Role of Financial Management in Decision Making - Tesco plc

Unit 15: Financial
Management

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
Scenario A:..............................................................................................................................................3
Scenario B:..............................................................................................................................................9
CONCLUSION.........................................................................................................................................17
REFERENCES..........................................................................................................................................19

INTRODUCTION
Financial management is a concept that needs to be discussed in order to help create
better business choices and assess the revenue and expense within an organization or entity. It
plays a key role in order to better utilization of available monetary resources of a company
(Shapiro and Hanouna, 2019). For effective financial management there are a range of principles
which are adopted by companies. These principles provide a way through which companies
implement strategies for better outcome. A Company that is Tesco plc has been chosen in this
project study. The business is headquartered in the UK and offers a wide range of products for
daily usage. There are two parts of the project study. Part one focuses on analysis and the role of
strategies in fraud reduction for ethical decision-making in the context of financial aspect. The
second section of the study further includes details on the numerous financial strategies and their
relevance for long-term decision-making.
MAIN BODY
Scenario A:
Overview: In this scenario of report, a detailed report of 2000 words has been presented in which
information of role of different kinds of management accounting techniques and their role is
explained. This explanation has been done in relevance with above mentioned organization.
1. Evaluation of techniques, approaches and factors for better decision making.
A decision is an action plan that is intentionally selected for a desirable outcome
from a selection of alternatives (Chandra, 2020). It implies that choices are made as there
are many alternatives. This becomes essential for companies to take decisions in an
effective manner so that they can achieve their goals and objectives. In the regards to
above mentioned company some techniques, approaches and factors for effective
decision making are explained in such manner:

Approaches: There are different kinds of approaches which are used by managers in
order to take accurate decisions and some of them are mentioned in such manner:
 Rational-Analytical Approach- Rational analytically approach believes that the
decision maker is a "single person who acts intelligently and rationally." He is
well informed of the potential options available and takes the options and the
implications into consideration and agrees upon the solution that guarantees
optimal benefit. Many managers want to consider themselves as rational decision
makers. In reality, a variety of experts suggest that managers must try to take
actions as rationally as practicable. It is founded on the premise that management
is reasonable and practical that they take actions which are in the group's best
interests. This approach consists a detailed process that is as follows:
(a) Policy makers have comprehensive details and potential solutions on the
decision scenario.
(b) In order to make a decision, ambiguity can be easily minimized.
(c) Critically and rationally, they consider all facets of the decision scenario.
In regards to above Tesco plc, their managers can apply this process in order to
take effective decisions on the basis of own skills and competencies.
 Political-Behavioral Approach- This model implies that actual decision-makers
need to consider a variety of demands from others influenced by their act
(Madura, 2020). In interdependent exchange relations, a company communicates
with multiple stakeholders. Every party or individual who may influence or be
influenced by the accomplishment of the intent of an entity. More influential
shareholders have a stronger effect on decision-making as the company depends
most on these members. As in the aspect of above Tesco plc, this is important for
their managers to consider this approach when they take decisions. They have to
consider the interest of major stakeholders such as employees, customers and
many more.
Techniques used in decision making: Along with approaches there are some techniques
which can be used for better decision making that are as follows: