Financial Management's Impact on Organizational Performance Project

This project is a research proposal examining the relationship between financial management and organizational performance, focusing on small businesses. It aims to identify the significance of financial management, determine associated issues, and analyze the impact of poor financial management. The research questions address the importance of financial management, issues within business units, and the degree to which organizational performance is affected. The literature review explores the significance of financial management to small businesses, including the role of financial management in ensuring adequate funds, enabling future expansion, and supporting dividend policies. It also covers issues such as improper monitoring, inefficient fund allocation, and lack of planning. The methodology involves a qualitative approach using both primary (questionnaires) and secondary data (internet and books), employing random non-probability sampling and thematic data analysis. Ethical considerations include ensuring no harm or coercion during the study, along with maintaining confidentiality.

BUSINESS MANAGEMENT
AND LEADERSHIP
PROJECT

TABLE OF CONTENTS
RESEARCH PROPOSAL...........................................................................................................................3
Aim..........................................................................................................................................................3
Objectives................................................................................................................................................3
Research questions..................................................................................................................................3
Literature review.....................................................................................................................................3
Justification.............................................................................................................................................5
Research Methodology............................................................................................................................5
REFERENCES............................................................................................................................................7

RESEARCH PROPOSAL
Aim
To identify relationship between financial management and organisational performance
Objectives
To find out significance of financial management to small business
To determine issues related to financial management in business unit
To analyses the extent to which organizational performance is getting affected by poor financial
management.
Research questions
 What are some importance or significance of financial management to small business?
 What are some issues associated with financial management in business unit?
 What is the degree to which organizational performance can get affected due to poor
financial management?
Literature review
significance of financial management to small business
As per the view of Shapiro and Hanouna, 2019), financial management can be defined as
effective management of financial activities that support the firm in utilising funds well and
minimising operational cost so that capital can be invested in right place to generated desired
profit. There are many risk associated with financial management activities. Companies need to
take investment decision so that it can generate profit but if there is inappropriate flow of cash
then it can create problem to company in investing in the accurate place. One of the main aim of
managing financial activities is to ensure supply of fun is done in accurate manner and
shareholders can get adequate return over their investments. If there is improper financial
activities then enterprise will not be able to generate revenue that would create problem in
sustaining in market for longer duration. Supply chain decision, dividend policies are much more
depended upon financial management of organisation. If entity does not have adequate fund then
it would not be able to handle logistic activities that would impact on production of business
hence enterprise will not be able to meet the demand. In such condition its performance will get

hampered badly. On other hand strong financial management of funds help the organisation in
saving funds for future expansion and gaining competitive advantage by expanding business
globally.
According to Madura (2020), company is responsible to give dividend to all workers if
they do not get adequate bonus and rewards timely then they may become negative towards the
brand hence their working efficiency will be affected and entity will not be able to retain its
talent in the firm for longer duration. This activity affects organisational performance to great
extent. Financial management is highly depends upon the capability of financial manager of
business. Management has to ensure that adequate funds are allotted to each functional unit and
they have monitor each task closely so that wastage of money can be minimised. This is
beneficial in reducing operational cost and raising net profit of company to great extent.
Some issues associated with financial management
According to Finkler, Smith and Calabrese ( 2018), financial management issues may
take place due to improper monitoring and inefficient fund allocation. If companies are unable to
ensure whether their capital is being utilised in proper manner or not then it will not be able to
find out best solution to improve financial management. In such condition its performance will
be affected and entity will not be able to meet competitive advantage. Hence it is essential to
managers to have close monitoring on progress and management has to make investment
decision by looking at market condition otherwise it may give negative result to organisation, By
developing sound economical combination small business can minimise its cost of capital that
will be beneficial in handling complex situations well and sustaining in market for longer
duration.
In addition, it is also stated b Jones and et.al., (2018) stated that making an effective planning
and monitoring all elements is one of the main task. Due to lack of this planning, ot can create
several problems in financial management. Lack of planning can delay in the submission of
projects, imbalance between liabilities and assets, lack of profits and others. One of the main
issue which can be created by lack of proper planning in financial management is heavy drainage
of funds which can lead serious problem in financial management in the wake. In this context, it
is also stated that unfavorable input and output is also one of the main problem which is

