Financial Management

CASE ON MARKS AND SPENCER

Marks and Spencer Retailer

The role of a finance manager has moved beyond traditional accounting functions like preparing accurate accounting and financial statements, collecting revenues and disbursing expenses. Today, organizations have become large and more complex. Financial management now involves a broader horizon where value maximization has gained prime importance. Now a days finance manager is concerned with all the business activities that involve funds, directly or indirectly. He/she does not restrict himself/herself to specific activities. Finance managers manage the monetary concerns of business organizations and need to possess high levels of business awareness and common sense.

Roles and functions of the Financial Manager

There are different roles and functions that financial managers have to play in an organization. His duties and responsibilities may change with the organization but the main financial activities will be the same. The roles and functions of the Financial Manager in this case are:

1. Profit Planning It is important that the financial manager is able to discuss ideas, and using various methods of analysis, to make final recommendations on whether they will improve profitability and should therefore be implemented. Financial Manager play a role in influencing the profit Profit earning is one of the prime functions of any business organization Marks & Spencers leading position in the highly competitive market- place depends on its ability to stay one step ahead of other retailers and to do this they have to keep their customers happy. Profit planning refers to proper usage of the profit generated by the firm. Profit arises due to many factors such as pricing, industry competition, state of the economy, mechanism of demand and supply, cost and output.

2. Cash management The finance manager needs to ensure the supply of adequate, timely and cheap fund to the various parts of the organization. He has to see that there is no excessive cash idling around. The finance manager is responsible for knowing how much the product is expected to cost and how much revenue it is expected to earn so that he can invest the appropriate amount in the product.

3. Forecasting and planning

A finance manager has to forecast and predict the short- and long-term requirement of money by the business and also forecast the activity levels of the various business operations so that it preplans what to manufacture and deliver at what price to the customers. The finance manager has to take these decisions in the light of both the external and internal factors that affect the business activities. At the beginning of the each year, the management team for each store looks back at the previous years sales and the target objectives for the whole organization to predict their sales for the store for the following year. Profit and loss statement: He has to produce a forecast of profit and loss account which enables each store to make comparisons with the activities of others. Budget: Every company should have a budget. A budget is a financial plan developed for the future. Variance analysis: studying budgeting results in a way of monitoring and controlling performance. Comparing expected results to actual results and finding out why differences have taken place.

4. Coordination and control

A finance manager focuses on the generation of the funds and their allocation to various organizational activities. The various organizational activities are to be coordinated and controlled to ensure cost effectiveness and maximum efficiency in terms of value generation. The financial manager at Marks and Spencer store highlights many of his qualities such as leadership, adaptability and analytical consideration required by financial managers every day in a busy retail environment. 5. Cost controlling The duty of the financial manager is to monitor all the costs that are incurred by the company. Costs are broken down into direct costs and indirect costs. To make the store profitable financial manager has to examine both direct and indirect costs incurred by the store. Cost cutting can be done through small activities like savings in stationary, putting notices near the switches and encouraging the staff to save electricity. Also taking safety measures to avoid theft and robbery in the company can help cost cutting i.e. using CCTV and security guards.

6. Line manager and problem solving

In Marks and Spencer financial manager is also a line manager with established responsibilities for decision making. The financial manager is consulted when problems arise in administration office and he has to take responsibility for decisions which have to be made. He is responsible for data protection and security. Financial manager has to respond flexibly to locally based issues and problems as and when they arise. This may include feasibility issues such as advising about the costs and benefits of working on Sundays which may require considerable research and planning. 7. Financial manager in Audit Financial manager in Marks and Spencer also acts an internal auditor responsible for many different areas within each store.

Conclusion:
Financial manager plays an important role in Marks and Spencer. With the finance activities he also has to handle other main activities in the organization. He plays a major role in decision making because he creates a business plan for the organization with major activities like budgeting sales forecasting etc. which gives a company a clear idea of its future targets which they have to reach and the line of action to be taken.