Financial Management

CONTENTS:

 Meaning of FM

 SCOPE AND ELEMENTS

 OBJ. OF FM

 FUNCTION OF FM

INTRODUCTION:

Financial management is strategically planning how a business should earn and spend money.
This includes decisions about raising capital, borrowing money and budgeting. Financial management
also involves setting financial goals and analysing data.

Financial management starts with recording all the money your business earns and spends.
Accountants then prepare reports that help owners understand the financial health of their business. These
include profit and loss statements, balance sheets, cashflow statements and budgets.

MEANING OF MANAGEMENT

Financial Management means planning, organizing, directing and controlling the financial
activities such as procurement and utilization of funds of the enterprise. It means applying general
management principles to financial resources of the enterprise.

SCOPE AND ELEMENTS

 Investment decisions includes investment in fixed assets (called as capital budgeting). Investment
in current assets are also a part of investment decisions called as working capital decisions.

 Financial decisions - They relate to the raising of finance from various resources which will
depend upon decision on type of source, period of financing, cost of financing and the returns
thereby.

 Dividend decision - The finance manager has to take decision with regards to the net profit
distribution. Net profits are generally divided into two:

a. Dividend for shareholders- Dividend and the rate of it has to be decided.

b. Retained profits- Amount of retained profits has to be finalized which will depend upon
expansion and diversification plans of the enterprise.

OBJECTIVE OF FINANCIAL MANAGEMENT

The financial management is generally concerned with procurement, allocation and control of
financial resources of a concern. The objectives can be-
 1. To ensure regular and adequate supply of funds to the concern.
2. To ensure adequate returns to the shareholders which will depend upon the earning capacity,
market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in
maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate
rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a
balance is maintained between debt and equity capital.

FUNCTION OF MANAGEMENT

1. Estimation of capital requirements: A finance manager has to make estimation with regards to
capital requirements of the company. This will depend upon expected costs and profits and future
programmes and policies of a concern. Estimations have to be made in an adequate manner which
increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the capital
structure have to be decided. This involves short- term and long- term debt equity analysis. This
will depend upon the proportion of equity capital a company is possessing and additional funds
which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has many choices
like-
a. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and period of
financing.

4. Investment of funds: The finance manager has to decide to allocate funds into profitable
ventures so that there is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager. This can
be done in two ways:
a. Dividend declaration - It includes identifying the rate of dividends and other benefits like
bonus.
b. Retained profits - The volume has to be decided which will depend upon expansional,
innovational, diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards to cash management.
Cash is required for many purposes like payment of wages and salaries, payment of electricity
and water bills, payment to creditors, meeting current liabilities, maintainance of enough stock,
purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the funds but
he also has to exercise control over finances. This can be done through many techniques like ratio
analysis, financial forecasting, cost and profit control, etc.
 MARKETING MANAGEMENT

CONTENTS:

 WHAT IS MM

 MARKETING MANAGEMENT SALARY

 EDUCATION REQUIREMENTS

 SKILLS REQUIRED

 RESPONSIBILITIES

 STRUCTURE

 BRAND AUDIT

 MARKETING STRATEGY

 IMPLEMENTATION PLANNING

 PROJECT, PROCESS, AND VENDOR MANAGEMENT

 REPORTING, MEASUREMENT, FEEDBACK, AND CONTROL SYSTEMS

 INTERNATIONAL MARKETING MANAGEMENT

INTRODUCTION:

WHAT IS MARKETING MANAGEMENT?

Marketing managers play a critical role in the success of a company. Responsible for developing
the customer base of a company, a marketing manager plays a direct role in fostering relationships with
customers. Extensive travel and long hours are part of the experience of being a marketing manager for a
company. When a person serves as a marketing manager for a company, he or she will receive a great
salary and benefits package. The road to becoming a marketing manager usually takes years of experience
in the field of marketing. As long as an employee has proven his or her ability to attract and retain new
customers, this is usually a reason that is powerful enough to promote him or her to this position.

Marketing management is the process of developing strategies and planning for product or
services, advertising, promotions, sales to reach desired customer segment.
MARKETING MANAGEMENT SALARY

Marketing managers receive a nice salary due to the high demands that are placed upon them.
According to the Bureau of Labor and Statistics, the average salary of a marketing manager is about
$126,000 a year. The demand for marketing managers is expected to increase in the next ten years by at
least 20 percent. Companies will need to hire individuals who can adapt to social media methods of
marketing. Companies will want to find qualified individuals who can market their products or services
on an international level.

Education Requirements

There are no formal educational requirements for becoming a marketing manager. The common quality
that all marketing managers seem to have is past experience that is indicative of their success in this
position. They may have served as marketing agents for companies in their past. A company will usually
want to see that a person has three to five years of experience in a marketing position. If you already
know that you want to become a marketing manager, then you should pursue a bachelor’s degree in
marketing or business administration. A degree in public relations can also be helpful for this position.

