Financial Management to Support Strategy

In the post-recession world, the new norm for many companies is cost control and cash flow management. But it is important not to lose the big picture.

 

Business success is about growth. There are still growth opportunities in emerging markets, and in the changing demographics of the western world. Identifying and taking advantage of these opportunities is a key goal of the whole management team, including — most importantly – the Financial Managers and their teams.

The Financial Management group is a critical part of the management team of any company. They are even more important when financial resources are tight and capital allocations are difficult. That is why your finance team needs to be fully engaged and involved in the decision-making process of the business, its long-term strategy and the implementation of the strategy.

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The Role of Financial Managers in Strategy and Implementation

Financial Management plays an important role in the strategic issues of any company or organization.

 

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Capital Resource Management Remains Critical

Securing capital resources, managing cash flow, and controlling long-term capital allocation is fundamental in the post-recession business environment. Many businesses around the world face challenges in securing capital resources as banks and shareholders remain cautious in investing funds in new ventures or projects. But, opportunities for renewed growth are appearing in local and international sectors. And businesses need to be in a position to develop these opportunities quickly and effectively. Securing sufficient capital resources from both internal and external sources will be a key success factor in future expansion. It is also something that requires the time and attention of the management team.

To do its job properly, Finance needs the cooperation of all other functions in the business. Line managers in every department need to be familiar with basic financial concepts.

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Profitable Customer Centricity

Companies realize that to generate long-term growth, they should focus more on their customers. Loyal customers are more likely to be profitable customers, and deliver profits over a long time frame. But how much do you have to spend to create loyal customers? Which initiatives are most profitable?

Finance and money vs. Marketing and customers

There is an apparent conflict between happy customers and profits. The root of this conflict can be found in the metrics a company uses to measure its progress. Customer satisfaction data is often based on impressions and feelings, not on hard numbers. Financial data is too rigid to be useful in building long-term relationships with customers.

Financial, strategic and operational teams identify opportunities to make more money. Yet they often ignore valuable customer insights in the process. Marketing and customer teams come up with all sorts of initiatives to make customers happy. But they lack the money metrics, rhetoric and credibility to get any real attention.

 

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Mergers and Acquisitions: Use your Capital Resources to drive growth

Different parts of the world are experiencing the global recession in different ways. Europe and America felt the hardest impacts, while much of Asia continued to expand and grow. Emerging markets suffered less and recovered quickly. As a result, there are many opportunities to expand operations and secure new markets through effective Merger and Acquisition programs. 

However M&A transactions remain risky and dangerous for many companies. Studies show that 60% of all M&A transactions fail to achieve their stated goals and expectations. Companies with limited experience in the area of Due Diligence and Integration planning are at particular risk. It is critical to develop this capability on your finance team if your company is planning M&A activity as part of its growth strategy.

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Strategic Alliances: Why and how to build them

Strategic alliances make sense when you need to offer more value to the customer, but you cannot completely do it on your own. An alliance or partnership offers you a competitive advantage through access to a partner’s resources and capabilities. Alliances are used more and more often for innovation, and research and development.

Even the best alliances can be difficult to manage. They work best when all parties agree on and work together to implement a common strategy to achieve business objectives. Hidden expectations about operational issues can lead to conflicts. How do you know you have the right partner? How do you plan for success? Your finance team needs to have the capability to structure an alliance deal, and to be able to evaluate the performance of the alliance to be sure value is being created.

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Developing Talent in the Finance Department

Controllers

The controller is the business partner and right hand of line management. Increasingly, controllers are not only in charge of planning, analyzing and presenting figures, but also act as coach, consultant, or project manager. They are expected to understand the business context as well as the financial figures and drive financial performance.

Controlling is a cross-over function. You find controllers at the headquarters and in all divisions and departments of a company. Typically, controllers are in charge of planning, analyzing and presenting figures. Controlling is an excellent career path, as demonstrated by the increasing number of CEOs with a controlling background.
The ideal controller is a good communicator, fully familiar with the IT tools the company is using, and able to prepare and/or deliver effective presentations. Such individuals are difficult to find.

Building financial skills, technical areas

To keep you and your managers up-to-date—and to prepare the next generation of managers to take on roles of greater responsibility—developing members of the finance team is an ongoing necessity. Whether your need is to develop groups of managers, or to follow a more individualized approach, MCE can help you.

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Talk to MCE About Financial Management to Support Strategy

For Teams, Divisions, Organizations

For Individual Managers

 

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