FINANCIAL STRATEGIES FOR A GLOBALIZED FIRM
FINANCE MANAGEMENT AND ITS OVERVIEW
According to G.C Ozoani (2004:1), financial management is defined by the function and responsibilities of financial managers. Funds are raised from external financial sources and allocated from different uses.
The flow of und involved in the operations of an organization is monitored. The benefit to the financing sources takes the firm of returns, repayment, products and services.
These key financial functions must be performed by a firm.
This calls for the financial managers that will help in managing. Planning, for acquiring and utilizing funds in order to maximize the efficiency of the organization’s operation.
A good managerial duties will help the firm internally and externally in funding other firms both in long-term funding at a reduced interest rate to boost the image of the organization.
2.2 THE TASK OF FINANCIAL MANAGEMENT
The determination of the most crucial function in the co-operate set-up is a complex issue and ultimately of little benefit. Complete because each functional unit perceives its roles to be the most crucial and as such consensus in very difficult.
It is of little benefit because the corporate entity cannot function without any of the units indicating that each a critical and that complementarily is the key issue (Muo, 2001:1).
Financial or finance function owns its importance to the fact that it facilities the timely and adequate acquisition of men, material, machinery, system, technology and entrepreneurship.
Finance also helps to maintain the self-regenerating capacity of the firm and ensures the optimization of returns from completing course of action.
Finance activities uses ‘3As’ anticipation, acquisition and allocation of financial resources (Christy and Roden, 1976).
The first A, “Anticipation”, it involves forecasting the expected events and their financial implication for the firm. The sales, cost of sales, prices, overhead, discounts, credit given and received and capital expenditure are forecasted and on the basis of the cash budgets, budgeted balance sheet, profit and loss account and anticipated sources and application of firm are prepared.
All these enable the firm to have fair approximation of its future financial management.
The second A, Acquisition, involves the knowledge where, when and how to procure finance, keeping in touch with providers of fund making timely request, and indicates good management in lendering, rating in borrowing, size or strength of the firm.
The final A, Allocation, involves investing the finances so acquired in alternative and completing areas. This is the realm of capital budgeting and project rating technique like Net present value, Average rate of returns.
In analysis, alternatively, investment key issues usually considered, included profitability, feasibility, legality, liquidity and dilemma of present project versus future survival.
Van Horne (1992:9) agreed that investment (allocation) and financing (acquisition) are major financing decisions but also added dividend policies, to what extent the owners of the firm should allow more investors (shareholders) in the interest of the firm and also the investors.
- FINANCIAL MANAGEMENT FUNCTION
According to Patrick Emekekwue (2005:2-3). Management is concerned with the attainment of certain objectives, which have been outlined by the directors of the organization. Thus, it is the duties of the financial manager to look into the financial policies of the organization with a view to determine how best these financial goals can be attained.
Although, various writers have identified the management function as an aggregation of planning, organization, staffing, directing and leading and control. We shall broadly identify financial management function as an a mailgram of planning, organizing and control of the sources available to an organization in order to meet the demands of the various claimants of the company. These resources take cognizance of the labour requirements of the organization. Based on the resources available to it, the financial manager has to decide whether the mode of production will be capital intensive or labour intensive. If he decides on labour intensive method of production then the question of availability to attract, motivate and retain them will be decided. On the other hand, if the production is going to be capital intensive, the financial manager has to identify where to get the required capital equipment bearing in mind the political sentiments of the country as regards trading partners and friendly countries.
The material resources of this firm is composed of real and financial resources. Financial resources are peculiar to any organization and this can be further sub-divided into cash and financial asset. Of these, cash is the most peculiar hence it can commend the other resources in an organization.
- FINANCE MANAGEMENT AND THE GLOBAL ORGANIZATION
A global organization (firm) takes the whole world as its
constituently. It therefore deals on a continuing bais with different markets and different product.
The finance function involves the 3As anticipation, acquisition, and allocation as well as working capital management and dividend issues.
The global finance manager faces different challenges with varying and conflicting priorities. Resultant, the finance function becomes more complex and daunting.
These complicity arises from:
- Dealing on and with multiple currencies (this complication (ones risk).
- Differing investment scenario’s and resultant varying returns on investments.
- accounting standard that may very slightly or significantly between countries, regions or books (Corrsbercy 1997:41)
- Security of the investment made in various parts of the world.
- Maintaining relationship with various banks in various parts of the world. Operating under different regulatory regimes.
- Managing a complex – web of financial inter-relationships between the various marketers, products and nations.