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FIN 370 WEEK 3 TEAM ASSIGNMENT - STRATEGIC INITIATIVE PAPER

Strategic Initiative Paper:s
Using the selected organization from your Learning Team Week Two assignment, prepare a 1,050-1,400-word paper
in which you describe the relationship between strategic planning and financial planning. In your paper, be sure to
address the following:

Describe the strategic planning process for your selected organization and identify a strategic initiative discussed in
the organizations annual report.
Describe how this initiative will impact the organizations financial planning.
How will the organizations initiative impact costs?
How will the organizations initiative impact sales?
Describe the risks associated with the initiative and the financial impact that these risks may have.

PepsiCo Strategic Initiative

PepsiCo Strategic Initiative
Organizations use strategic initiatives when introducing new products, to enter a new
market, to meet market requirements, lower costs or facing any other difficulties in making the
organization more profitable. The concept behind a strategic initiative is change and that can be a
challenging situation. To make the change successful it takes a group effort throughout the
company that needs to be closely managed and monitored. The results of a successful strategic
initiative implementation have a positive and significant impact on the organizations
profitability, but it only takes place if the efforts are unanimous. The main steps a company
needs to make in the strategic initiative implementation are to initiate and ensure support,
analyze and agree on approach, execute and examine the results (Snyder, 2008, p. 1).
Strategic Planning Initiative
The strategic planning initiative of an organization helps the company to improve the
organization from different aspects. When the initiative is high people tend to work hard. In life
and in business, people want what ever they can have. This is part of the human nature and in
business it drives people to be successful and make profit. PepsiCo used a strategic initiative to
plan financially for the future. The upper management will evaluate and decide what is best for
the company in the short term and what is best for the company in the long term. PepsiCo
releases periodically the financial statements, initiatives for increased productivity to inform the
shareholders of growth opportunities (PepsiCo, 2011).
PepsiCo used their portfolio, the brands that they represent, the costs, and the capital

structure of the company in their strategic planning. The organization analyzed and reviewed the
financial reports and decided to combine their food and beverage to a one-company platform.
The decision to vary their products from making only soft drinks and combine it with food was a
new idea that was implemented based on the financial analysis results prior to this investment.
The company thinks that combining their food and beverage to a one-company platform they
will give the shareholders an increased rate of return on their investment (PepsiCo, 2011).
In the short term, PepsiCo plans to increase the investments in the brands that they sell, put
in place a three-year productivity program, improve the net return, and give a higher annual
dividend to the shareholders. In the long-term PepsiCo plans to invest in new products because
the company forecasts a cost increase driven by global commodity cost inflation. PepsiCo also
sees a higher pension cost as a result of a lower discount rate, and the production will offset any
other costs that may come up in future initiatives. This initiative can have a positive or negative
impact on the organization depending on a few different factors. The trick is for the decision
makers to know what goals they need for the organization and how to reach those goals. An
initiative can make a business grow and that is the reason why PepsiCo would adopt a strategic
planning (PepsiCo, 2011).
Financial Planning Initiative Cost
The initiative affects organizational planning by influencing the financial planning. To ensure
thorough coverage of the capital, PepsiCo must determine the weighted average cost of capital
(WACC). According to Titman, Martin, and Keown (2011), WACC is a composite of the
individual costs of financing incurred by each capital source. A firms weighted cost of capital
is a function of the individual costs of capital, the capital structure mix, and (3) the level of
financing necessary to make the investment (p. 454). Simply put, the WACC determines the
cost of borrowing money and raising capital. The initiative affects costs because the corporation
has to plan to drive greater cost productivity. Cost competiveness is always at the forefront of
strategic planning meetings. Delivering products and services at a lower price than competitors
displays that consumers are at the central focus. PepsiCo vows to produce quality products with
regard to quantity and pricing, which stages savings.
In the past PepsiCo implemented across the global organization a strategic initiative called
Structured to Succeed. The program set out to anticipate a savings of $70 million (iStockAnalyst,
2008). Cost effectiveness offers an immense amount of liberty for new advancements throughout
the corporation. The firm also could invest savings to generate long-term savings. It is
paramount to analyze other aspects, which would include analyzing financial statements.
Examining financial statements set the stage for financial planning.
Financial Planning Initiative Sales
Understanding the fragile relationship between strategic and financial planning is critical in
any organization today. Strategic planning determines the direction an organization travels. This
type of planning involves setting milestones on a distinct path an organization wishes to pursue
to achieve a certain goal. Financial planning represents the financial forecast to meet that
organizations needs. Even though they may seem different both of these planning have similar
traits. In both financial and strategic planning objectives are clearly defined, research must be
conducted and data carefully analyzed, a plan to reach the desired goal is implemented, and
finally organizations must monitor the results of the initiative.

