financial management 5-6 pages

Running Head: ECONOMICS AND ADMINISTRATION 1

ECONOMICS AND ADMINISTRATION 5

ECONOMICS AND ADMINISTRATION

Khalia Hart

Dr. Touhey

MGMT 640 – Financial Decision Making for Managers

March 31, 2019

EXECUTIVE SUMMARY

For the success of every business, there needs to be a strong supporting factor that enforces success. The success of a business indicates that the structure of decision making is tough, strict but at the same time lenient to staff and more importantly customers. Financial management is a very vital factor to consider while engaging in any business activity. Not only is it concerned about customers and staff, but also affects every aspect of the business from managing cash flow and maintaining performance index to developing plans to ensure maximum use of opportunities by business owners. Stakeholders and business owners need to realize the importance of financial management as a tool in business administration since it is the force that ensures continuous development of financial capabilities needed for a business to achieve its full potential.

The macro-economic environment addresses issues concerning behavior. Here are where aAdministrative issues lie. Administration can be categorized into two main categories, administration as a practice and as a science. Administration as a practice mainly addresses the normal routine of business owners and managers and their normal administrative roles in any business entity. Administration as a scientific field is bound to face challenges which are broken down into four main classes. They are discussed fully in this document.

Factors that affect administrative decisions include globalization, cost of control, the relationship between stakeholders and demand on ethical behavior and corporate responsibility. Administrations in different organizations should always be keen to ensure that the named issues are always put under the eye . These factors can greatly affect the performance of a business entity as shall be discussed in this document. Comment by debra touhey: Good start, Khalia. The Executive Summary should explain the problems at hand with potential solutions to those problems. Here is a good reference on writing Executive Summaries: https://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html

INTRODUCTION

Since time immemorial, business has always been a very important factor in society. To date, business transactions take place daily through the various business entities that have been established. In the modern world, however, various guidelines, strategies, and tools have been established to ensure that business practices go on smoothly (Robert et al., 2004). Comment by debra touhey: A little too informal for graduate writing

One of the practices that have been developed to ensure maximum productivity in the various entities that have been established, is financial management. The financial management function allows for the planning, organizing, monitoring and controlling of financial resources within a business entity to ensure maximum productivity and additionally ensure organizational goals and objectives have been met. Comment by debra touhey: Very good points here!

The practice provides guidelines for activities such as risk assessment, procurement of funds, management of funds, payments and any other activity that revolves around money in an organization. Now that matters to with finance have been addressed the term economic environment of a business should be additionally outlined. The economic environment of a business is a broad term but when used simply the term is used to imply economic factors that affect consumer and commercial behavior of a business entity (Funk & Wagnalls, 2018). The economic environment is encompassed by both the external and internal environment surrounding a business entity. The external factors surrounding a business usually includes customers, suppliers. market size and competitors. Internal factors are simply those within the organization but have effects on the business such as the workforce and availability of funds.

Daily, the financial manager of an organization is bound to experience challenges which are usually brought about by various issues either in the microeconomic or macro-economic environment.

ANALYSIS

To meet the requirements of this research paper, the macroeconomic environment will be delved into in the bid to ascertain the effects that due to the ripple effects that are experienced due to decisions made by financial as subject to the affiliate economic environment. The macroeconomic environment comprises of various aspects that include fiscal policies, inflation, employment.

The macroeconomic environment additionally deals with aspects such as the behavior, performance of an economy with the long-term goal of ensuring an economy holistically achieves the set economic objectives and guidelines. The current context of the organizations stimulates some reflections on the challenges of the aAdministration as practice and as science. They can be summarized in four main points: pressures linked to globalization, pressures related to cost control, pressures that refer to relationships of trust between stakeholders, and demands on ethical behavior and corporate responsibility. These four challenges are linked to some paradoxes that companies face today.

The constitution of the aAdministration as a scientific field - the themes, the phenomena approached and the theories that provide explanations for these phenomena - go through the identification of the challenges pointed out previously and its investigation. It is hoped that the accumulation of knowledge about the way they affect organizations can contribute to finding viable solutions that result in more effective political action, not only internally, but also at the institutional level. Thus, the purpose of this essay is to briefly discuss these challenges and their implications for management practice, to stimulate further reflections and motivate further research on such subjects (Funk & Wagnalls, 2018). Comment by debra touhey: A bit “wordy” here. You have told us your purpose before and it’s time to get to the “meat” on the bone

The first challenge, globalization, is not new. Despite this, it is worth remembering that the most recent findings indicate that, from the economic point of view, globalization is nothing more than regionalization, since most companies still prefer to invest in geographically and culturally closer territories. Moreover, the practice of market opening has more clearly exposed the contradictory stance of the United States, which imposes pressures on economic openness in other countries, but protects its internal interests. This leads to the conclusion that globalization, understood by many as an autonomous economic movement, benefits mainly the stronger countries through policies and practices established by governments. The phenomenon attributed to the loss of power of nation-states occurs mainly with weak countries and governments, which employ disproportionate measures of the attraction of foreign capital, such as the use of high-interest rates, which places the domestic economy in recession but attracts foreign investors. Another common practice among countries dependent on external resources is the devaluation of their currency, rendering land, property, capital, and labor disproportionately cheap. Contradictory, this practice leads to the appropriation of internal resources, forcing local companies to compete under disadvantageous conditions (OJS, 2018). Comment by debra touhey: Be specific on the global challenges for JUST the Financial Manager (country risk, interest rate risk, etc.)

