Financial Management Report: Purpose, Decisions, and Government Role

This report delves into the significance of financial management for business organizations, emphasizing the efficient allocation of financial resources. It explores the implications of key financial decisions, including investment, financing, and dividend strategies, as assessed by stakeholders. The report highlights the crucial role of government assistance in fostering business growth and development, particularly within the context of Tesco's operations in Canada. It examines the impact of government policies, incentives, and market research support on business planning and decision-making. The analysis underscores the importance of aligning business strategies with government frameworks and leveraging expert guidance to mitigate risks and enhance financial management effectiveness, ultimately contributing to economic growth. The report concludes by reinforcing the necessity of incorporating financial planning and management into current strategies to drive sustainable business success and maximize resource utilization.

Financial Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1. Purpose of financial management and implications of three main decisions..........................3
2. Need for government assistance .............................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
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INTRODUCTION
Financial management is important for every business organisation so that effective use
of financial resources can be done. This report helps in understanding the main purpose of
financial management and the implications which are assessed by shareholders when three
important decisions are taken in the stated process. Furthermore, the need of government in
assisting business and its interaction has been depicted in this report.
1. Purpose of financial management and implications of three main decisions
Financial management is the administration of monetary funds or benefits in an efficient
way so that main objectives of the company are achieved effectively. Tesco being an
internationally recognised brand in retail sector can maintain its strategic position by adapting to
effective finance management approaches. Resources, assets and liabilities are identified in this
process and then decisions are made whether they are beneficial for the company or not
(Brigham and Ehrhardt, 2013). There are some basic mechanisms which are considered as the
integral part of financial management. These include planning, procuring and controlling the
resources or monetary funds of the company. Tesco has to perform all these operations for
effectively using all its resources and monetary funds.
In cases when huge profits are acquired by Tesco and no financial management is
performed; then there won't be any sort of control over company's actions. More resource
utilisation and unplanned investments shall take place. This can land the organisation in various
troubles and the financial power of company will be weakened. Hence, it is important to perform
financial planning or management. There are three main decisions which are taken in this
particular process. These are mentioned below: The investment decision: In order to meet the financial objectives developed by the
leader, Tesco's finance manager has to take accurate investment decisions. These are
segregated into two elements that is investment appraisals and decisions regarding correct
choice of potentially beneficial projects. The management of working capital and
potential risks in terms of debts and excess inventory are considered in this decision
(Petty and et. al., 2015). The financing decision: The decisions regarding selection of correct source of finance
after identification of appropriate sources according to needs and requirements of
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company are financing decisions. Investments can only be made when there is proper
assessment of the available finances.
 The dividend decision: Considering the investments made by Tesco in Canada to be
profitable, there must be some funds or cash generated in terms of profits. The dividend
decision is concerned about further investments i.e. whether the acquired cash has to be
provided to owners or kept for more investments.
The shareholders are individuals that hold certain amount of shares in the organisation.
Their perspective towards these three decisions is quite different as compared to those of
financial managers (Attig and et. al., 2015). They will assess the investment decisions to be more
risk oriented because running capital is involved. On the other hand, the financing decisions are
considered as essential requirements before making an investment. Furthermore, shareholders are
keen to focus more on dividend decisions because it has been evaluated that business
investments which have been made in Canada are beneficial for the company.
2. Need for government assistance
Government of the country is an integral part of the business environment and affects
various business decisions consequently. Canada is a country that holds a lot of potential in terms
of growth and development. The role of ruling government in promoting and assisting business
is discussed as follows: Controller : There are various policies and laws which have been devised by the
government so that businesses can function without any hindrance or roadblock. The use
of these policies and reforms helps in reducing unethical practises which are often
addressed by volatile markets especially in those where competition is less. Hence, this
kind of guidance from government is necessary in establishing strong roots in the
operational markets. Incentives: Tesco's new operations in Canada can be aided with incentives which are
introduced by government for encouraging business activities. The evaluation of benefits
associated with products and services is performed for understanding the implications, a
company can bring in with their operations (Armstrong, Guay and Weber, 2015). The
nature of provisions which have been designed by the government vary according to the
level of development or establishment.
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 Customer and Market research: While operating in any market, it is essential to develop
an insight regarding the customers and their preferences. Government agencies like
Statistics Canada provide some valuable sources of information which helps Tesco to
perform the market research.
There are certain more interactions of businesses with the government at various stages
like business planning and decision making. When formulating strategies regarding business
development, the alignment of activities with government policies and frameworks is necessary.
The state government which is present in every province and city is also supportive in offering
businesses consultancy services so that their strategies are aided with authentic and relevant
facts. The exploitation that occurs due to misguidance of private agents and fake investors can be
avoided through this government aid (Government Assistance in Business. 2017). Decisions
regarding financial management and probable investments can be taken with more effectiveness
and strategically if government support and advise is taken. It can be acquired through different
agencies and national reports. Furthermore, Tesco can get assistance while devising the business
expansion plans and strategies so that development of organisation brings in economic growth
for the country. Canadian Intellectual Property Office and the U.S Patent and Trademark Office
are some of the centres were expert guidance on protection of intellectual property can be
acquired. This helps stimulating the protection of growth measures of the organisation.
CONCLUSION
This report has enhanced knowledge level by creating an understanding that government
is essential in utilising the most out of businesses and resources. Moreover, financial planning
and management are two principle processes which need to be incorporated in the current
strategies of Tesco for aiding growth and development. It also serves the purpose of using
monetary funds for the benefits of company.
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REFERENCES
Books and Journals
Armstrong, C., Guay, W. R. and Weber, J., 2015. The role of information and financial reporting
in corporate governance: A review of the evidence and the implications for banking firms
and the financial services industry.
Attig, N. and et. al., 2015. The global financial crisis, family control, and dividend
policy. Financial Management.
Brigham, E. F. and Ehrhardt, M. C., 2013. Financial management: Theory & practice. Cengage
Learning.
Petty, J. W. and et. al., 2015. Financial management: Principles and applications. Pearson
Higher Education AU.
Online
Government Assistance in Business. 2017. [Online]. Available
Through:<http://smallbusiness.chron.com/government-assistance-business-3033.html>.
[Accessed on 5th April, 2017].
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