FIN20014 Financial Management

Goals of an organization

As the manager of an ABC Limited company, the goal has defined in context of shareholders. ABC Limited is retail organization situated in Queensland, Australia. The major goal of the company is to provide the satisfactory return to the shareholders. It can be achieved through focusing on the areas that lead to increase the revenue and decrease the overall cost. The demands of customers are met on time so that it provides competition and increases the customer royalty. Shareholders are provided with high dividends so that build their confidence in ABC limited.

Example of Reflection

As a cost manager of ABC limited, the goal of the company has been developed on the basis of practical scenario faced in the past. The company initially has placed emphasis on deriving larger returns for the shareholders by increasing the prices of the product being manufactured for covering the overhead costs and improving the profitability position. However, it has been realized that the company’s profits has significantly declined in the respective year. The analysis carried out by me in this respect has lead to the conclusion that increasing the prices alone with no significant improvement in the quality of products has lead to its reduced customer attraction negatively impacting its profitability position. This is because the company’s decision has not taken into accounts the competitive prices and only focuses on creating profits for the shareholders. As such, to overcome such issues it has been recommended to the top management to integrate the objective of maximizing customer value into its goals that will ultimately lead to promoting sustainable growth of shareholders. This is because improving the quality of products by achieving operational efficiency will help in gaining customer satisfaction eventually leading to improved sales and profitability of the company.

Evaluation

Yes the current goal pursed by me conflicts with other stakeholder’s goals because my responsibility is to maintain the cost of goods and services lower in order to achieve the higher returns. The requirement to set the higher prices of goods that leads to undue burden on the customers and it also creates various issues while attracting the large volume of customers (Phillips, 2011). The major goal of the company is shareholder centric leaving behind the problems faced by the customers due to increase in price. As the cost manager I found that my goal of increasing the shareholder’s return has considerably affected the goal of satisfying the customers which is another major objective of the ABC Limited.

Analysis

The major challenge that has been faced as a cost manager to pursue the goal of the organization is to achieve operational efficiency that helps in reducing the operational costs and maxima the operational profit. As a cost manager, I have to identify the non-valued added activities that significantly lead to an increase in the cost of the products being produced. In addition to this, it requires specific training to be provided to the subordinates so that they can adequately meet the goal of improving the operational efficiency by lowering the costs. This involves changes to be done in the organizational structure that promotes improved coordination and participation of the employees at all level. This has resulted in directing the goals of the organization to be more employees focused for motivating them to achieve the organizational goals. The employees should be motivated by involving them in the overall decision-making process to empower them that result in improving their organizational commitment level and achieving effectively its stated goals and objectives (Denning, 2015).

Conclusion and action

I have learnt from the above scenario that goal to increase the shareholder’s wealth can only be achieved through focusing on the customer values and their needs. If company mainly focuses on the shareholders wealth without concentrating and solving the problems of customer’s issues will lead to downfall of overall profits of the company. The value of shareholders return can only be maximized if company focuses on overall prosperity of stakeholder’s not shareholders alone.

References

Denning, S. 2015. Salesforce CEO Slams 'The World's Dumbest Idea': Maximizing Shareholder Value. Retrieved 4 October, 2018, fromhttps://www.forbes.com/sites/stevedenning/2015/02/05/salesforce-ceo-slams-the-worlds-dumbest-idea-maximizing-shareholder-value/#135375617883

Phillips. R.A. (2011). Stakeholder Theory. Edward Elgar Publishing.