One of the consequences of external dependence on resources is the reduction of consumption and the economic recession in emerging countries, which has stimulated the migration of skilled labor in mass to the countries in which the investment in labor results in financial compensation and opportunities for advancement. This mobility reaches the quota of skills and competencies available in the host countries, but above all, it shows the fact that one of the most important competencies of a government, today, involves the capacity to generate jobs. Nothing different so far, except the recognition that it is the responsibility of governments to open opportunities for mass employment and for companies to act responsibly on practices such as downsizing and outsourcing. These strategies do not withstand a long-term analysis, as they stimulate unemployment (Robert et al., 2004), leading to the reduction of markets and threatening the conditions that sustain the survival of companies.

The alternatives under consideration in developing countries are increased exports and the internationalization of firms. International expansion has become an essential prerequisite for the survival of firms in emerging countries, considering the vulnerability of these countries during global crises. The most recent studies suggest that one of the most effective forms of internationalization by beginners is through cooperation in networks since isolated strategies are difficult to get access to required infrastructure, making it difficult to explore new opportunities. These studies also show that the ability for organizations to improve in their business relations depends on the development of a trust between the relating parties. Another challenge that presents itself is that organizations have made it a norm to lay their foundations on opportunism (Nadkarni, Sucheta & Narayanan, 2004).

The second challenge concerns cost control. The development of measurement techniques in various sectors and organizational levels created conditions for companies to examine and measure the cost of their various activities. Today's society is much more aware of costs, thanks to neoliberalism. Any human activity is evaluated in terms of differentiated costs that apply to different contexts and occasions. Neoliberalism stimulates cost consciousness not only at the institutional and organizational level but also at the individual level. Each person should be responsible for the costs of their survival because, from the point of view of social values, the limits of family responsibility have been reduced and the state has increasingly been absent from social areas. Neoliberalism stimulates a certain profile, in which the individual is considered an economic unit, clearly independent of family, personal or institutional relationships, implying that he himself has to continually generate surpluses in order to finance his existence and take precautions in times uncertainty, abundance or disability. In the organizational context, individuals are expected to be independent of the organization, since they must assume that employment is temporary and dependent on the development of key competencies (those that interest the organization at a given moment). The development of key competencies - employability - can be an instrument that leads to greater individual mobility, but also serves to justify the breakdown of implicit agreements between the company and employees. The company is more interested in the flexibility of maneuvering the labor force than building a relationship of trust and loyalty with its employees. Comment by debra touhey: Stay focused on the financial manager only.

This last argument leads to the third point, which refers to the ability of organizations to generate knowledge. To be competitive, organizations need to systematically invest not only in procurement but also in retention of knowledge. As the media today makes information easier, copying has also become much easier, imposing an accelerated pace of innovation on companies that want to be competitive. In addition, both organizations and individuals need to generate knowledge that can be transformed. The vulnerability of innovations encourages copying or expropriation, requiring a strategic approach that protects the retention of knowledge internally. Although it can be considered that the human being is an inexhaustible source of ideas, there are always the costs associated with the transformation of ideas into something tangible, that can be commercialized. Even the universities, generating ideas by excellence, have created rules to guarantee the ownership of the knowledge generated internally. However, the capacity for innovation requires some key ingredients, since the creative process requires the sharing of information and knowledge. In addition, it requires the ability to work in groups, the formation of collaborative attitudes and, above all, the building of relationships of trust among organizational actors. Comment by debra touhey: Use higher level writing here. State theories or facts and support them with citations. Stay focused on the challenges of the financial manager and ONLY them. Discuss economic cycles, affects of globalization, and various specific risks to the financial manager.

The ability to build relationships of trust also becomes important in another context, that of the relationships between owners and managers and between these and other stakeholders. Agency relationships have been centralized by the expansion movement of international bodies, hence has changed the ownership logistics of businesses in the whole world (Boyce, 2013). This is more important especially when that the change in company ownership is observed in a global perspective.

References Comment by debra touhey: Use relevant scholarly resources from our library using the keyword searches that align to our topic.

Funk & Wagnalls New World Encyclopedia. 2018. 1p. , Database: Funk & Wagnalls New World Encyclopedia

Nadkarni, Sucheta; Narayanan, V. K.. Academy of Management Proceedings, (2004, pU1-U6, 6p). Publisher: Academy of Management., Database: Complementary Index

OJS, 2018.; Faculty of Islamic Economics and Business of Institute Agama Islam Negeri (IAIN) Pekalongan, 2018.Language: English, Database: Directory of Open Access Journals

Robert C. Prior; Rob L. Slavens; Jerry Trimarco; Vedat Akgun; Edward G. Feitzinger; Chyi-Fu Hong (2004). In: Interfaces. 34(1):26-38; The Institute for Operations Research and the Management Sciences. Language: English, Database: JSTOR Journals.