associated with financial management. Inadequate and improper planning and lack of
coordination among departments of an organization can cause for over capitalization.
Degree to which organizational performance can get affected due to poor financial management
In the context of financial management, stated by Madura, (2020) that it plays an important role
in developing or improving productivity as well as performance of the company. An effective
financial management allow an organization and manger to accomplish their all pre-determined
financial goals. An effective financial manager makes an effective planning which gives several
positive impacts on the performance of an organization. An effective financial management
include: proper planning, setting goals, organizing, communicating, measuring which all makes
employees able to focus on their performance and increase productivity. On the other hand, it
can be said that an ineffective financial management can create several problems for an
organization like poor quality of products, poor productivity and ineffective performance. An
effective financial management allows an organization to engage employees. Increased
engagement can help an organization in reducing labor turnover and it directly affect their image
in a positive manner. When employees live with the company for the long run than it improves
image of the company and increase sales as well. So, it can be said that financial management
affect company’s performance to the great extent.
In addition, for supporting this view, Wambui and Njuguna, (2017) stated that a poor
management directly affects on workers as it crates stress and frustration among them. Due to
frustration and stress, they cannot focus on their given task. Due to lack of concentration they
commit mistakes and errors in their projects. It directly affects performance and productivity of
employees and company as well. So, from this it can be said that an effective financial
management is vital for the growth and development of an organization. A bad or ineffective
manager can also affect an employee’s perception of the company’s overall vision which
potentially causes unhappiness which leads high level of turnover. It can affect their image in a
negative manner. So, from these examples, it can be said that financial management is vital and
has effectiveness which can affect the company’s performance to the great extent.

Justification
The main reason of choosing this topic is the growing significance of financial
management and its impact on the organizational performance. The financial management is
highly essential for the small business and it helps in increasing their overall productivity. There
are various factors in financial management which basically contributes towards the growth and
development of small businesses. Financial management basically helps the organizations to
manage their overall funds and allocate the various resources according to their importance. This
topic will primarily will help large number of small organizations to improve their overall
performance and gain the competitive advantage. The interrelation between financial
management and performance of small businesses will help these to establish a position in
market and will prove to be a great driving factor for their growth and development. Thus,
financial management plays a great role within organizations and thus helps the small
organizations to improve their goodwill among the eyes and hearts of people. In order to help the
small businesses to overcome various financial issues, this report has been developed.
Research Methodology
Research methodology
This is the process which researcher uses for conducting the well-through research. There
are two types of research methodology. Qualitative methodology is method of the observation
for gathering non-numerical data. Quantitaive method on the other hand which has been used in
this report is proper investigation of the statistical and mathematical data for gathering
quantifiable data.
Data collection
There are mainly two methods of the data collection. Primary data is the one which serve
as first-hand information and is mainly collected through various methods like surveys,
questionnaire etc. Secondary data collection is method in which researcher gets the already
available information from various sources like internet, journals etc. In this report both method
has been used where under primary, questionnaire is used and in seconday internet and books are
used for collecting data.

Sampling
Sampling is method through which a small population is being selected for testing and
data interpretation. There are various sampling techniques but technique which has been used in
this report is random non probability sampling. Under this method, odds of any member selected
for sample cannot be calculated (Kumar, 2019).
Data analysis
For this report, thematic data analysis has been used. In this, data is mainly analysed by
identifying the common themes like topics, ideas, patterns etc. There are various techniques of
data analysis like exploratory, descriptive, predictive etc.
Ethical consideration
While carrying out this study, no employee or person has been harmed, pressurized for
providing their responses. No coercive force was being used for the responses from people.
Along with this, the confidentiality of people has been taken into account and there were names,
contact number and other confidential information were not revealed (Fletcher, A.J., 2017).

REFERENCES
Books & Journal
Finkler, S.A., Smith, D.L. and Calabrese, T.D., 2018. Financial management for public, health,
and not-for-profit organizations. CQ Press.
Fletcher, A.J., 2017. Applying critical realism in qualitative research: methodology meets
method. International journal of social research methodology.20(2). pp.181-194.
Jones, C. and et.al., 2018. Financial Management for Nurse Managers and Executives-E-Book.
Elsevier Health Sciences.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications
Limited.
Madura, J., 2020. International financial management. Cengage Learning.
Madura, J., 2020. International financial management. Cengage Learning.
Shapiro, A.C. and Hanouna, P., 2019. Multinational financial management. Wiley.
Wambui, C. and Njuguna, A., 2017. Factors Affecting the Financial Management Systems
Effectiveness: A Survey of Health Oriented Civil Society Organizations in
Kenya. International Journal of Finance and Accounting. 2(2). pp.63-84.