Financial Management: Approaches, Techniques, and Factors of Decision Making

Financial Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
SCENARIO A..................................................................................................................................3
1. Evaluation of various approaches, techniques and factors of decision making.................3
2. Stakeholder management ...................................................................................................4
3. Management accounting techniques in cost control...........................................................5
4. Techniques of fraud detection and prevention...................................................................5
5. Reflection of learning.........................................................................................................6
Scenario B........................................................................................................................................6
Financial ratio's analysis of Morrison Supermarkets PLC for the year 2020, 2019 & 2018..6
Usefulness of data obtained in decision making..................................................................12
Evaluating the various investment appraisal techniques utilized to maximize ROI............13
Values of various techniques to inform financial decision making.....................................14
Ways in which financial decision making support long term sustainability........................15
Recommendation .................................................................................................................15
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Financial management is referred to as the process through which the planning,
organizing, controlling and the directing of all the activities is undertaken in the management of
the financial activities (Chung and Chuang, 2016). The present report is based on Morrison
which is a company based in the retail sector. The present report will discuss about the various
techniques, factors and approaches of decision making used within the company. Also, it will
discuss about the stakeholder management along with the different management accounting
techniques used in cost control. Further the detection of fraud and the reflection of learning will
be provided. In the next part the ratio analysis of the company and the various techniques of
appraisal management will be applied. In the end it will be seen that how the financial decision
making supports the long term sustainability will be assessed.
SCENARIO A
1. Evaluation of various approaches, techniques and factors of decision making
For the business to be successful the most essential thing is the proper and effective
decision making. The decision making is a process through which a person chooses a single best
option from a variety of options.
Approaches of decision making Formal approach- this is a type of approach wherein the formal chain of command is
used in order to take the decision. This is essential because of the fact that if the company
will follow the formal chain of command for the decision making then proper and
accurate decision will be taken as only the top management will be included in the
decision making. Informal approach- this is another approach wherein the company does not follow the
formal chain and rather every person can share their views and suggestion relating to the
area of decision (Bapat, 2019). Thus, this is a better approach as here the company will
have better alternatives to select from as all employees participate within the whole
decision making process.
Techniques of decision making Cost benefit analysis- this is a technique in which the company analyses the benefit and
cost of every alternative and then in the option where there is maximum benefits and
lower cost that decision is being finalised (Herranz and et.al, 2017). This technique is

useful as this will assist the company in taking the most appropriate decision which will
be beneficial for the company. Brainstorming- this is another major important technique of taking the decision wherein
the whole management or the decision making committee sits together and the discuss
over the topic on which decision need to be taken. This is also a better technique as here
all the people discusses and then finally takes the decision.
Factors affecting the decision making process Mind- set of people- this is the major factor which affects the working and the decision
making process by a person. This is due to the reason that every person has their own
way of thinking and perception. Thus, when two or more people takes the decisions then
this factor affects to a great extent.
 Too many option- this is another major factor which affects the working to a great extent.
This is pertaining to the fact that when the decision taker has a lot many options then it
will be difficult for the company to decide which option to be selected.
2. Stakeholder management
The stakeholder management is a process or series of steps which are to be undertaken in
order to manage and monitor and organize for the requirements of the stakeholders of the
company. The stakeholder of the company is the one who are interested in the success of the
company as they have some personal interest within the company. There are different types of
stakeholder generally divided in two categories that is internal and external. This includes
stakeholders like management, employees, suppliers, owners, government, competitors and
many others. For getting success it is very essential for the company to keep all the stakeholder
happy and satisfied.
In contrast to this all the stakeholder have their own need and requirement which is
different from others (Yuniningsih, Pertiwi and Purwanto, 2019). This is pertaining to the fact
that interest and power of every stakeholder is different. For example, the government is a
stakeholder of the company who is interested in the profits of the company as the government
charges tax on the profit earned by the company. In contrast to this the management is interested
in cutting the cost of the company so that the profits of the company can be increased. On the flip
side the employees within the company expects that the company give them better salaries and
incentives (Choonara, Eyles and Morrison, 2020).