Financial Strategy Essay Example | Topics and Well Written Essays - 1500 words - 1

Financial Strategy - Essay ExampleHowever, it should not be forgotten that todays business environment is spiritedly competitive, unpredictable, unstructured and labyrinthian therefore, only fittest and stronger firms having proactive approach could survive in contemporary business outlook. Proactive approach is actually about sensing problems before hand and contrive alternate solutions / strategies to avert damage in upcoming future. In addition, the proactive approach also refers to prospect trends in the industry or marketplace by means of product development, quality maintenance, innovation, branding and differentiation strategies. It should be highlighted that business is all about taking insecuritys. An entrepreneur identifies the gaps and opportunities in the market after which risks ones resources to capitalise them for profit generation and monetary gains. chances are identified, evaluated and measured through quantitative tools and statistical methods so that the st rategic planners would gain a near-to-accurate insight oer the potential scope in any specific industry (Lynch, 2008) (Emmison & Smith, 2002) (Johnson & Scholes, 2008). In other words, if all perceived risks are not evaluated and measured correctly thus the probability of business failure and financial losses will be higher. For instance, if the risks associated with any business are high then investors also expect high rate of return because of effort and risk involved. This means that it is difficult to enter in a risky field and industries (more barriers) because of greater probability of losses and hapless chance of survival however, the success of an entrepreneur in a riskier venture would entitle him / her to high profit margins and financial benefits (Beasley et al, 2005). As mentioned before that the organisations are available in a highly complex and uncertain business environment therefore, there is immense need of risk consciousness because even small mistakes and blun ders whitethorn lead to adverse consequences. I would, thus, agree with this statement that a firms risk consciousness governs the underlying strategies that are employed by the enterprise. Risk consciousness, in simple words, refers to paying serious attention to identify any small and large risks associated in setting up a new business, expanding an living firm (in either domestic or foreign markets), introducing a new product, innovating an existing product range, acquiring diversified businesses, shifting from debt to equity financing and others etc (Neale & Haslam, 1994). Nonetheless, risk consciousness takes place when top management / policy makers implement measures that would help instilling risk management shade within a corporate setting (Glen, 2007). In fact, the more prudent, judicious, efficient and calculated the strategic planners are in determining, assessing, measuring and communicating risks with their subordinates and organizational members, the more effective ly risk management culture and risk consciousness could be developed and implemented with the support of chief risk officers (Lam, 2000) (Colquitt et al, 1999) (Bender & Ward, 2002). In addition, the firms that are not risk conscious face situations in which problems have to be tackled immediately when they occur due to absence of proactive risk management approach and contingency plans. Obviously, this leads to nothing but inefficiencies and losses in the short run that could have been avoided