Strategic Financial Management: Roles and Applications Essay

This essay provides a comprehensive overview of strategic financial management, detailing its significance in achieving long-term organizational objectives and maximizing value. It explores the core roles of strategic financial management, including asset management, goal setting, and environmental analysis. The essay also delves into the tools used for financial decision-making, such as marginal revenue and relevant cost, while examining the application of strategic financial management across different fields, specifically hospitality, travel and tourism, and airline/event management. The importance of strategic financial management in minimizing costs, maximizing profits, and effectively serving clients is emphasized throughout the analysis, with references to key academic sources.

Essay

Strategic financial management is the aspect which helps in managing organization
financial resources in order to attain long term objectives and assist in maximizing value by
considering the strategic goals of the enterprise.
(a)
According to Baldenius, Dutta and Reichelstein (2007) there are different resources
which are to be managed in an effective manner to carry out the various operations in order to
attain the goals of the organization.
Proper framework is being followed in order to carry out the various operations that
determine the proper allocation of the resources that are needed in order to conserve the
resources to meet specified goals and objectives (Wheelen and Hunger, 2011). Strategic financial
management includes different types of roles that help enterprise to attain goals in a specific
manner.
As per view point of Freeman (2010) there are different roles that need to be performed
by the enterprise to serve client by effectively utilizing resources which are available to them in
order to meet their need specifications. The different roles which are managed by the
organization are stated below:
 Asset management: This aspect help in effectively managing the current assets (cash,
debtors, prepaid expenses) and the current liabilities (bill payables, accrued income) in
order to properly manage the working capital and the cash requirement.
 Setting detailed goals: According to Grzegorz (2010) the goals are to be set in a specific
manner to utilize the additional cash for the future investment. This helps in long term
planning in order to build up suitable cost relationship for the enterprise.
 Analysing the internal and external environment: Proper analysis of the internal and
external environment is done in order to forecast future plans in order to allocate the
resources in determining the organization objective in order to serve the customers.
 Formulating a strategy: The strategic financial management helps in proper formulation
of the strategy in order to serve the clients with the specific utilization of the resources to
determine the value of the money.

With the view point of Shapiro (2008) there are different elements that properly help the
enterprise to analyze contribution which is made by them in order to serve the clients by tracking
their requirement.
Strategic financial management use various tools in order to make the proper decisions
with the effective utilization of the resources to serve clients in the market in which it operates.
This helps in proper determination of the various costs that are involved in order to forecast long
term objectives of the organization.
As per view point of Simons (2013) proper analysis is being done with the help of the
various tools in order to determine effective allocation of the resources to serve the clients. This
helps in proper forecasting the organizational goals and attaining in specific time duration.
There are various costs which are valued over the specific time duration in order to meet
the requirement of clients in an appropriate manner with the proper allocation of the cost as well
as capital. With the view point of Jansen, Van Den Bosch and Volberda (2006) various costs that
are involved are discussed below:
Marginal revenue: It is the change in the total revenue which is the outcome of
production of one additional unit in order to meet the specific needs of clients. For example: if
organization makes additional production from the available resources, then in that case
enterprise generates profit which increases the cost of capital.
Relevant cost: It is the cost which is associated to make specific decisions in order to
serve clients. For example: when organization uses the relevant cost, it can be measured that the
purpose of using cost is to accept the special output to generate the profit for the business unit.
As per the view point of Abiad, Oomes and Ueda (2008) along with the cost, proper
analysis of the different dimensions is being done of the contribution that help organization to
determine break-even point which helps enterprise to generate profit that is equal to the total
cost. For example: business is selling 10 units at the cost of £100 each and is able to generate
equal revenue that is £100 each out of the expenses and profits are equal to the total cost then
business entity can serve clients in an effective manner with the effectual utilization of resources
which are available to the enterprise.
(b)
There are different role of strategic financial management in different fields in order to minimize
cost which is employed to maximize profit by serving clients as per their specification. There are

different fields which are operating in the work environment in order to serve clients that are
discussed below:
Hospitality: According to Jansen, Van Den Bosch and Volberda (2006) this industry
operates to serve clients in an effective manner to avoid the ineffective utilization of resources
that are used to serve them effectively. Different dimensions are involved to formulate, evaluate
and execute strategies in an effective manner in order to minimize capital which is employed to
serve clients in an appropriate manner. Strategic financial management helps in the detail
forecasting of two important elements in order to generate maximum profit out of the services
which are rendering to the clients in order to make their stay easy and relaxing. In accordance to
Kotler, Bowen and Makens (2006) this proper analysis of the various cost helps business entity
to control the variable cost and manage cash inflows and cash outflow in an effectual manner.
Travel and tourism: As per the view point of Kotler, Bowen and Makens (2006) proper
internal and external analysis are being done. This analysis helps business entity to generate
maximum output by attracting more and more tourist to visit places. In order to make places
more attractive, different expenses are made by the organization so that maximum output is
generated out of it. Strategic financial management plays a very important role in this field as it
will help in effective attainment of the competitive advantage (Evans 2015). It helps in proper
formulation of the strategies which will help organization to introduce innovative aspects so that
more and more tourists are attracted to the places and this will help in generating more revenue.
It will also help organization to generate maximum profit as this sector is more attractive.
Airline or Event management: According to Evans, Stonehouse and Campbell (2012)
market consists of the homogeneous products and services which are offered in order to serve
clients as per the needs that are specified by them. Organization tries to serve clients in an
effective manner so that they are able to minimize capital which is employed in order to meet the
demands and in return generates maximum profit while serving clients. In accordance to Evans
(2015) organization can make maximum profit by offering effective fare prices so that
passengers are able to afford it in order to travel across the different countries. For example: if
British airways reduce their air fare, then it will increase the total number of tickets that are sold
by them and will help to minimize the amount of capital as well as profitability.

REFERENCES
Books and Journals
Baldenius, T., Dutta, S. and Reichelstein, S., 2007. Cost allocation for capital budgeting
decisions. The Accounting Review, 82(4), pp.837-867.
Evans, N., 2015. Strategic Management for Tourism, Hospitality and Events. Routledge.
Evans, N., Stonehouse, G. and Campbell D., 2012. Strategic Management for Travel and
Tourism. Taylor & Francis.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge University
Press.
Grzegorz, M., 2010. Planning optimal from the firm value creation perspective: Levels of
operating cash investments. Romanian Journal of Economic Forecasting, 13(1), pp.198-
214.
Jansen, J.J., Van Den Bosch, F.A. and Volberda, H.W., 2006. Exploratory innovation,
exploitative innovation, and performance: Effects of organizational antecedents and
environmental moderators. Management science, 52(11), pp.1661-1674.
Kotler, P., Bowen, J.T. and Makens, J.C., 2006. Marketing for hospitality and tourism (Vol.
893). Upper Saddle River, NJ: Prentice hall.
Shapiro, A.C., 2008. Multinational financial management. John Wiley & Sons.
Simons, R., 2013. Levers of control: How managers use innovative control systems to drive
strategic renewal. Harvard Business Press.
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Online
Abiad, A., Oomes, N. and Ueda, K., 2008. The quality effect: Does financial liberalization
improve the allocation of capital?. [Pdf]. Available through: <
https://www.imf.org/external/pubs/ft/wp/2004/wp04112.pdf>. [Accessed on 4th
January2016].