The Set Vision of the Business that Determines the Future Success of the Partnership - Term Paper Example

Financial Strategy By: Name: Tutor: Subject: University City Financial Strategy Part 1 There are various non-financial issues that Joan and Jane need to put into consideration in the process of making the decision concerning the formation of the partnership. These factors include the following: Shared goals and vision Jane and Joan need to consider whether they have some shared goals and whether their vision is related. Having a similar vision and goals is important in working together towards achieving common objectives. The people entering into partnership need to evaluate their goal and vision to ensure that they are similar. The failure to have similar goals and vision the partnership is likely to collapse as its success is entirely dependent on the partners. The goals can include their plans concerning where they want to be in the future in the market. Therefore, Jane and Joan need to work towards ensuring that they have similar goals and vision to ensure that their partnership is successful. Partnering with someone with similar goals and vision creates high chances of being successful in the market (Glasbergen, Biermann and Mol, 2007). Jane and Joan then need to consider the compatibility of their vision and goals through coming up with their mission statement that will guide their operations. The partners with similar vision are able to work together to achieve the set vision of the business that determines the future success of the partnership. It is through having similar vision and goals that the partners can be in a position to believe in their ideas and work toward developing their ideas to achieve their set partnership objectives. Joan and Jane can only embrace and respect their ideas if only their goals and vision are shared. Therefore, Jane and Joan need to consider whether they can be in a position to have similar things concerning the future of their partnership. The level of trust Trust in the success of any partnership is important as it is a fundamental component of the partnership. Jane and Joan need to consider their level of trust that exist between them before deciding to establish the partnership. It is trust that determines the relationships existing between the partners hence determining the success of their partnership because good relations are important in determining the behavior of the partners. Mutual trust is the important component in ensuring a successful partnership. The moments the parties have a high level of trust are likely to share knowledge hence making it possible to ensure a successful partnership. It is through the sharing of knowledge that the partners can be in a position to achieve their set goals. As a result, the partners can learn from each other leading to improvement in the performance of their partnership through enhancing their skills and expertise in business through sharing ideas. Mistrust between partners has been said to be among the major factors leading to failure of partnerships due to the resulting poor relationship (Austin, 2010). The level of trust is also important in determining the management of the business as the partners with a high level of trust are likely to manage their business with utmost good faith with the aim of achieving success. Management skills Jane and Joan need to assess their management skills to be sure that they have the necessary skills needed in managing the partnership. Partnership relies on the management of the partners where the partners share the management responsibilities. The higher the capabilities of the partners to manage the business operations properly the higher the chances of improving the success of the partnership. Therefore, there is the need for Jane and Joan to assess their management skills to assess the possibility of their success in the market. In partnership management skills is important in aligning the available resources with the business objectives to ensure a successful partnership. Joan and Jane need to consider their capabilities of managing their new venture to be successful. For instance, they can assess how they can share the management responsibilities depending on their capabilities and areas of specialization (May, 2007). Failing to assess their management capabilities can result in the failure of the partnership due to mismanagement of the venture. In the case, they find that they lack the necessary management skills they can decide to hire a manager to manage their business. Leadership skills Leadership plays an important role in the process of ensuring a successful partnership. It is through proper leadership that the direction of the partnership can be provided to make sure that the activities of the partnership are in line with its objectives. Joan and Jane can then assess their abilities to provide the necessary leadership that can help in making the partnership successful. The leadership has a role it plays in the process ensuring that the necessary resources are put in place to ensure competitive of the business (Kedia and Lahiri, 2007). For instance, it is the role of leadership to ensure that the employees are motivated to work towards achieving a common goal. Taking the case of Jane and Joan, it is clear that they will have staff in their partnership hence leadership is important in coordinating the human resources. There is the need for Jane and Joan to assess whether they have the necessary leadership skills that can be employed to achieve the set objectives. The style of leadership determines the success of the organization hence it can be important for Jane and Joan to consider the style of leadership they possess and assess the impact the leadership style they have on the partnership. Considering their leadership skills can be crucial in making sure that they develop the necessary leadership behavior that can influence the success of the business positively (Tamasy, 2006). Considering the fact that business environment has been changing, leadership can be important in making sure that the partnership remains relevant and competitive in the industry. It is the leadership that can determine the ability of the partners to adopt to the change taking place in the market. For instance, transformational leadership style can be important in managing change as it engages the stakeholders in the process of implementing the necessary changes. Part 2: Key areas of risk Investments The major area of risk in organizations is the investments as the failure to select the right project venture can result in high losses. The necessary screening is usually needed before selecting the best project among different competing business ventures. The screening involves analysis of the business environment that is likely to affect the success of the business. The risk can arise in case there is a failure to conduct the necessary environmental screening that can ensure proper knowledge on the business environment (Christoffersen, 2012). In the case of failure to ensure the necessary screening of the external business, the venture can result in failure. Therefore, poor decision making concerning the investments is a major area of risk that can result in business failure. The