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Financial Management Understanding

   

Added on  2020-10-23

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FINANCIAL MANAGEMENT
Financial Management Understanding_1

Table of ContentsINTRODUCTION................................................................................................................................3LO1 Application of different approaches used to support effective decision making ........................3Knowledge based approach: .....................................................................................................3Process of strategic decision making .........................................................................................4M 1 and D 1................................................................................................................................5Constraints of fashion industry.................................................................................................6macro and micro factor determine profitability.........................................................................6LO2 Analysis of financial management principles which are used to support effective financial strategies ..............................................................................................................................................7Evaluation of short term, medium and long term goal................................................................7M2 and D 2.................................................................................................................................7Critical Evaluation of maximisation of shareholders wealth......................................................8Cash flow for the new bakery.....................................................................................................9LO3 Evaluation of role of management accountant and accounting controls systems .......................9Evaluation of application of financial management techniques to present financial data for decision making..........................................................................................................................9Use of advanced and new technologies for building integrated and inclusive financial system10Control system for financial planning ......................................................................................10M3.............................................................................................................................................11D3 .............................................................................................................................................12LO4 Evaluation of ways in which financial decision making support sustainable performance ......13Company internal and external control.....................................................................................13Advantages of external control ................................................................................................13D3..............................................................................................................................................14Financial management techniques for identifying and preventing fraud.................................14Financial ratio of Marks and Spencer and Next PLC..............................................................14Evaluation of the outcomes of investment appraisal techniques are used to maximise ROI....16M4.............................................................................................................................................17Evaluation of value of cash flow statements, trial balance and break even for financial decision- making ......................................................................................................................................17REFERENCES...................................................................................................................................19
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INTRODUCTIONFinancial management refers to the process of planning, organising, controlling and monitoring the financial information. This assignment will provide understanding of the organisation internal and external controls. Moreover, It will include financial management techniques for making effective decision. Furthermore, This study will provide understanding of thenew technologies used in financial system. It will contain information about investment appraisal techniques for maximising the return on capital employed.LO1 Application of different approaches used to support effective decision making Knowledge based approach: It is a strategic decision making process, in which manager collect all the relevant information and data from formal and informal sources. Information are gathered about product quantity, its target and other supportive information. Generally this approach is adopted for particular project(Todorović and et.al., 2015)Basic component of these approaches are open communication between manager and employee, share information from stakeholders, healthy discussion and fair voting with collaborator and develop trust culture. Zara allow its internal as well as external stakeholder to participate in product development. Its internal collaborators are employees, government and department manager. And external sourcesof information are supplier and investor. External people render information like market condition, customer expectation, competitor strategies and resources, measuring progress. Internal people contributes their knowledge, experience and skill of making policy, plan and objectives etc. Advantage of internal stakeholder contribution: At the time of decision making process, employee has enough knowledge oforganization culture, resources and process, which make their information andsuggestion more relevant to Firm. Disadvantage:As they only think from organization profit objective there knowledge andinformation are limited and narrow.
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Advantage of external stakeholder's contribution They Render pool of diverse, latest and different idea and information.Their information gives hint of their expectation from firm, which help Zara to set differentobjectives(Karimi and Davoudpour,2017). Disadvantage Render ton of irrelevant data.Possibility of receiving twisted, incorrect and biased information because stakeholder wanttheir interest and profit first.Process of strategic decision makingZara make its cloth in its textile factory and for accessories like handbags, watches, jewelry,sunglasses and shoes, it relies on external buying (assembling and in sourcing). Following is theprocess of manufacturing strategic decision can be use by Zara: Identification of problem or opportunityRight recognition of problem lead half way to success. Here, Zara analysis the impact of decision on stakeholder like customer get benefited or it put negative impact on them. Like internal manufacturing effect pricing of product.Gather information: Zara manager collect information for making external buying decision like cost, transportation charges, assembling cost, and for manufacturing raw material cost, distribution, R&Dand packaging cost etc(Reymen and et.al., 2015).Alternative judgments:Zara has option to go for self-manufacturing, or buy From products from other companies like shoes from shoe company and place the name Zara or butdifferent part and assemble it by own.Marketing the alternative :Company gives more preference to option, which is more cost, quality and time effective and have smooth accessibility.Choose alternative and review decision: Company take suggestion from its supplier, employee and shareholder about its strategic manufacturing decision. Once decision is taken manager also conduct periodic evaluation and consulting process.In business unit, decision making aspects can be divided into two parts such as:M 1 and D 1Formal decision making: In the context of Zara, formal decision making aspects include the
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