The Finance department is the most important decision-maker in a global company 1
The Finance department is the most important decision-maker in a global company
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The Finance department is the most important decision-maker in a global company. Financial department is identified as effective management of capitals in various ways to achieve the established aims. Financial sectors provide the organizations with a vast range of business perspectives, as well as further stability and development. In early decades of the 1900s, the capital was raised by a formation of new firms and the legal aspects of mergers(Brigham,2012). Consequently, it enabled global companies to enhance their profitability and performance on the regular basis by means of a variety of new opportunities. Nevertheless, in order to attain these results, a financial department of the company should precisely analyse data and performance, set appropriate goals, as well as plan and organise the financial activity of the company. Thus, it can be assumed that the financial department is the most important decision maker in a global company as it is responsible for the development and well-being of the company.
Financial management can be defined as rational and productive money management in a way to achieve the objectives of a company. The definition is associated with an arrangement of organisation’s financial strategy. It includes increasing the capital and its efficient distribution and investment. The capital planning implies a great degree of responsibility. As far as finances is an essential part of business, due to its impact on company’s actions and further outcome, it is essential for a company to hire a specialist with the profound knowledge in the sphere. It signifies the responsibility of financial manager’s position as it is linked to top management.
The field of financial management is considered to be the most influential in the global companies due to the fact that it gives an opportunity for organizational development. Primarily, it enables company to analyse data of its previous performance and then, develop a strategy aimed at the further expansion to the global market. The department organises a work of decision makers who apply various efficient means of contributing to the overall outcome, as well as sharing information and experience. Due to the fact that financial management requires collecting the significant amount of data, its proper analysis, and discussion, it is always important for a global company performance. Furthermore, the market tends to shift constantly. If you are not certain of correctness and relevance of your actions and statements, it is better to consult more powerful members of a team, who have a better insight into changes of the financial market (Ted Prince, 2006).
Thus, the effective operations of in the experienced financial department can influence the future of the organisations. Responsibility and ability to make decisions enhance the general productivity of a company and advancement of internal functions including communicative skills and finding approaches to different situations. Proper financial management helps the company to grow or remain stable. If specialists are able to improve the financial situation in a company, they will develop trust and make people more confident about their actions, as well as advance their confidence.
Ambitious individuals who are eager to start their business, have a greater chance to achieve this objective, if they are already experienced in the financial field and are aware of financial planning rules. As soon as individuals improve knowledge and skills in a sphere, it will be easier to start the business, due to the fact that they are already familiar with the working process (American Library Association, 1999).
What is more, new business establishment acquisition requires awareness of ruling business in a particular country, where business is planned to be established. Thus, successful business arrangement depends on a number of points, which should be examined and studied in advance, including ethics, politics, employment and law of the foreign country.
One more benefit for acompany to conduct a proper financial management is a variety of occupations. Despite the narrow focus of finances, it enables a company to use different opportunitiesin order to capitalize on them. For instance, a company can make money ona variety of establishments, including effective banking, supplies, governmental institutions, insurance companies, financial planning services and others. Moreover, financial managers can work with decision makers of outside organisations, which provide a company with an opportunity of beneficial cooperation.
Financial positions are growing faster than any other type of employment. The growth is caused by increasing of a range of financial products and services. As far as the areas of business grow, the companies develop more branches of their manufacturing in different parts of the world. Thus, there is always a need for knowledge in finances concerning different geographic regions. However, it is obvious that there are other departments that participate in the decision making process. For example,the company isto find specialists from the whole world to have multiple perspectives of the global economy and the ways of future progress. Hence, human resource department is one of the main parties participating in the decision making regarding global expansion. Consequently, specialists, who can provide better insight into the national and cultural aspects of business and market, are in great demand. It should be concluded that there is a tendency of hiring financial managers from the countries where the company’s objects are located. It is conditioned by the fact that global organizations starting a new business need to consider political and employment issues. The reason is that environment of each country is different. Therefore, companies are to take into consideration specific of each country and hire relevant personnel. Besides, it is essential for companies to develop a flexible human resource policy in order to handle various political issues and ensure a success in a country.
In addition, if a global company is going to start its activity in a new country, it must study ethics, laws and labour standards of this country. It is essential part as a company, which is not familiar with these elements will not succeed in this environment due to several reasons. The first one is that problems with violation of laws will lead to the increase in expenses by means of different fines and penalties. In turn, non-acquaintance of local ethical rules would worsen a company’s reputation; thereby, reduce the number of its partners, employees, and clients. It means that a company should be ready to start operations in a new country. Therefore, the legal department is one of the important decision makers during expansion as it prepares employees and approves their readiness.
In spite of these facts, a financial department is the most important decision maker during expansion, as financial factors will provide a significant impact on the future of activity and management in global business. In addition, financial specialists are to analyse all advantages and disadvantages, count how much a company must invest in the expansion and determine the profitability of its decision. In spite the advancement of informational technologies, the process of planning and assessing the financial situation is still the most important. Moreover, all the types of management depend on a financial department. The reason is that financial manager decides how much money each department need for elaboration and expansion. They assess and determine the profitability of different activities and options. Taking into consideration the fact, that an ability to manage money effectively is a cornerstone of a successful business, it becomes obvious that financial managers have more influence in the decision-making. In addition, in the modern multinational corporations, such as Coca-Cola and Alphabet, the final word in a decision making regarding global expansion always rests with a head of a financial department (Brigham & Houston, 2012). Thus, a financial department plays a key role in decision-making on the global market as the role of finance in the everyday life of a company is evident.
In conclusion, it should be stated that experienced management of financial departments can provide a company with a number of benefits, including rapid development, as well as acquire new assets. However, one of the most beneficial aspects provided by the financial departments is a future progress. The reason is this department analyses the whole activity of a company in terms of financial effectiveness that directly points to unprofitable occupations. As a result, only financial managers can develop a long-term plan of how to minimize expenses and enhance the overall profitability of a global company. It signifies that specialists from different parts of the world would share their experience in the field by working in overseas companies in order to make activities of a corporation more efficient. Undoubtedly, starting a new business requires legal and ethics studies, as well as establishing specific HR policy. In spite of this, it should be said that it is extremely important for a company, which operates globally to develop and improve financial management in order to get a perspective of working abroad in various specific companies.
References
Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage Learning.
Entrepreneur magazine’s start your own business: The only start-up book you’ll ever need (1999) Choice Reviews Online, 36(08), pp. 36–4572–36–4572. doi: 10.5860/choice.36-4572.
Madura, J. (2011). International financial management. Cengage Learning.
Shapiro, A. C. (2008). Multinational financial management. John Wiley & Sons.
Sumichrast, M.A. (2004) Opportunities in financial careers. New York, NY, United States: McGraw-Hill Companies, The.
Ted Prince, E. (2006) ‘How to make human resources more relevant to corporate financial objectives’, Human Resource Management International Digest, 14(2), pp. 3–4. doi: 10.1108/09670730610656824.