Session 1 Discussion

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Please download the .pdf of the following article from the following website: https://www.sciencedirect.com/science/article/pii/S2212567115010540 Ilie, L. (2015). Challenges for financial managers in changing economic environment. Procedia Economics and Finance, 27, 726-730. Retrieved from https://www.sciencedirect.com/journal/procedia-economics-and-finance/vol/27/suppl/C https://doi.org/10.1016/S2212-5671(15)01054-0 After you download and read the article, respond to the following question from Session Please do this as a "response." 1. What are 3 fundamental decisions that are of concern to the finance team? What is the impact of these on the balance sheet? 2. Explain the difference between a stakeholder and a stockholder and why both are important to the success of an organization. Don't forget to respond to the postings of your colleagues to keep the discussion going! In the article titled "Challenges for Financial Managers in Changing Economic Environment," the authors make fundamental decisions that concern the finance team, due to the various changes that are occurring, so the CFO must be accustomed to the changes. The decisions are not only concerning the finance team but also have an effect on the balance sheet. (1) One fundamental decision that is of concern to the finance team is in regard to technology. It is important for the CFO to determine whether or not it is beneficial to their company to invest in the resources of bringing top-of-the-line technological software in order to enhance the functions of the finance team. With the proper technology, the finance department can effectively gather, organize, and standardize data, while reducing the time spent on looking for data. While updating technology within a business seems beneficial at first, this decision can be of concern to the CFO and the finance team as there must be the proper resources allocated to not only purchase the software but the time and resources to train and ensure effectiveness among the employees using the new software. Ultimately, new technologies would transform the finance department by making it more efficient and effective, which would most likely improve the accuracy of the balance sheet. (2) Another fundamental decision that is of concern to the finance team is in regard to communication and reporting, both within the finance department and within the business itself. Allowing the financial department to convince business leaders that the finance department should not only evaluate past financial performance but also get involved in an active way in strategic investment decisions. This decision of changing the structure of communication and reporting affects the finance team as it provides a greater take for them. This idea would fundamentally change the way decisions are made and performance is measured for the finance team. (3) Lastly, another fundamental decision that would be of concern to the finance team is globalization. As the company becomes global, the CFO must emphasize the importance of having a global perspective and experience, as well as their employees. Understanding how businesses operate and function in different cultures and regions would provide valuable input for the finance
department in new markets. This ties right in with talent and capability. The decision of prioritizing globalization, talent, and capability will require diverse skills in new employees so they are able to handle complex financial situations. This decision not only creates a change in new and current employees but the CFO as well. The company must allocate the proper resources to train current employees and the CFO on how other markets handle financial operations in order to boost productivity. These three fundamental decisions would impact the company's balance sheet in a positive way as it would boost company morale, and increase the chance of financial functionality. Knowing the difference between a stakeholder and a stockholder is extremely important, especially when examining how each is responsible for the success of an organization. Stakeholders are individuals directly affected by an organization's actions, decisions, and outcomes. Stakeholders may not only be involved financially but may have other interests (social, ethical, etc.) concerning the organization itself. Stockholders are a bit different. Stockholders are a more specific type of stakeholder, as they are affected by one specific part of an organization. Stockholders are individuals who hold shares of the company's stock. Because they hold shares, stockholders often have a financial interest in an organization; mainly prioritizing their own financial return (DesJardine et al., 2022). There are various differences between a stakeholder and a stockholder, mainly in regard to financial interest. (1) Stockholders have more financial interest in a company due to their own finances being involved in a company's success, whereas stakeholders hold a broader range of concerns over a company outside of the finance aspect, such as social or ethical aspects. (2) Another important difference between stakeholders and stockholders is the level of influence they have over a company. Stockholders carry a greater influence over an organization due to their ownership stake. Stakeholders, specifically those without significant financial stakes, have less direct influence. Regardless of the difference, both stakeholders and stockholders play crucial roles in the success of an organization. The concern stakeholders have over social and environmental impact can lead to bettering the company's reputation. Stakeholders having an overall interest in all the other ongoings of a company outside of financial interest benefit an organization as they are focused on the factors of an organization that can increase employee and customer loyalty, as well as increase employee retention. On the other hand, stockholders' interest and dedication to a company financially is equal to making an organization succeed. The investments stockholders make provide companies with capital that they can use to fund necessary initiatives. In essence, while both stakeholders and stockholders prioritize different aspects of an organization, they are both responsible for bettering and increasing the success of an organization due to their main goal being the betterment of their organization of interest. Resources DesJardine, M. R., Zhang, M., & Shi, W. (2022). How shareholders impact stakeholder interests: A review and map for future research. Journal of Management , 49 (1), 400-429. https://doi.org/10.1177/01492063221126707 Ilie, L. (2015). Challenges for financial managers in changing economic environment. Procedia
Economics and Finance, 27, 726-730. Retrieved from https://www.sciencedirect.com/journal/procedia-economics-and-finance/vol/27/suppl/C https://doi.org/10.1016/S2212-5671(15)01054-0
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