SFM Session One

8/8/2019 SFM Session One

http://slidepdf.com/reader/full/sfm-session-one 1/20

Strategic Financial ManagementStrategic Financial Management



Accenture on Finance Strategy«««««««..

Today's CFO faces a dynamic and challenging environment. Globalization,merger and acquisition activity, cost pressure, emerging competition, andincreased scrutiny by investors and regulators represent just a few of the

business trends the finance organization must be prepared to address.

The Finance Strategy helps CFOs and their leadership teams align finance priorities with business priorities ² and to put in place the tools, processes,workforce and organization structures to support those priorities.

Our extensive strategic experience is augmented by additional services in theareas of organization and governance, and in compliance and controls.Accenture¶s distinctive skills in workforce transformation help clients developand sustain the right skills and capabilities in its people to«««..

add Maximum Value to the Enterprise.



A True Strategist Believes in«««««««..

Lateral Thinking

or

Thinking Creatively

Without prejudices of

³Systematic Approaches´



What is Strategic Financial Management ?

I ts not a Mathematical Science only

Mathematics is just a requirement for Analysis,

Decision Making and Monitoring

I ts all about

Thinking Strategically !



Too Much of Mathematical Thinking Kills Both«..

Strategic Thinking !

&

C reative Problem Solving !



Strategic Financial Management is «««««.

An advanced area of knowledge, which offers a great amount of versatility to strategists , to be ultimately (andsubstantially) successful in financial sense

This financial sense converts the big dream based onV I S ION into small mission led tasks that are to be fullysupported by ³ Pragmatic Strategies´

Strategic Financial Management Offers the realisticconnectivity between a C E O¶ s Vision-Mission and thetargets set for the executives



SFM Refers to Both«««««««««««««««.

The F inancial I mplications of Business Strategies and

The Strategic Management of F inance Strategic Approach to Revenue Maximisation

Strategic Approach to Cost Management

Strategic Approach to Fund Raising

Strategic Approach to Funds Deployment

Strategic Approach to Diversification Strategic Approach to Expansion

Strategic Approach to Down Sizing

Strategic Approach to Renovation



Role of Strategic Finance Professionals««««..

Strategic Finance specializes in providing expertresearch, consultation, analysis and testimony infinancial economics and related fields.

The areas of expertise and experience include Strategic Planning and Execution,

Business valuation,

Value Based Management, Corporate Restructuring

Statistical and Econometric analysis of markets,



Strategic Finance experts work collaboratively with

corporate officials, attorneys and other advisors to

determine effective and efficient strategies for

understanding, explaining and solving intricateeconomic and financial problems.



W hat is the Goal of the F irm?

Maximization of Shareholder Maximization of Shareholder

W ealth!

W ealth!



How to Maximize ShareholdersWealth

By Maximizing the Benefits to all I nterest Groups

or Stakeholders of the business«««««««

Employees

C ustomers

Vendors & Suppliers

Lenders

C ontractors

Government

Society



Most Important Equation for SFM«««««..

R eturn on Investment (Profit/Investment)

ROI = I nvestment Turnover X Profitability(Sales/ I nvestment) (Profit/Sales)

I f you can increase

I nvestment turnover and Profitabilityby x % , your ROI will go up by 2x%



Sub Aspects of Investment Turnover & Profitability

If you want to improve your ³Receivables Turnover´ by giving less

credit to customers, you can either sell less or sell at lower price

which will affect your profitability ratio

You may reduce your fixed cost (especially which does not give

you immediate tangible results or which are easy to reduce such as

human resource development cost, R&D, promotional communication cost

etc.) for increasing your profitability. This may later on prove to be wrong,as some of these costs are essentially incurred on order to sustain and to

achieve long term results for the enterprise

You may reduce inventory cost significantly but which may result

in stock out situation



The Modern C orporation

There exists a SEPARATION between owners and

managers.

Modern Corporation

Shareholders Management



Role of Management

An agent agent is an individual authorized by another

person, called the principal, to act in the latter¶s

behalf.

Management acts as an agent agent for

the owners (shareholders) of the

firm.



A gency Theory

Agency Agency TheoryTheory is a branch of economics relating

to the behavior of principals and their agents.

Jensen and Meckling developed a

theory of the firm based on agencyagencytheorytheory .



Agency Theory

Incentives include, sweat equity, stock stock optionsoptions,, perquisites perquisites,, and bonuses bonuses.

Principals must provide incentivesincentives so

that management acts in theprincipals¶ best interests and then

monitor monitor results.



What is Required«««««««««««

³Strategy Based Growth´ or ³Growth Based Strategy´



What is the Parameter of Growth«««««..

³Single Parameter´ vs. ³Multidimensional Parameters´



How to Make Organizations Great from Good««..

Benchmark with Great Organizations«««««

Documents

SFM Session One