 Financial
planning
The consensus view, that of the rational model, of financial planning in
mainstream finance is that it is a process that starts with goals, compares these to
anticipated achievement to identify any gap, analyses alternatives and monitors progress
towards the goals. The basic goal is shareholder wealth maximization. This model, however,
is not the only one, and it has been criticized on a number of grounds. An extreme
alternative is the 'disjointed incrementalism' model, which is based on making only
marginal changes to existing policies as problems arise. Other models attempt to combine
the strengths of these two models. Procedures and calculations have a role in supporting
planners' more intuitive and political skills. Computer models may also be of some help,
although they have their shortcomings.
Robert H. Berry
|