Financial & Economic Interpretation: Corporate Failure & Non-Financial

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This essay delves into the critical aspects of financial and economic interpretation, emphasizing the importance of strategic planning in avoiding corporate failure. It highlights two key factors contributing to corporate downfall: the absence of a strategic plan despite having a vision, and the detrimental effects of hiring unsuitable personnel. The essay underscores the necessity of understanding competitors' strategies and adapting business approaches accordingly, as well as the importance of contract-based hiring to secure top talent. Furthermore, it addresses the bias towards non-financial measures, emphasizing their long-term strategic value and their role in achieving profit and strategic objectives. The inclusion of intangible assets like intellectual property and customer loyalty in the balance sheet is also deemed essential. The essay concludes that while financial measures focus on short-term performance, non-financial data provides crucial links between beneficial activities and financial results, ultimately guiding managers in maximizing their efforts and enhancing overall performance.
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Running head: FINANCIAL AND ECONOMIC INTERPRETATION AND
COMMUNICATION
Financial and Economic Interpretation and Communication
Name of the Student:
Name of the University:
Author’s Note:
Course ID:
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1FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
Table of Contents
Answer to Question 1:................................................................................................................2
Answer to Question 2:................................................................................................................2
References:.................................................................................................................................4
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2FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
Answer to Question 1:
For achievement of success, it is quite important to be aware of pitfalls leading to
corporate failure and how it should get avoided. Below are two important factors that show
the reason behind corporate failure and how those should be avoided.
Not having a strategic plan despite of having a vision: Corporates should initiate the
strategies keeping in mind what is leading their competitors to succeed (Cassidy
2016). For this the corporate should find for client’s portfolios, product portfolios as
well as market shares of the competitors. Corporate should try to develop their
business depending upon this or else it would lead to conflict.
Wrong people getting hired: Hiring the wrong candidate for specific post would lead
to corporate failure. This is because they cannot have proper knowledge and might
have negative attitude. This might lead to stress and bad relationship among each
employees and as a result it would hamper the corporates performance In order to
avoid this hiring based on contract shall be done until top candidate can be found as
relevant for corporate’s success.
Answer to Question 2:
There is a biasness regarding non- financial measures as those would provide for
long-term strategies relating to the organization (Simon et al. 2015). It is the financial
evaluation system that would aim on short-term as well as yearly performance. It can be seen
that requirement of the customers or the competitors are not dealt with progress. Other than
this for achievement of profit as well as long strategic goals objectives which not financial
are considered to be very important. Other than these intangible assets in the form of
intellectual property as well as customer loyalty are considered important to be included in
balance sheet. It can also be found that non-financial measures including capability of the
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3FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
management, employee relations as well as brand value with respect to company’s value is
considered to be of significance. In case where the goal is leading to the maximization of
financial performance in that case financial measures are inactive leading to long-term loss.
Again, non-financial data would be helpful in providing essential link in between activities
those are beneficial and financial results giving correct information as per stock performance.
In order to provide correct information relating to the action of the manager non-financial
measures can act as a good choice. This would help the managers to be aware of
maximization of their efforts and how that would affect the performance.
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4FINANCIAL AND ECONOMIC INTERPRETATION AND COMMUNICATION
References:
Cassidy, A., 2016. A practical guide to information systems strategic planning. Auerbach
Publications.
Simon, A., Bartle, C., Stockport, G., Smith, B., Klobas, J.E. and Sohal, A., 2015. Business
leaders’ views on the importance of strategic and dynamic capabilities for successful
financial and non-financial business performance. International Journal of Productivity and
Performance Management, 64(7), pp.908-931.
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