Skills Required

If you want to become a marketing manager, you should possess excellent communication skills. You
should have the ability to communicate the benefits of a particular service or product that is offered by
your company. You will need to attract the interest of potential customers. You may also need to give
presentations to individuals who are interested in investing in a company’s product or service. You will
need to be someone who can take initiative in promoting a new product.

Responsibilities

One of the major responsibilities of a marketing manager is developing programs that will develop the
customer base for a product. This means that you may develop a new social media marketing initiative
that increases the interest that young people have in your product. You are responsible for essentially
creating the “buzz” about a product. You may need to oversee a group of marketing agents and ensure
that they meet their goals for a given month. You play an important role in representing the brand of your
company, especially when you are on the road.

STRUCTURE

Marketing management employs tools from economics and competitive strategy to analyze the industry

context in which the firm operates. These include Porter's five forces, analysis of strategic groups of
competitors, value chain analysis and others.[1]
In competitor analysis, marketers build detailed profiles of each competitor in the market, focusing on
their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will
examine each competitor's cost structure, sources of profits, resources and competencies,
competitive positioning and product differentiation, degree of vertical integration, historical responses to
industry developments, and other factors.
Marketing management often conduct market research and marketing research to perform marketing
analysis. Marketers employ a variety of techniques to conduct market research, but some of the more
common include:
 Qualitative marketing research, such as focus groups and various types of interviews
 Quantitative marketing research, such as statistical surveys
 Experimental techniques such as test markets
 Observational techniques such as ethnographic (on-site) observation
Marketing managers may also design and oversee various environmental scanning and competitive
intelligence processes to help identify trends and inform the company's marketing analysis.
Brand audit
A brand audit is a thorough examination of a brand's current position in an industry compared to its
competitors and the examination of its effectiveness. When it comes to brand auditing, six questions
should be carefully examined and assessed:

1. how well the business’ current brand strategy is working,

2. what the company's established resource strengths and weaknesses are,
3. what its external opportunities and threats are,
4. how competitive the business’ prices and costs are,
5. how strong the business’ competitive position in comparison to its competitors is, and
6. what strategic issues are facing the business.
When a business is conducting a brand audit, the goal is to uncover business’ resource strengths,
deficiencies, best market opportunities, outside threats, future profitability, and its competitive standing in
comparison to existing competitors. A brand audit establishes the strategic elements needed to improve
brand position and competitive capabilities within the industry. Once a brand is audited, any business that
ends up with a strong financial performance and market position is more likely than not to have a
properly conceived and effectively executed brand strategy.
A brand audit examines whether a business’ share of the market is increasing, decreasing, or stable. It
determines if the company’s margin of profit is improving, decreasing, and how much it is in comparison
to the profit margin of established competitors. Additionally, a brand audit investigates trends in a
business’ net profits, the return on existing investments, and its established economic value. It determines
whether or not the business’ entire financial strength and credit rating is improving or getting worse. This
kind of audit also assesses a business’ image and reputation with its customers. Furthermore, a brand
audit seeks to determine whether or not a business is perceived as an industry leader in technology,
offering product or service innovations, along with exceptional customer service, among other relevant
issues that customers use to decide on a brand of preference.
A brand audit usually focuses on a business’ strengths and resource capabilities because these are the
elements that enhance its competitiveness. A business’ competitive strengths can exist in several forms.
Some of these forms include skilled or pertinent expertise, valuable physical assets, valuable human
assets, valuable organizational assets, valuable intangible assets, competitive capabilities, achievements
and attributes that position the business into a competitive advantage, and alliances or cooperative
ventures.
The basic concept of a brand audit is to determine whether a business’ resource strengths are competitive
assets or competitive liabilities. This type of audit seeks to ensure that a business maintains a distinctive
competence that allows it to build and reinforce its competitive advantage. What’s more, a successful
brand audit seeks to establish what a business capitalizes on best, its level of expertise, resource strengths,
and strongest competitive capabilities, while aiming to identify a business’ position and future
performance.
Marketing strategy
Two customer segments are often selected as targets because they score highly on two dimensions:
 1. The segment is attractive to serve because it is large, growing, makes frequent purchases, is not
price sensitive (i.e. is willing to pay high prices), or other factors; and
2. The company has the resources and capabilities to compete for the segment's business, can meet
their needs better than the competition, and can do so profitably. [2]
A commonly cited definition of marketing is simply "meeting needs profitably". [3]
The implication of selecting target segments is that the business will subsequently allocate more resources
to acquire and retain customers in the target segment(s) than it will for other, non-targeted customers. In
some cases, the firm may go so far as to turn away customers who are not in its target segment.The
doorman at a swanky nightclub, for example, may deny entry to unfashionably dressed individuals
because the business has made a strategic decision to target the "high fashion" segment of nightclub
patrons.
In conjunction with targeting decisions, marketing managers will identify the desired positioning they
want the company, product, or brand to occupy in the target customer's mind. This positioning is often an
encapsulation of a key benefit the company's product or service offers that is differentiated and superior
to the benefits offered by competitive products. [4]For example, Volvo has traditionally positioned its
products in the automobile market in North America in order to be perceived as the leader in "safety",
whereas BMW has traditionally positioned its brand to be perceived as the leader in "performance".
Ideally, a firm's positioning can be maintained over a long period of time because the company possesses,
or can develop, some form of sustainable competitive advantage.[5] The positioning should also be
sufficiently relevant to the target segment such that it will drive the purchasing behavior of target
customers.[4] To sum up,the marketing branch of a company is to deal with the selling and popularity of
its products among people and its customers,as the central and eventual goal of a company is customer
satisfaction and the return of revenue.
Implementation planning
If the company has obtained an adequate understanding of the customer base and its own competitive
position in the industry, marketing managers are able to make their own key strategic decisions and
develop a marketing strategy designed to maximize the revenues and profits of the firm. The selected
strategy may aim for any of a variety of specific objectives, including optimizing short-term unit margins,
revenue growth, market share, long-term profitability, or other goals.
After the firm's strategic objectives have been identified, the target market selected, and the desired
positioning for the company, product or brand has been determined, marketing managers focus on how to
best implement the chosen strategy. Traditionally, this has involved implementation planning across the
"4 Ps" of : product management, pricing (at what price slot does a producer position a product, e.g. low,
medium or high price), place (the place or area where the products are going to be sold, which could be
local, regional, countrywide or international) (i.e. sales and distribution channels), and Promotion.
Taken together, the company's implementation choices across the 4 Ps are often described as
the marketing mix, meaning the mix of elements the business will employ to "go to market" and execute
the marketing strategy. The overall goal for the marketing mix is to consistently deliver a
compelling value proposition that reinforces the firm's chosen positioning, builds customer
loyalty and brand equity among target customers, and achieves the firm's marketing and financial
objectives.
In many cases, marketing management will develop a marketing plan to specify how the company will
execute the chosen strategy and achieve the business' objectives. The content of marketing plans varies
from firm to firm, but commonly includes:

