Essay about Disney Strategic Planning Initiative
The Initiative Effect on Cost
When a company develops a strategic planning initiative, the company needs to take into account how the initiative is going to affect the costs that drive the company. The Walt Disney Company’s strategic planning initiative is no different. The Walt Disney Company needs to take the cost drivers into account when developing an initiative, specifically the costs that will affect the working capital. The organization does use the VAR model for the initiative, but if the organization does not develop a financial plan in the strategic planning process, the company will not be able to forecast when an outside source of financing is needed. The costs of the company can rise higher than the sales creating illiquidity. This is from an excess of outside financing (Keown, Martin, Petty, & Scott 2005).
By calculating the VAR, the Walt Disney Company will be able to estimate the levels of loss that will occur based on low profitability. If the organization can use this to take into account an increase in the organization’s sales, Walt Disney Company can predict what the inventory and accounts receivable will be to keep the company going strong. The organization will know when the different projects of Walt Disney Company will need to expand