FINANCIAL MANAGEMENT
Initial evaluation 4.
Inadequate control of financial management
- Need for cash flow forecasts, costing systems, budgetary control
- The larger firm suffers from inadequate systems whereas the smaller firm often lacks a control system
Systems are inffective due to:
- Poorly designed systems
- Poor use of management accounting information
- Organizational structure hinders effective control
- Inappropriate methods of overhead allocation
High cost structure
- Relative cost disadvantages
- Inability to take advantage of economies of scale
- Lack of experience
- Absolute cost disadvantages - competition has:
- Ownership or control of raw materials
- Proprietary production know how
- Favorable site location
- Cost disadvantages due to:
- Diversification strategy
- Organization structure and management style
- Operating inefficiencies, e.g.
- Low labor productivity
- Poor production planning
- Lack of adequate maintenance
- Allocation of sales force time
- Allocation of advertising expenditures
- Distribution/terms of trade
- Unfavorable government policies
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