Financial Management Goals: Balancing Stakeholder Interests at ABC Ltd

This essay discusses the financial management goals of ABC Limited, an Australian retail organization, emphasizing the importance of balancing shareholder returns with customer satisfaction. It reflects on a scenario where prioritizing shareholder wealth by increasing prices led to decreased customer attraction and profitability. The analysis reveals a conflict between shareholder-centric goals and customer needs, highlighting the challenge of achieving operational efficiency while maintaining cost-effectiveness. The conclusion emphasizes that sustainable shareholder value is best achieved by focusing on the overall prosperity of all stakeholders, including customers, and that neglecting customer needs can lead to a decline in profits. The essay underscores the importance of aligning organizational goals with both shareholder and customer interests for long-term success. Desklib provides access to similar solved assignments and study resources for students.

Financial Management

Goals of an organization
As the manager of an ABC Limited company, the goal has defined in context of
shareholders. ABC Limited is retail organization situated in Queensland, Australia. The major
goal of the company is to provide the satisfactory return to the shareholders. It can be achieved
through focusing on the areas that lead to increase the revenue and decrease the overall cost. The
demands of customers are met on time so that it provides competition and increases the customer
royalty. Shareholders are provided with high dividends so that build their confidence in ABC
limited.
Example of Reflection
As a cost manager of ABC limited, the goal of the company has been developed on the
basis of practical scenario faced in the past. The company initially has placed emphasis on
deriving larger returns for the shareholders by increasing the prices of the product being
manufactured for covering the overhead costs and improving the profitability position. However,
it has been realized that the company’s profits has significantly declined in the respective year.
The analysis carried out by me in this respect has lead to the conclusion that increasing the prices
alone with no significant improvement in the quality of products has lead to its reduced customer
attraction negatively impacting its profitability position. This is because the company’s decision
has not taken into accounts the competitive prices and only focuses on creating profits for the
shareholders. As such, to overcome such issues it has been recommended to the top management
to integrate the objective of maximizing customer value into its goals that will ultimately lead to
promoting sustainable growth of shareholders. This is because improving the quality of products

by achieving operational efficiency will help in gaining customer satisfaction eventually leading
to improved sales and profitability of the company.
Evaluation
Yes the current goal pursed by me conflicts with other stakeholder’s goals because my
responsibility is to maintain the cost of goods and services lower in order to achieve the higher
returns. The requirement to set the higher prices of goods that leads to undue burden on the
customers and it also creates various issues while attracting the large volume of customers
(Phillips, 2011). The major goal of the company is shareholder centric leaving behind the
problems faced by the customers due to increase in price. As the cost manager I found that my
goal of increasing the shareholder’s return has considerably affected the goal of satisfying the
customers which is another major objective of the ABC Limited.
Analysis
The major challenge that has been faced as a cost manager to pursue the goal of the
organization is to achieve operational efficiency that helps in reducing the operational costs and
maxima the operational profit. As a cost manager, I have to identify the non-valued added
activities that significantly lead to an increase in the cost of the products being produced. In
addition to this, it requires specific training to be provided to the subordinates so that they can
adequately meet the goal of improving the operational efficiency by lowering the costs. This
involves changes to be done in the organizational structure that promotes improved coordination
and participation of the employees at all level. This has resulted in directing the goals of the
organization to be more employees focused for motivating them to achieve the organizational
goals. The employees should be motivated by involving them in the overall decision-making

process to empower them that result in improving their organizational commitment level and
achieving effectively its stated goals and objectives (Denning, 2015).
Conclusion and action
I have learnt from the above scenario that goal to increase the shareholder’s wealth can
only be achieved through focusing on the customer values and their needs. If company mainly
focuses on the shareholders wealth without concentrating and solving the problems of customer’s
issues will lead to downfall of overall profits of the company. The value of shareholders return
can only be maximized if company focuses on overall prosperity of stakeholder’s not
shareholders alone.

References
Denning, S. 2015. Salesforce CEO Slams 'The World's Dumbest Idea': Maximizing Shareholder
Value. Retrieved 4 October, 2018,
fromhttps://www.forbes.com/sites/stevedenning/2015/02/05/salesforce-ceo-slams-the-
worlds-dumbest-idea-maximizing-shareholder-value/#135375617883
Phillips. R.A. (2011). Stakeholder Theory. Edward Elgar Publishing.