Sometimes these initiatives an organization implements can affect cost and sales. In 2008 the
Pepsi Bottling Group announced its initiative to enhance the organizations operations around the
globe. Structured to Succeed also focused on making sales and customer service more
effective, helping management with decision-making process, lowering productivity cost in
current macroeconomic environment, and to improve the infrastructure of the supply chain
saving the organization $150 to $160 yearly upon its completion (iStockAnalyst, 2008).
The plan focused on three specific regions the United States and Canada, Europe, and
Mexico. In the United States and Canadian region the organization focused on reducing its
general costs and improving the supply chain, affecting 750 jobs but and in the future could save
the organization on financial obligations. In Europe 200 jobs were affected by the organization
streamlining its business practices. In Mexico the organization plans to close three plants and 30
distribution centers and eliminate 700 routes. These changes are designed to overhaul the
delivery and selling capabilities to achieve greater productivity levels but will impact 2200 jobs.
This restructuring of the organization business help Pepsi Bottling Group to save millions of
dollars, improve productivity levels, and increase sales around the globe (iStockAnalyst, 2008).
Initiative Risk and Financial Effects
When a new initiative is initiated, especially one as large as Pepsi, it can cause a high risk
for the company. When introducing such a large initiative it can increase the overhead costs
because the company spends time to research how the initiative will perform when developing a
new product and also spends on marketing. To add to the labor costs and time spent there is also
an increased amount spent on the rollout phase to ensure that the difference is noticed and
perceived by customers. As a result, increasing the cost it can be very risky for a company to
invest money and time if the initiative does not work well in their favor. The company could lose
not only the investment but could also lose current customers because they will choose a
competitor with a lower price (iStockAnalyst, 2008).
The strategic initiative can have a positive growth on working capital, increasing the income
and the profit for the company, but to increase the return to such extent there is a high risk
associated with it. There is a risk of failure if the new initiative is not supported by the whole
organization before it is implemented. During the research phase the organization needs to
evaluate how the initiative affects profits and how is accepted by customers. If in the planning
stage the research proves that it would not be a good option to continue with the initiatives
implementation because it could be too risky and the capital invested could be lost, the
organization should consider not implementing the strategic initiative (iStockAnalyst, 2008).
Conclusion
Organizations chose to implement strategic initiatives to increase profit and the rate return
for their shareholders. The change process that occurs as a result of a strategic initiative affects
departments across the organization such as sales, product development, finance and marketing.
Working together on the same common goal is the key to make the change successful and
improve dramatically the results, providing an increased market and customer share, enhanced
customer satisfaction and greater product competitiveness (Snyder, 2008, p. 2).
References

PepsiCo. (2011). PepsiCo Announces Strategic Investments to Drive Growth. Retrieved from
http://www.pepsico.com/PressRelease/PepsiCo-Announces-Strategic-Investments-to-DriveGrowth02092012.html
iStockAnalyst. (2008). The Pepsi Bottling Group Announces Initiative to Strengthen Customer
Service and Drive Cost Productivity. Retrieved from
http://www.istockanalyst.com/article/viewiStockNews/articleid/2808369
Snyder, R. (2008). Making Changes that Dramatically Improve Results. Breakthrough Inc
Accelerating Revenue Profitability. Retrieved from http://www.breakthroughinc.com/media/Breakthrough%20SaaS%20Survey.pdf
Titman, S., Keown, A. J., & Martin, J. D. (2011). Financial Management: Principles and
Applications (11th ed.).

