Techniques and Factors in Decision Making and Stakeholder Management in Financial Management

Financial Management

INTRODUCTION...........................................................................................................................1
SCENARIO 1..................................................................................................................................1
1. Evaluation of the range of techniques and factors which are contributing in the decision
making of the organisation..........................................................................................................1
2. Stakeholder management and the management of conflicting objectives of different
stakeholder groups.......................................................................................................................2
3. The value of management accounting techniques in cost control and maximising
stakeholder value.........................................................................................................................3
4. Techniques for fraud detection and prevention and the approach to ethical decision making5
5. Reflection for the understanding of above questions..............................................................6
SCENARIO 2..................................................................................................................................6
1. Identify how data helps to inform operational or strategic decisions for the company...........6
2. Compare and contrast the three investment appraisal techniques...........................................9
3. Demonstrate the value of techniques which helps in financial decision making..................10
4. Analyse that how financial decisions support the long term sustainability...........................11
5. Recommendations regarding the way in which management accountants can help to
improve financial sustainability.................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Financial accounting principles can be defined as various types of rules and regulations
that are required to be followed by all the organisations while generating final accounts. Some of
the financial statements that are formulated by entities on yearly basis are profit and loss account,
balance sheet and cash flow statement. All of them are used to analyse actual position and
performance of company. While formulating decisions for future all of them are used to evaluate
the past year’s situation and then effective strategies are formed to make sure that highly
effective policies for upcoming years could be formed (Dauderies and Annand, 2019). In order to
meet strategic objectives such as increased profits, higher customer engagement and enhanced
revenues it is essential or all the enterprises to make sure that they are able to formulate the final
accounts on the basis of financial accounting principles. Present report is based upon analysis of
management as well as financial accounting of a company. The organisation which is selected
for this report is Tesco which is one of the largest supermarket chains around the world. It was
founded in year 1919 by Jack Cohen. Its headquarter is in London, United Kingdom. This
assignment is segregated in two parts. First scenario covers topics such as evaluation of range of
approaches, techniques and actors contributing in effective decisions making, stakeholder
management, value of management accounting in cost control and techniques of fraud detection
and prevention. Second scenario is based upon calculation of ratios, comparison and contrasting
of investment appraisal techniques, value of BEP and cash flow to inform decisions making etc.
Apart from this, analysis of financial decision making and recommendations for management
accountants to improve financial stability are also covered in this assignment.
SCENARIO 1
1. Evaluation of the range of techniques and factors which are contributing in the decision
making of the organisation
Effective decision making is very important for all the organisations and the managers
are required to make sure that they are using effective techniques and approaches for the same
purpose. In Tesco the management team is using various types of them and all of them are
facilitating effective decision making. Description of them is as follows:
Brain storming: It is one of the common approaches of decision making in which all the
team members sit together and try to analyse the position of business so that effective ways to
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improve it could be determined. In order to analyse creative ways to meet the business goals it is
used by managers of Tesco so that they can find solution for the problems that are faced by the
organisation. It facilitates effective decision making because it guides them to determine the
steps that could be taken by them for betterment of business (Hayoun, 2018). It is beneficial for
the enterprise because it provides spontaneous solutions for difficult problems faced by the
organisation.
SWOT analysis: It is a technique which is also used in effective decision making by all
the entities like Tesco because with the help of it the managers get aware of strengths,
weaknesses, opportunities and threats for business. By analysing all of them, they determine
position of the company and then formulate effective decisions for upcoming period. It facilitates
in strategy formulation because when the management team will be aware of all the positive and
negative aspects of business then it can help to form effective decisions. This technique is mainly
used for strategic management so that performance of business could be improved.
While planning to formulate effective decisions for future different factors are also
focused by the managers. Description of them is as follows:
Risk: It is one of the main factors which is focused by the managers of Tesco while
formulating effective decisions. They determine all the risks for business which are currently
affecting the business or may leave adverse impacts in future. It helps them to be aware of all the
positive as well as negative situations for the organisation which guides them to make effective
decisions for betterment of the enterprise (Kimmel, Weygandt and Kieso, 2018).
Market situations: For all the managers it is very important to determine the market
situation so that it could be determined that business will be able to grow positively or not. The
management teams in Tesco analyse the market conditions and then formulate decisions for
business so that possibility of attainment of future goals could be enhanced. All the managers of
the organisation try to make sure that they are having accurate information about the market
situations as it helps to form effective strategic decisions for development of business.
2. Stakeholder management and the management of conflicting objectives of different
stakeholder groups
Stakeholder management can be defined as the procedure which is mainly focused with
organisation, monitoring, improving and maintaining relations with the stakeholders. It also pays
attention towards assessment of needs and expectations of all the groups of them so that effective
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