Financial Manager Challenges in a Changing Economic Environment

This essay explores the multifaceted challenges that financial managers face in a dynamic macroeconomic environment. It highlights the impact of globalization, technological advancements, shifts in market demand, and changing regulations on business operations. The essay also addresses the complexities of stakeholder management, exchange rate fluctuations, inflation, and unemployment, detailing how financial managers must adapt by implementing effective supply chain strategies, closely monitoring international markets, and investing in employee training. Ultimately, the report emphasizes the critical role of financial managers in navigating these challenges to ensure the stability and profitability of their organizations.

ESSAY ON CHALLENGES
FACED BY THE
FINANCIAL MANAGER IN
A CHANGING ECONOMIC
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Challenges faced by the financial manager in the dynamic macroeconomics environment...........3
.........................................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The economic environment refers to all those external forces that influences the
consumer behaviour and the businesses. The economic environment is highly flexible in nature.
There are large number of changes takes place in the environment. And all of these changes
affects the business processes. The macroeconomic environment is consists of those factors that
determines the economic stability of the country. The macroeconomic environment directly deals
with the factors like aggregate production, aggregate supply and aggregate demand in the
economy. These elements put the high impact on the business sector as the business sector is
responsible for generating the production and full-filling the demand in the economy. The rate of
production defines the rate of economic stability. (Roychowdhury & Verdi, (2019). This report
will illustrate the challenges faced by the financial manger of the business due to the changes
takes place in the macroeconomics environment. There are large number of changes takes place
in the macroeconomic environment and this creates the fluctuations in the business sector. The
consequences that has been take by the financial manage will also describe in this report.
MAIN BODY
Challenges faced by the financial manager in the dynamic macroeconomics
environment
Macroeconomics environment refers to that environment which affects the whole
economy. Any changes that takes place under this highly affects the every aspect of the economy
such as, GDP, employment rate, monetary and fiscal policy. In short, this environment is directly
linked with the general business cycle. There are large number of fluctuation takes place in the
macroeconomics environment and this results in creating a lot of challenges for the business
organizations. The financial management of the organizations has the accountability of looking
over this. In order to know the impacts of the changing economic environment, it is important to
know the types of changes that arises within the environment. (Cepel & et.al. (2019). The world
is going towards the global environment. This macroeconomics environment provides number of
opportunities and challenges as well. In order to understand these opportunities and challenges
there is deep analysation has been done by the finance manager. Here are the types of changes
that occurs in the economic environment and impacts the finance manager and business
operations n the organizations.

Globalised economy is the part of macroeconomic environment. Any change in the
global policies directly provides an impact towards the business. The global business operates in
the different part of the countries. Any change in the policy of one country will affect directly to
the main branch of the business. For example: any country increases the tax rate then it will
directly affects the revenue of the business in the main country. (Čepel & et.al. (2018). The
finance manager works hard in order to understand the policies of the different countries that can
affects the capital, investment and over all revenue of the firm. Under this, the finance
management prepares a plan in relation of the tax rate and policies of each country where the
business has been established. And pre-assume the risk that can arises due to change in economic
environment of that particular country. This helps them in determining the risk and their
alternatives that can prove helpful in the near future.
Technology plays an important role in stimulating the operations of the businesses. The
finance manager are concerned with the responsibility of analysing the data. In order to observe
the data from various sector that can impact the business they need computers and sophisticated
software. The main problem that has been faced by them is that, matching their collected data
with the current trends. Many times, the collected information proves wrong and the business has
to face the loss. In order to resolve this issue, implementation of strong energy is needed. The
strategy should consist of going with the latest trends. In case the data has been pre-assumed on
the basis of the past-experiences. (Bilan & et.al. (2019). Then there is a complete chance of
facing the loss. As the economic environment is dynamic in nature. It keeps changing. Therefore,
making assumptions on the basis of past will not work. It is important to make strategy by
focusing in the latest trends.
Transformation in market demand is one of the element of economic environment that
impacts the business organizations. The change in the demand of market takes place due to the
changes takes place in the consumer behaviour. This changes highly impacts the businesses. The
change in the consumer behaviour refers to the shift of the consumer from one organization to
other. This result in the loss of the business as losing consumer will directly affect the revenue of
the firm. (MIS, (2020). This is one of the biggest challenge for the finance manager. In order to
face this challenge, the main thing that has been done by the manager and the business is that,
they have to adopt the effective strategy understanding the consumer behaviour. The proper
understanding will help in adopting that policies by the manager that will satisfy the needs and

