Techniques and Approaches for Effective Decision Making in Financial Management

Financial Management

INTRODUCTION
Financial management purpose is to evaluate the financial activities of the organizations and
issue which affect the business. By using financial management framework, managers able to
produce financial reports for the future decision making process. It leads to the growth of a
corporation and improve the production performance as well (Abrahamsen And et.al., 2018). It
allows the business to take effective financial decisions. The financial judgment would affect the
operational activities since there is a close relationship with different departments of the
organization such as marketing, sales staff etc. Financial managers must track everyday
operating records, such as receivables and payments, to ensure the organisation has adequate
cash to fulfil its obligations. The financial advisor must research carefully over a broader time
period whether and where the company will open a new fabrication plant. The finance managers
may also recommend the most effective or useful means of funding the project, collecting the
funds and then overseeing the overall performance and return of the project. This assessment
based on continental clothing company which is UK based company. This report based on two
different scenarios where first part is based on different approaches used in decision making
process and another one is based on the performances which are used for ling term sustainability.
MAIN BODY
Scenario A
1. Explain range of techniques, approaches and the factors which contribute for effective
decision making
Approaches which contributes in decision making process in context of the organization:
 Knowledge based approach: It recognizing information as a resource for achieving
productivity in companies; intelligence implies a strategy for managing and maximizing
performance in organizations. Providing a knowledge-based approach is essential for a
business enterprise, so that the decisions taken for reform have some empirical basis
(BLŠTÁKOVÁ And et.al., 2019). It has a massive impact on the company's managerial
decision-making process. Management of continental clothing company can use this
approach to make effective decisions on the basis of the collected knowledge.
 Formal or Informal approach: This allows the organisation's decision-making process
to make coherent strategy (de Azevedo And et.al., 2020). This strategy avoids the rational
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decision and provides explanations of the factors which required for making decision. It
helps in increasing the possibility of selecting strategies that fulfil the company's various
stakeholder requirements. The uncertainty includes with the operational activities is
reduced by logical alternatives being available. The approach allows for a faster
revaluation of the partners' requirements, expectations or changes in objectives. It helps
companies make more informed choices about all facets.
Techniques used for decision making process:
 T-Chart: The graph is constructed to maintain plus and minus options (Arnaboldi,
Lapsley and Steccolini, 2015). This means the consideration is taken of both negative and
positive considerations when making important decisions
 Decision Matrix: Managers should evaluate chosen policy at the time of taking decisions
(Chand, 2019). Within this matrix, all options are put in the table's first, and the factors
affecting the first segment decisions. This involves rating and weighing criteria according
to their importance and choosing the absolute best choices.
 Ratio analysis: This benefit from the details given in these financial statements when
taking decisions. Effective use of accounting ratios allows managers to share knowledge
that is important and purposeful for decision makers to balance organization success
within the business (Fich, Nguyen and Officer, 2018). This analysis is used to measure
the organizational profitability, efficiency, liquidity performance etc. It further helps the
managers of continental clothing to use such information in the effective decision making
process.
 Financial analysis: In relation to business, financial information is essential for the
managers to make strategies and it further helps in decision making process (Banerjee,
2015). It is the most appropriate techniques which are used by the managers to maximise
the operational efficiency as well as effectiveness.
Above discussion provide the better understating related to the techniques which can be used
by the managers of continental clothing company to make effective decision to improve final
outcomes.
Factors which affecting decision making process:
 Financial factors: The making of a corporate decision relies on the capital structure of a
company (Piatti-Fünfkirchen and Schneider, 2018). Therefore the equity and the
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