The Role Of Financial Report In Decision Making
THE ROLE OF FINANCIAL REPORT IN DECISION MAKING
The financial position of a certain organization may impact a great deal of decision making process depending on the situation but a good financial standing can show a healthy atmosphere and confidence to its stakeholder. Financial corporate report and standing of an organization should be shown to the public so that they can deliver honest business dealings and corporate governance and this can be a basis for their corporate decision making process and their stakeholders is a part of it. The financial position as seen in their financial report can dictate the conditions of a certain organization let us take for example American International Group INC. (AIG) that they honestly report the condition of the company that during the third quarter ended on September of 2011 they have reported to their stakeholders their financial position shows a record low of net loss of $ 3.0 Billion U.S. dollars.
They have also reported that this financial report was due to decline of interest rate, competition breakdown, declining market equity and worldwide economic problems that brought about recession. AIG is still the leading group of financial insurance companies that deliver their services to 130 countries but the present economic condition and their position have become a motivating tools and a challenge to strive more for recovery. Robert S. Bemmosche the AIG President and Chief Executive Officer believed their present condition have somehow impaired their company but they continue to pursue and trained more sales people to do their job harder like they never before. http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MTE0MTY0fENoaWxkSUQ9LTF8VHlwZT0z&t=1
They also planned on selling some of their fixed asset to be able to meet their current stability needs. The management decision is also to sell or lease their aircraft this next quarter to the airline companies to partly enhance their financial position. They also focused on providing more training and benefits for their salespeople that will motivate them in providing their customers with real valuable products and services to encourage them to invest more. As obvious as you can see that the financial reports of a company has a very strong influence in management decision making process but in the case of AIG and other company the effect and losses of the company should not hinder their mission and integrity in delivering a persistent marketing and management foundation to their customers.
The impact or loss in financial reports shows an arguable and alarming performance of organization coming from stakeholders but a strong financial position reports can show a very strong signs and confidence. Unilever shows a very encouraging financial report in the third quarter of 2011, according to their Chief Executive Officer Paul Polman they have delivered their financial report confidently that their business continues to grow in personal care and health care products in fact almost all their product lines has shown an increase in sales and distribution. They have also integrated their business to Sarah Lee and Alberto Culver that also shown intensified performance from different countries including Asia, Africa and most parts of the United States.
Because of their continuous financial success the management decision is expansion, more investment more infrastructure and distribution strategy decision that will deliver more profitable growth, they are confident like they always do to get ahead with the competition for a steady and sustainable market potential and a strong financial cash flow that has shown in their reports. Unilever financial position has made their standings and management decision to become focused on moving forward or plan ahead their future that in the next ten years they will be helping at least 1 billion people for sustainability and growth by changing their habit using their products, distribute safe drinking water and improve their livelihood. This is their plan of 2011 to 2020 that they have become very aggressive because they have reached the most stable financial standing in the last years of their distribution and customers continue to patronize them. http://www.unilever.com/mediacentre/pressreleases/2010/Unileverunveilsplantodecouplebusinessgrowthfromenvironmentalimpact.aspx
The financial position of a certain organization is a strong determinant to show their standing. They must make sure that they meet the expectation of their stakeholders so they will continue to support them. If their financial position while still at risk should defer most of their expenses and other project, financial report should be properly executed in delivering an absolute standard. The management decision can prove and improve its quality. The financial record can also show the measurement and liquidity of the company it can measure their effectiveness and profitability that can attract more investors. If management believed that their financial position is getting worst they should act confidently to resolve such position rather than depend on their standing so that they can be the one to control their decision rather than their financial position.