Strategic Financial Resources Management

Narendra Kumar

14 Mar, 2023

A strategy of action designed to accomplish a continuing or general aim. ‘Time to develop a coherent economic strategy’

The art of planning and directing overall military operations and movements in a war or battle. ‘He was a genius when it came to military strategy’ Often contrasted with “tactics”

“Strategic management includes the preparation and application of the major areas and creativities engaged by a company’s top management on behalf of owners, based on the reflection of possessions and a valuation of the internal and external environments in which the organization competes.”

Strategic Management for Organizations

It can be advantageous for any association, notwithstanding their sizes since there is always a room for improvement and each organization possesses some unique strengths and opportunities which can be capitalized upon. It ideally should be a continuous process and not a one-time evaluation or brainstorming exercise. It involves systematically reviewing participants, understanding their method and single vending opinions which have helped them achieve their places. Also, rechecking own organization’s strategies regularly determining their applicability and potential success/ threats in present market conditions.

Superior planned choices provide an overall future course to the group and must be founded on thorough analysis. Continuous monitoring is further required that the organization is moving in the right direction and if any further steps are needed for more effective implementation.

Important Concepts of Strategic Management

SWOT Analysis

SWOT framework was initially used by Harvard and future commercialized by Kenneth R. Andrews and it still remains a commonly skillful analysis tool.

SWOT Analysis should be conducted, i.e., identify Strengths, Weaknesses, Opportunities, and Threats for your organization and accordingly utilize strengths in the best manner, work over the organizational weaknesses, grab the upcoming opportunities and make a backup plan for identified threats.

Financial management refers to the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the particular meaning straight connected with the top management.

Key Success Factors For SFRM

While the exact nature of the SFRM effort will likely differ significantly from bank to bank, based on the factors outlined in our report, we find the following success factors and principles hold true across most situations.

Elements of Strategic Financial Management

Strategic financial management is financial procedures and includes basics designed to make the maximum efficient use of the company’s financial resources. Key elements of strategic financial management include budgeting, risk management, and review and evaluation.

Meanwhile, strategic financial management is all about continuing focus on achieving a company’s long-term business goals, it necessarily includes developing and putting in place regular procedures for review and evaluation of how well the company is doing in terms of staying on track.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation, and control of financial resources of a concern. The objectives can be-

• To ensure a consistent and satisfactory source of assets to the anxiety.
• To ensure adequate returns to the shareholders which will depend upon the earning capacity, the market price of the share, expectations of the shareholders.
• To safeguard best funds use. Once the resources are acquired, they would be utilized in the maximum possible way at least cost.
• To ensure the safety of investment, i.e., funds should be invested in safe ventures so that an adequate rate of return can be achieved.
• To strategy, a complete principal structure-There should be the sound and fair composition of capital so that a balance is maintained between debt and equity capital.

    Scope/Elements

• Investment decisions: – includes investment in fixed assets (called capital budgeting). Investment in current assets is also a part of investment decisions called working capital decisions.
• Financial decisions: – They relate to the floating of finance from countless incomes which will be contingent upon the decision on the type of source, a period of financing, cost of financing and the returns thereby.
• Dividend decision: – The finance manager has to take a decision with regards to the net profit distribution. Net profits are generally divided into two:
• The dividend for shareholders– Dividend and the rate of it has to be decided.
• Retained profits: – Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

Read our article:How does your Inventory Management Impact your Financial Reports? Know More