Disney
Strategic Initiative Paper
In this paper, the relationship will describe strategic planning and financial planning for Disney. The first
section will cover Disneys strategic planning initiative and identify a strategic initiative discussed in the
organizations annual report. This will be followed up with a description on how this initiative affects
Disneys financial planning. The next section will address how Disneys initiative will affect the costs. The
third section will discuss how Disneys initiative will impact sales. The fourth section will describe the
risks associated with the initiative and the financial impact that these risks have. This will be followed up
with a conclusion.
Strategic Planning Initiative for Disney
Within many elements of strategic planning, the scope of a corporation such as Disney must be
broken down into numerous factors, and the initiatives derived from those business components looked
upon a step-by-step process to glean advantages from the wide array of contingencies. Team A has
looked at an initiative from the Disney Annual Report for 2009, which is the strategy for handling foreign
currency exchange risks. As with numerous large multi-national corporations both their future growth
and expansion lie in the ability to do business in foreign markets. The management at Disney is astutely
aware of this factor and has made inroads into these markets. The major drawback is financing these
operations with local currencies and the foreign exchange rates, and as such Disney has modeled a
hedging system to address these issues. To preclude the diminishing effect of losses strictly as a result of
currency fluctuations in various market exchanges, Disney has set ranges in the form of minimum and
maximum ranges of exposure so as to anticipate exchange rates and set a limit of exposure time to five

years. By invoking a management system that allocates hedges like these, the company has been able to
offset losses and avoid the possible affect to its balance sheet. This strategy has netted additional big
profit over operational revenues in addition to helping finance expansion into markets such as China.
Finding and employing new sources of revenue is always difficult at best; however the Disney
management team has done well by authoring a new revenue stream called accumulated other
comprehensive income or (AOCI), which has provided further gains for the shareholder equity within
the company.
Financial Planning
The Disney Corporation has a team of specialized accountants to deal with the risks
attached to foreign currency exchange. When Disney was considering its first theme park out of
the country this group was formed. Disney had distributed its films globally but nothing of the
magnitude of a theme park. Analyzes are run and foreign exchange rates are monitored daily for
any changes.
Risk management is an iatrical part of the foreign exchange rates and these figures can
change hourly in some cases. The accountants in this division of Disney are specialist in the field
of international financial management and a bachelors in this subject is required to work within
the accountant division of Disney.
When Paris Disney, Formerly Euro Disney, was first opened, the foreign exchange rate
risks were higher than today. During those first years Disney dealt with the exchange of other
European currencies to the Franc and then the equilivant to the dollar. The creation of the Euro
currency has made the process a little easier, because you only have to evaluate the Euro to the
dollar.
The Disney Corporation has always strategyly planned the financial areas of the company
for any contingency. The risk management steps for the foreign exchange risks has been

successful, and will continue to update the information to improve the transition of currencies
Cost Impact
Disney's management system to allocate hedges in dealing with risk of foreign currency exchange can
help the company to avoid major losses and affects to the balance sheet. The strategy can create profit
for the company and help them to expand into more foreign market areas. Hedging reduces the
interest rate risk. Without hedging, earnings are affected by each interest rate fluctuation, and several
hedging techniques available. Some choices will not cost the company anything initially and liquidity is
good because of the open market; however, there are also disadvantages to hedging.
One disadvantage to hedging is that if the foreign currency is more valuable than United States
currency that benefit is lost. If the foreign currency appreciates in value, the company could lose
ground. Hedging is based on the thought that the particular currency will continue to be received,
which may not necessarily be the case. Some contracts are for two years or less, and will not provide
the cash flow needed currently to reduce short-term debt. Hedging has both advantages and
disadvantages. The costs can sometimes eat up more profit than it makes. If not used properly,
hedging can cause damage financially and in public relations.
Sales Impact- Samantha
Risks
Disney; like any other company has many risks associated with the company. These risks are anything
from developing more costs than the company makes, losing money on marketing, and just losing
money on ideas. Disney has a team of people just to deal with such risks so that the company can stay
afloat and able to make money. With Disney owning so many different things, they have to make sure
that the risks are taken care of when it comes to finances. The risks of this initiative can affect the
financing of Disney by completely wiping out the savings of the company. The risks taken also make it so
Disney cannot obtain financing for items that they may need. To avoid having any problems, Disney
needs to keep track of all finances with the use of balance sheets, and internal rate of return reports.
This way the company will have all of the risks covered before they have any possible problems now.
Any major company like Disney needs to have a backup plan in place just in case something goes wrong
so that things will be covered. With Disney owning amusement parks for instance; they need to have
great deal of insurance in place along with a separate account to deal with possible injuries to visitors of
the parks. In so many words it all comes down to risk management.
Conclusion
Disney has been a tremendous family oriented amusement park and like every other company, has
overcome its financial obstacles, and still has obtained the reputation as being the Happy Place on
Earth.