wants of the consumer. As a result, the consumer share of the organization will increase. This
further result in increasing the profit margin of the firms.
The one of the most important challenge that has been faced by the finance manager in
the macroeconomic environment is changing regulations. The regulations refer to the changing
rules and regulations of the country in which the firm operated the business. Companies that runs
their operations on the international market this situation. The financial manager of such
companies face the high rate of issues due to this. For example: there is a company that runs its
operation in the international market. (Mahmood & et.al. (2019). The company has its branch in
different countries. In all the countries there are different rules and regulations has been adopted
by the government. But, the financial manager of the company has to keep focus each country's
regulation system. As the profit is earned from all the countries where the branch is established.
And this profit plays the major part in increasing the GDP of the home nation. Thus, it is the part
of macroeconomic environment the changing regulation in the different country affects the trade
policy of the country. In order to protect the business from affecting the changing regulation of
the government in different countries where the business is established. The financial manager
must make sure that the business is full-filling all the requirements that has been mentioned in
the business law and ethics. This results in the less interruption of the government.
Stakeholder management is one of the complex thing that has to be managed by the
finance manager. For example: there is a situation in the market that is related to the “Unequal
ratio of demand and supply” this situation results in losing the effectiveness of the market. This
impacts the macroeconomic environment of the economy. As the supply is not matching the
demand. In such situation it is hard to manage the stakeholders for the organization. In such
situation, shareholders withdraw their shares. And the consumer shifts towards the substitute
products. (Hitka & et.al. (2021). This results in extreme loss for the business. In order to solve
this situation or saving the business from facing this situation the financial manager that are the
part of top executive teams ensures that the business has the effective supply chain management.
This ensures the effective and timely delivering of goods and services. The logistics element in
supply chain management has been given full focus as this helps in ensuring the availability of
goods in the market. The new supply chain management strategy has been implemented by the
financial manager in order to re-create the effective supply. The financial manager ensures that
the cost of the production remains low for implementing the new strategies.

The exchange rate is one of the big obstacle that has been faced by the finance
management of the company. The change in exchange rate refers to the change in the value of
currency. Firms that running their operations in the international market faces the high loss due
to this. Slight change in the currency rate impacts the business. It impacts the exports of the
business. The fluctuation In the rate of currency is take place due to several economical reason
but the major impact of this comes on the business sector. (Kotchoni, Leroux & Stevanovic,
(2019). The financial manager in the business is concerned with managing the profit, expenses
and cash flow. Top level management team is consist of those financial managers that takes the
important decision in relation of the profit of the company. The change in currency rate is the
crucial factor that affects their decision-making. Therefore, the finance management team
gathers the data from the international market by making a keen observation. This gathered data
has been stored in the software of the company and then on the basis of the research and
available information the financial manager makes the different plans in relation of gaining the
profitability of the firm. The finance management team believes in the concept of collecting,
analysing and interpretation. The consistent observation in the international market provides the
idea to the manager in relation of the risks that can arise. The manager prepares the business in
such manner that the risk can faced by the business.
The situation of inflation in the market refers to increasing the prices of products. The
prices have been increased due to the unstable condition of the market. This situation creates the
loss for the business. The increase in prices by the firm leads to shift the consumer and if the firm
does not increase the prices then also the firm has to face the loss in terms of earning less profit.
Both the situation in the macroeconomic environment results in the loss for the business.
(Khyareh & Rostami, (2021). The government implements the monetary policy in the economy
in order to solve this situation. This policy refers to decreasing the price of product and
increasing the interest rate. This situation results in creating the loss for the business. The finance
management team faces the high level of complexity while dealing with this situation. In such
situation, the business is left with only one option and that is increasing the capital in the
business. The other option that can be taken in account is the retained earning of the business.
Through this way the financial manager solve the issue and allocates the capital from different
sources so, the increasing interest rate can be managed by the company.

