Arment Co. has sales in the range of \(\$ 25\) to 30 million, has one manufacturing plant, employs 700 people, including 15 national account salesmen and 80 traveling sales representatives. The home office and plant is in Philadelphia, and the product is distributed east of the Mississippi River. The product is a line of pumps and related fittings used at construction sites, in homes, and in processing plants. The company has total assets equal to \(80 \%\) of sales. Its capitalization is: accruals and current liabilities \(30 \%\), long-term debt \(15 \%\), and shareholders' equity \(55 \%\). In the last two years sales have increased \(7 \%\) each year, and income after tax has amounted to \(5 \%\) of sales.

Required:

(a) Strategic decisions by top management on a number of important topics serve as a basis for the annual profit plan. What are these topics, and why are they important.

(b) What specific procedures will be followed each year in developing the annual profit plan?