References
Disney, (2008), The Walt Disney Company: Corporate Responsibility Report, Retrieved from
www.disney.com/crreport/home.httl on January 22, 2011.
New York University, (n.d.), Risk Management: Profile and Hedging. Retrieved from
http://pages.stern.nyu.edu/~adamodar/pdfiles/papers/hedging.pdf on January 22, 2011.

Dell
a. Describe how this initiative will impact the organization's financial planning.
This initiative will impact financial planning in the sense that Dell will have to set aside
sufficient funds for such Innovation approach and related research and development initiatives.
Dell will need to plan for such expenditures in advance to ensure that such R&D and innovation
approach progresses seamlessly.
1) How will the organization's initiative impact costs?
Although such initiatives will increase the cost structure initially as funds need to be set aside for
such initiatives, the effort will bring improved efficiency and cost reduction in the organization
in the longer term as innovation will led to improvement in processes, systems, reduce product
costs and lead to overall efficiency.
2) How will the organization's initiative impact sales?
The initiative will have a significant impact on the company's sales as it will capture greater
market share and growth in sales by addressing customer needs with its innovative products and
will be offer more value of money to customer's money and thus, offer enhanced customer
satisfaction.
b. Describe the risks associated with the initiative and the financial impact that these risks
may have
The major risk associated with this initiative is that the spending on such efforts may not be
useful if it does not lead to creation of innovation and world class products. In other words, if the
innovation approach fails to deliver a world class product that exceeds customer's expectation
and is far superior than competitor's offerings, the extra cost incurred on such initiative will
affect bottom line profitability of the organization

Wal-Mart
Strategic Initiative Paper
FIN/370
February 19, 2012
Strategic Initiative Paper
Strategic and financial planning is an important part of Wal-Mart Stores Inc.s success. Wal-Mart
constantly plans strategic initiatives to make the business the best in the industry. Wal-Marts three
basic beliefs are respect for individuals, service to their customers, and to strive for excellence. These
beliefs have instilled a strong company culture that is always able to implement those strategic plans
through cohesive team work and unity.
This paper provides information describing the relationship between strategic and financial planning for
this organization. A strategic planning initiative for this organization and an identification of an initiative
discussed in the organizations annual report is included. Discussing how the initiative affects Wal-Mart
Stores Inc. and determining how the initiative affects costs and how the initiative affects sales is
provided. Furthermore, describing the risks associated with the initiative and financial effects they may
have on this organization are determined.
A Strategic Planning Initiative
A strategic planning initiative that Wal-Mart could implement to take care of their customers through
their associates is better training of their department heads. Merchandise supervisors, the people that
are responsible for keeping the store in stock, keeping their bins in receiving neat and organized, setting
the modulars and completing the price changes need weekly training classes on the processes of
running the business. Wal-Mart has been spending a large of money implementing these process and
each process depends on the other so it is critical that they understand what they are doing and why
they are so important to the business and to the customers. New innovations have been implemented
into the processes that need to be mastered and understood. Wal-Mart would reap a huge benefit
from formal training classes when an associate is promoted to a merchandise supervisor in increased
sales due to better flow of merchandise and better customer service for the customer.
Wal-Mart's Initiatives
This year the focus is on Wal-Marts commitment to deliver everyday low prices (EDLP). WalMarts brand was built on EDLP and it has earned them their customers trust and loyalty. The company
is working with their suppliers to offer the most relevant broad assortments in all categories. To reduce
costs they are expanding their assortment, reallocating selling space, and improving productivity to
reduce costs (walmartstores.com, 2012). Expense leverage is still a strong focus for the company this
year. Productivity initiatives are continuing to be implemented in all stores, the supply chain, and
logistics to increase returns.

