Strategic Management: Financial Data Analysis and Business Strategies

This report, prepared for a Chamber of Commerce committee, examines the role of financial data in strategic management, using Samsung PLC as a case study. It begins by highlighting the importance of financial health indicators for long-term growth and the necessity of financial data in formulating business strategies. The report delves into financial metrics, risk management, and capital appraisal techniques. It explores revenue growth, financial risks such as credit and liquidity risk, and methods for appraising capital expenses. The report references several academic sources to support its analysis, providing a comprehensive overview of how financial data can inform strategic decisions and contribute to effective business planning. The report is designed to assist the committee in understanding how to apply financial insights to improve the performance of retail stores. The report is based on the analysis of the financial data of Samsung PLC.

Part 1 – Finance for strategic management
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Evaluation of sources of financial data for business strategies
Current as well as past financial health of an entity is
considered as the key indicators for the potential of long
term growth. Further, the analysis of financial data point is
crucial for understanding the strategies of the business.
Hence, the financial goals, position, performance as well as
the resources are considered as integral part for strategic
planning, monitoring the performances and implementation
of process.

Revenue growth – quality, timing and quantity of the
revenues determines the potential level of the
business’s long term success that is considered as the
fundamental concern for strategic planning. Revenue
growth indicates the future sustainability of the entity
and based on surplus earning it can plan for
distributing dividend to the shareholders.

Financial metrics are considered as the standard for
analyzing the performance of any firm. It helps in
monitoring and establishing the measurable as well as
specific strategic goals on integrated and strategic basis
and hence, enables the organization to operate
effectively and efficiently. Financial metrics and goals
are formed on the basis of industry benchmark.
Need for financial information and data to formulate the
business strategies

Risk related to the financial business decisions
Financial risks determine the ability of the entity to
manage the debt as well as financial leverage. Different
financial risks faced by Samsung Plc are –
 Credit risk – this is the risk incurred through extending
the credit to the customers
 Liquidity risk – it includes the asset liquidity as well as
risk related to operational funding.

Methods used for appraising the projects for strategic
capital expenses
Capital appraising techniques is primarily used for
planning process that helps in determining the
investment appraisal for both long term as well as short
term basis. Techniques used are based on priorities of
stakeholders as well as the decisions makers. Selection of
available criteria for appraising capital investment or the
budgeting is dependent upon the long term growth while
compared to the short term profits.

Reference
Begenau, J., 2018. Capital requirements, risk choice, and liquidity
provision in a business cycle model. Risk Choice, and Liquidity
Provision in a Business Cycle Model (March 6, 2018).
Gepp, A., and Kumar, K. 2015. Predicting financial distress: a
comparison of survival analysis and decision tree techniques.
Procedia Computer Science, 54, 396-404.
Karadag, H., 2015. Financial management challenges in small and
medium-sized enterprises: A strategic management approach. EMAJ:
Emerging Markets Journal, 5(1), pp.26-40.
Rich, S.P. and Rose, J.T., 2014. Re-examining an old question: Does
the IRR method implicitly assume a reinvestment rate?. Journal of
Financial Education, pp.152-166.