The situation of excess unemployment in the macroeconomic environment also affects
the business in high manner. At the time when the economy is facing the unemployment, the
government introduces the policy of providing employment to the people in business sector. Due
to the orders made by the government the public sector companies has to select the people in
order to provide the job. But, this selection of the people has been done on the order of the
government. And the business sector requires the effective set of human base that can drive the
activities of the business in effective manner. (Goulet Coulombe & et.al. (2021). In such
situation, the business faces the complexity of unskilled people. This further results in losing the
productivity of the business. The financial manager from the top executives approaches the
effective human resource management team in the business and give them responsibilities in
order to train and developed selected employees by implementing the various training
programmes. This result in developing the skills in the people. And the complete scenario of
working is explained to them. This enables the selected people in the increment of their
productivity. As a result, the over all productivity of the business has also been increased.
From the above discussion it can be easily analysed that the financial manager in the business is
accountable for creating the profitability in the business. The financial managers that are part of
top executive team forms the important decision in relation of increasing the profit of the
business. The managers focus solving the different challenges that is developed in the
macroeconomic environment. (Filipović, Radovanović & Golušin, (2018). Macroeconomic
environment is directly linked with the business sector and therefore, any change that takes place
in the macroeconomic environment leads to impact the business. The financial manager in the
company keenly observe the market and gathers the data and this helps them to implement the
strategies in relation of facing and solving the challenges.

CONCLUSION
The above report has come on a conclusion that, the factors of the macroeconomics environment
affects the operations of the business organizations. The financial management team of the
organizations are focusing highly on these changes in order to solve this and for ensuring the
smooth running of the business. The main element that helps in adjusting and facing the changes
is the observation power of the managers. Consistent research and observation in the market
results in increasing knowledge of the manager and provides them idea to deal with these
situations. The better understanding of the economic aspect helps in determining the different
alternatives in order to solve the issues and challenges arise in the macroeconomic environment.
Along with this, the report describes that any specific or small change in the market impacts the
macroeconomic environment and it further impacts the business process. The capability of
financial managers helps in solving all these issues by adopting different strategies. This ensures
the better running of the business.

REFERENCES
Books and Journals
Bilan & et.al. (2019). Brand management and macroeconomic stability of the country.
Čepel & et.al. (2018). Business environment quality index in the SME segment. Journal of
Competitiveness.
Cepel & et.al. (2019). Selected economic factors of the quality of business environment. Journal
of International Studies.
Filipović, S., Radovanović, M., & Golušin, V. (2018). Macroeconomic and political aspects of
energy security–Exploratory data analysis. Renewable and Sustainable Energy
Reviews. 97. 428-435.
Goulet Coulombe & et.al. (2021). Macroeconomic data transformations matter. International
Journal of Forecasting. 37(4). 1338-1354.
Hitka & et.al. (2021). Influence of selected macroeconomic indicators on employee motivation.
Khyareh, M. M., & Rostami, N. (2021). Macroeconomic Conditions, Innovation and
Competitiveness. Journal of the Knowledge Economy, 1-20.
Kotchoni, R., Leroux, M., & Stevanovic, D. (2019). Macroeconomic forecast accuracy in a data‐
rich environment. Journal of Applied Econometric. 34(7). 1050-1072.
Mahmood & et.al. (2019). The role of macroeconomic and institutional factors in creating
corporate financial flexibility. Management Decision.
MIS, M. (2020). The Essential Role of the Project Manager in Business Transformation.
Roychowdhury, S., Shroff, N., & Verdi, R. S. (2019). The effects of financial reporting and
disclosure on corporate investment: A review. Journal of Accounting and
Economics. 68(2-3).101246.