Building new stores in the United States is still a priority and supercenters will be the focus
because they yield the greatest return and give shoppers that onestop shopping experience. Smaller
grocery stores called neighborhood markets (small grocery stores about 70,000 square feet) and
convenience formats will also be a focus of the company. In the second quarter of 2012 they will open
their first convenience format Wal-Mart Express (Walmartstores
.com, 2012). The stores will be 30,000 square feet (supercenters are over 200,000 square feet) and will
carry groceries, pharmacy and limited general merchandise.
How Initiative Affects Cost and Sales
Wal-Marts strategic initiative is making the best on all of its products in all of its stores. By
decreasing the quantity of overall suppliers and possibly the amount of products, Wal-Mart can easily
persuade contractors to decrease prices. Therefore, then increase revenue while creating an
opportunity for private label products. Wal-Mart never leaves one type of brand just simply decreases
the quantity of products supplied. For instance, Wal-Mart has changed to two plastic food storage bags
in its brand instead of four plastic food storage bags in its brands. Pactiv Corp.'s Hefty and Clorox's Glad
brand products have been removed from store shelves, which left Wal-Mart Great Value brand and SC
Johnson's Ziploc brand products (About.com, 2012). With the initiative, Wal-Mart products the company
will be the first to all new products, be the lead in cost and value, have a stock of assorted products as
well as increase market share. Wal-Marts strategic initiative is the growing stage in each category. They
are able to profit in overall market performance and balance growth. Merchants who have products that
are being sold in this section are always trying to assertively market toward Wal-Mart so that their
products are seen on Wal-Marts shelves, in turn help merchants grow as well.
Risks and Financial Effects
Wal-Marts initiative to deliver everyday low prices may have some risks. The risks associated with this
initiative, is Wal-Mart may not be able to deliver the promise of low prices, because of their suppliers.
The suppliers may not deliver the goods to meet the demands of the many Wal-Mart stores imposing a
risk of customers going to the competitors for the product Wal-Mart does not have. Zoning and
environmental issues may affect the risk of building new stores, depending on what areas the company
chooses to place the stores. There can also be risks from natural disasters when building new stores in
a certain areas. In addition, there is the risk of bad weather, which can hamper the distribution of
products and delivery of goods from suppliers. Some of these risks can be controlled with planning and
careful management.
The financial effects for Wal-Mart that can possibly hamper the initiative to deliver everyday low prices
can be cash flow problems, production cost overruns for the Wal-Mart brand products that the company
produces. There can be commodity risks, which can affect cash flow for the company, fluctuations in
the national and regional economy can also effect the spending habits of the consumer thusly affecting
Wal-Mart financially. Other financial effects for Wal-Mart are that operating expenses grew at a faster
rate than net sales because of restructuring charges and higher advertising expenses. Lastly, the
financial effects associated with cash flows from operations used for global expansion activities. All of

these risks and financial effect the Wal-Mart initiative of deliver everyday low prices.
Conclusion
In closing, Team A reviewed and evaluated Wal-Marts reports to help us identify important strategic
planning initiatives. We also gained a close understanding of how Wal-Mart uses strategic planning to
add organizational and stakeholders value while increasing profits. We uncover a series of great
efficiency tools used by Wal-Mart such as cost leadership to leverage operating expenses, and how it is
used by the organization to strategically dominate the competition, and lead the industry by continuing
to provide quality products at discount prices. This perfect planning continues to demonstrate WalMarts expertise in effectively utilizing global resources to maximizing profits while minimizing the
shared risk associated with it. In the end, Wal-Marts narrowed financial expense control and robust
inventory management alongside with their strategic planning; will sustain a profitable successful
organization with profitable returns.
References
About.com (2012). Logistics/Supply Chain. Wal-Marts Strategic Initiatives. Retrieved March
2012 from http://logistics.about.com/od/industryfocus/a/Wal-Mart.htm
Titman, S., Keown, A.J., & Martin, J.D. (2011). Financial management: Principles and
applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
Wal-Mart Corporation. (2011). Annual Report. Retrieved March 17, 2012 from www.
walmartstores.com
Walmartstores.com (2012). 2011 Annual report. Leveraging our foundation to reach even more
U.S.families. Retrieved from http://walmartstores.com/sites/annualreport/2011/walmartus.aspx