipment asset and new plant, it is important to ensure they decrease the variable costs that are required to make new motorcycles. The Return on Asset Ratio is one metric that is essential in this area as it helps indicate the amount of revenue that is generated from the total asset of the firm. The use of robotics and upgrade in information technology has aided the firm with many choices for advancing the assets of the plant (Harley, 2014). From a financial view, the asset upgrade of a new plant often increases the leverage degree thereby creating further risk for the company’s shareholders.
Secondly, a new demand on purchases by suppliers and a complex working capital will be required in the process of implementing a new process of manufacturing. Purchasing more materials to cater for the consumers needs will require the firm to maintain sufficient liquid assets in the whole financial year. The firm must further be prepared to offer overtime wages to employees working extra time in the season of peak production (Harley, 2014).
The primary ethical concerns with setting up the initiatives are purely related to the firm’s employee’s relation. Based on the long-standing and good working relation that has been established, the new manufacturing process, which is meant to cut on cost and raise the efficiency might not be of employee’s interest. This aspect is because the new initiative might end up reducing employees working hours and cutting their jobs (Harley, 2014). Environmental sustainability is another ethical concern because of the capabilities of the new surge in production. The more energy required for the production will present the firm with a good opportunity to install a renewable source of energy that will further decrease the variable cost of energy for the firm in the long-term.
Reference
Harley Davidson Inc. (2014) Harley Davidson Annual Report retrieved from: http://www.annualreports.com/Company/1140
