Question

‘Leno’ is a reputed car manufacturing company, which is going to complete its 75 years in October 2024. The Chief Executive Officer of the company decided to take the company to a higher level. For this he called a meeting of all departmental heads of the company. In the meeting, the Chief Executive Officer proposed a target to increase sales by 10% and profits by 20% in its Platinum Jubilee year. The Human Resource Manager estimated that an increase of 500 workers would be required to achieve the target. The Finance Manager suggested that the company must hold adequate cash balances for various purposes, and he will prepare a statement showing the estimated cash inflows and outflows for this particular period. Identify and explain two types of plans discussed in the above case.

Hint:

Objectives guide ‘what to achieve’; financial plans decide ‘how to fund’ it.

Answer 1

• Objective: The broad goal or target that an organization aims to achieve.
  Clue: “...proposed a target to increase sales by 10% and profits by 20%...” — This sets a clear objective.
• Financial Plan (Budget): Planning and forecasting of financial requirements, including cash inflow and outflow.
  Clue: “...prepare a statement showing the estimated cash inflows and outflows...”

These plans guide resource allocation and future course of action.
Final Answer: Objective and Financial Plan