failure to make the necessary predictions concerning the financial market can lead to failure of businesses due to bad investment decision like it is the case with the new era scandal. For instance, in the recent financial crisis, many businesses lost money because of investing without proper screening of the external business environment. The potential financial risk facing many organizations is the investment in a sector that is facing a crisis. The recent financial crisis is an important economic aspect that can be used in explaining the need for proper external environment screening to assess the potential future risks in the sector. Misuse of funds Organizations face the risk of misusing funds by the managers managing the organization. Financial management in many organizations has been facing numerous risks due to the misuse of funds that affect the performance of the organization. The board of directors has the responsibility of ensuring that the financial objectives of the organization are aligned with organizational goals. They are expected by the shareholders to monitor the financial management practices employed by the managers in the process of maximizing the wealth of the shareholders (Hillier, Grinblatt and Titman, 2011). The focus of the organization needs to be on ensuring the financial success of the organization through managing the company funds properly. However, the lack of ethics among the managers can result in misuse of funds like it is in the recent financial crisis. Many managers during the recent financial crisis were looking for ways of enriching themselves leading to misuse of funds. Fraud Many organizations have experienced fraud where fraud is defined as the intentional action aimed at concealing the truth. The management can collaborate with the auditors to fraud an organization through forging the financial statements. The shareholders might not be made aware as the auditors responsible for auditing the financial statements hide the truth concerning the financial position of the company. Ethically auditors are expected to be independent in the process of auditing books of accounts and provide a fair and true representation of the financial position of the company. There are many stakeholders who rely on the opinion of the auditors hence giving an untrue financial report concerning the financial performance of an organization can greatly affect the shareholders. For instance, investors rely on the auditors’ reports to make investment decisions. Fraud has been a risky area in many organizations that has led to the collapse of many companies. In the recent financial crisis, many incidents of fraud were reported in organizations. Theft is part of the fraud that takes different forms that can include forgery, burglary, embezzlement and swindling (Wipplinger, 2007). However, forgery has been one of the major fraud that has been taking place in many organizations. Forgery entails altering the financial records to make it appear accurate with the aim of stealing money from the company. Fraud has become the most common risk in organizations where auditors and managers forge the financial statements to hide the truth. Managing the risks Developing accounting controls Organizations can manage the risks by developing accounting controls necessary for monitoring the funds. The primary objective of the accounting controls includes safeguarding the company assets. Implementing proper accounting controls is important in providing accurate and reliable financial records. However, the senior management and the board have the responsibility of monitoring the financial operations. The failure of the senior management to monitor the financial operations has been witnessed in the financial crisis where fraud took place without their knowledge (Brigham and Ehrhardt, 2013). Despite the fact that internal controls are used in detecting fraud that might take place they might not be sufficient hence making it necessary to develop the accounting controls. The accounting controls can be focused in areas such as proper documentation, authority and approval, early detection and physical security. The procedures for approval by the relevant authority are necessary for the process of approving the transactions to eliminate the possible risks associated with the transactions. For instance, signing checks, approving invoices, expense accounts, and dispensing the supplies. Proper documentation can be important in approving financial transactions and ensuring the security of the company assets. Risk management techniques Organizations can develop techniques for managing risks associated with financial management. The techniques for managing risks can include effective internal controls for detecting misuse of funds and potential fraud. It is through developing the internal controls that the funds for the organization can best be managed. The internal controls can include the policies developed for using and accessing the financial resources in the organization (Hull, 2012). In financial management, internal controls are critical in making an organization ensure transparency and accountability in the use of company financial resources. The risk management techniques can include accounting controls for the company funds. Developing management controls. An organization can establish management controls that can consist of the senior management and the board of directors. The management controls can entail developing the necessary oversight for the company financial operations. The board can ensure they receive informative and clear financial statements regularly. Besides, the board can ensure auditing by an external auditor with the aim of ensuring fair and true representation of the organization's financial position. The auditors are expected to assess the investment decisions, detect the possible fraud and misuse of funds and make a report containing their opinion concerning the financial management of the company. References Austin, J.E., 2010. The collaboration challenge: How nonprofits and businesses succeed through strategic alliances (Vol. 109). John Wiley & Sons. Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning. Christoffersen, P.F., 2012. Elements of financial risk management. Academic Press. Glasbergen, P., Biermann, F. and Mol, A.P. eds., 2007. Partnerships, governance and sustainable development: Reflections on theory and practice. Edward Elgar Publishing. Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy. McGraw Hill. Hull, J., 2012. Risk management and financial institutions,+ Web Site (Vol. 733). John Wiley & Sons. Kedia, B.L. and Lahiri, S., 2007. International outsourcing of services: A partnership model. Journal of International Management, 13(1), pp.22-37. May Seitanidi, M., 2007. Intangible economy: How can investors deliver change in businesses? Lessons from nonprofit-business partnerships. Management Decision, 45(5), pp.853-865. Tamasy, C., 2006. Determinants of regional entrepreneurship dynamics in contemporary Germany: A conceptual and empirical analysis. Regional studies, 40(4), pp.365-384. Wipplinger, E., 2007. Philippe Jorion: Value at Risk–The New Benchmark for Managing Financial Risk. Financial Markets and Portfolio Management, 21(3), pp.397-398. Read More