 An executive summary
 Situation analysis to summarize facts and insights gained from market research and marketing
analysis
 The company's mission statement or long-term strategic vision
 A statement of the company's key objectives, often subdivided into marketing objectives and
financial objectives
 The marketing strategy the business has chosen, specifying the target segments to be pursued and
the competitive positioning to be achieved
 Implementation choices for each element of the marketing mix (the 4 Ps)
Project, process, and vendor management
More broadly, marketing managers work to design and improve the effectiveness of core
marketing processes, such as new product development, brand management, marketing communications,
and pricing. Marketers may employ the tools of business process reengineering to ensure these processes
are properly designed, and use a variety of process management techniques to keep them operating
smoothly.
Effective execution may require management of both internal resources and a variety of external vendors
and service providers, such as the firm's advertising agency. Marketers may therefore coordinate with the
company's Purchasing department on the procurement of these services. Under the area of marketing
agency management (i.e. working with external marketing agencies and suppliers) are techniques such as
agency performance evaluation, scope of work, incentive compensation, RFx's and storage of agency
information in a supplier database.
Reporting, measurement, feedback and control systems
Marketing management employs a variety of metrics to measure progress against objectives. It is the
responsibility of marketing managers to ensure that the execution of marketing programs achieves the
desired objectives and does so in a cost-efficient manner.
Marketing management therefore often makes use of various organizational control systems, such as sales
forecasts, and sales force and reseller incentive programs, sales force management systems, and customer
relationship management tools (CRM). Some software vendors have begun using the term marketing
operations management or marketing resource management to describe systems that facilitate an
integrated approach for controlling marketing resources. In some cases, these efforts may be linked to
various supply chain management systems, such as enterprise resource planning (ERP), material
requirements planning (MRP), efficient consumer response (ECR), and inventory managementsystems.
International marketing management
Globalization has led some firms to market beyond the borders of their home countries,
making international marketing a part of those firms' marketing strategy.[6] Marketing managers are often
responsible for influencing the level, timing, and composition of customer demand. In part, this is because
the role of a marketing manager (or sometimes called managing marketer in small- and medium-sized
enterprises) can vary significantly based on a business's size, corporate culture, and industry context. For
example, in a small- and medium-sized enterprises, the managing marketer may contribute in both
managerial and marketing operations roles for the company brands. In a large consumer products
company, the marketing manager may act as the overall general manager of his or her assigned product.
[7]
 To create an effective, cost-efficient marketing management strategy, firms must possess a
detailed, objective understanding of their own business and the market in which they operate.[2] In
analyzing these issues, the discipline of marketing management often overlaps with the related discipline
of strategic planning.

Created by: JOHN AXEL G. PANGANIBAN AND JUSTIN M. DELGADO