Financial Management and Marketing

Produced goods are sold in the market with innovative and modern approaches.For this, the marketing department needs
finance to meet their requirements.The financial manager or finance department is responsible to allocate the adequate
finance to the marketing department. Hence, marketing and financial management are interrelated and depends on each
other.
A finance department, which is charged with finding capital, either through debt or equity financing, can raise money far
more easily with a smooth-running, successful operations division, being able to point to high productivity, trimming of
costs, and good scheduling to meet demand. On the other hand, if the finance department can only show a record of
inefficiencies, too much or too little inventory, and uneven productivity, it is difficult to raise capital.
While organizational managers must focus attention and resources on supply chain functions such as logistics, their
primary concern remains improved organizational performance. Specifically, managers work to improve marketing
performance in terms of sales and market share growth. The growth of market share and sales growth should impact
financial performance through improved revenue numbers. Anderson et al. (1994) found that marketing performance, as
measured by customer satisfaction, positively impacts financial performance, as measured by return on investment.
Green et al. (2006) surveyed sales managers for manufacturing firms and found a positive link between marketing
performance and financial performance. In their study of retailers, Schramm-Klein and Morschett (2006, p. 283)
hypothesized that marketing performance has a positive effect on company performance and found that sales
performance positively influenced financial performance.
The results indicate that logistics performance is positively impacted by supply chain management strategy and that both
logistics performance and supply chain management strategy positively impact marketing performance, which in turn
positively impacts financial performance. Neither supply chain management strategy nor logistics performance was found
to directly impact financial performance.
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Traditionally finance and logistics are thought off as the two organization functions which have always found themselves
on opposite sides of each other. On one hand the logistics wants to expand the business by giving more credit to their
customers and also by holding inventory to serve the customer better while finance is seen as the controlling function
which does not believe in blocking the cash through credit and inventory and in speeding up the recovery process all the
time. Customers are often caught in situations which eventually affect the company's performance.
Financial performance of a company is dependent on its cash management and profitability. Cash management is very
critical for the survival of the company, there at times when company is performing well in term of sales and services but
fail to generate cash effectively which often results in unfavorable situations for the company. In order to do well financially
the company must have enough sales to cover up the running expenses and fixed cost and also a constant and growing
return on the investment.
Logistics performance of a company is dependent on low inventories, delivery quality and delivery time etc. Logistics was
not long before considered as a sub function to marketing where the marketing department forecasts the sales unit in a
period and the sales force set about their ways to achieve it. Logistics was primarily doing the procurement, warehousing
and transporting of the goods. The horizon of logistics has become a lot wider with the changing scope and emphasis on
the supply chain management. Now the logistics management is seen as complete delivery of goods from one end to the
other.

Meaning of Financial Management

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement
and utilization of funds of the enterprise. It means applying general management principles to financial resources of the
enterprise.
Scope/Elements
1. Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current
assets are also a part of investment decisions called as working capital decisions.
2. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision
on type of source, period of financing, cost of financing and the returns thereby.

3. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits
are generally divided into two:
a. Dividend for shareholders- Dividend and the rate of it has to be decided.
b. Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and
diversification plans of the enterprise.
Objectives of Financial Management
The financial management is generally concerned with procurement, allocation and control of financial resources of a
concern. The objectives can be1. To ensure regular and adequate supply of funds to the concern.
2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the
share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible
way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can
be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is
maintained between debt and equity capital.
Functions of Financial Management
1. Estimation of capital requirements: A finance manager has to make estimation with regards to capital
requirements of the company. This will depend upon expected costs and profits and future programmes and
policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of
enterprise.
2. Determination of capital composition: Once the estimation have been made, the capital structure have to be
decided. This involves short- term and long- term debt equity analysis. This will depend upon the proportion of
equity capital a company is possessing and additional funds which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has many choices likea. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c.

Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and period of financing.
4. Investment of funds: The finance manager has to decide to allocate funds into profitable ventures so that there
is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager. This can be done in two
ways:
a. Dividend declaration - It includes identifying the rate of dividends and other benefits like bonus.

b. Retained profits - The volume has to be decided which will depend upon expansional, innovational,
diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards to cash management. Cash is
required for many purposes like payment of wages and salaries, payment of electricity and water bills, payment to
creditors, meeting current liabilities, maintainance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the funds but he also has to
exercise control over finances. This can be done through many techniques like ratio analysis, financial
forecasting, cost and profit control, etc.
What does operations management involve?
Operations management is chiefly concerned with planning, organizing and supervising in the contexts of production,
manufacturing or the provision of services. As such, it is delivery-focused, ensuring that an organization successfully turns
inputs to outputs in an efficient manner. The inputs themselves could represent anything from materials, equipment and
technology to human resources such as staff or workers.
Examples of the types of duties or specialist positions this encompasses are procurement (acquiring goods or services
from external sources), managing relations with those involved in processes, and improving a companys sustainability
with regard to its use of resources.
Two key terms for operations management
There are two big terms that can help answer the question of what is operations management more precisely: supply
chain management and logistics. Operations management has firm foundations in both areas. For example,
understanding global trends in supply chain management in order to meet client demand is often critical. With logistics,
the careful and considered use of resources, as well as cost-effectiveness, has become increasingly important in an era in
which resources can often be in short supply and customer expectations have skyrocketed.
Logistics Management
Definition - What does Logistics Management mean?
Logistics management is a supply chain management component that is used to meet customer demands through the
planning, control and implementation of the effective movement and storage of related information, goods and services
from origin to destination. Logistics management helps companies reduce expenses and enhance customer service.
The logistics management process begins with raw material accumulation to the final stage of delivering goods to the
destination.
By adhering to customer needs and industry standards, logistics management facilitates process strategy, planning and
implementation.
Techopedia explains Logistics Management
Logistics management involves numerous elements, including:

Selecting appropriate vendors with the ability to provide transportation facilities

Choosing the most effective routes for transportation

Discovering the most competent delivery method

Using software and IT resources to proficiently handle related processes

In logistics management, unwise decisions create multiple issues. For example, deliveries that fail or are delayed lead to
buyer dissatisfaction. Damage of goods, due to careless transportation, is another potential issue. Poor logistics planning
gradually increases expenses, and issues may arise from the implementation of ineffective logistics software. Most of
these problems occur due to improper decisions related to outsourcing, such as selecting the wrong vendor or carrying
out delivery tasks without sufficient resources.
To resolve these issues, organizations should implement best logistic management practices. Companies should focus on
collaboration rather than competition. Good collaboration among transportation providers, buyers and vendors helps
reduce expenses. Also, an efficient and safe transportation provider is vital to business success.

Marketing Management Definition

Marketing is the process used to determine what products or services may be of interest to customers and the strategy to
use in sales, communications and business development (Kotler et al. 1996). The American Association of Marketing
define marketing management as the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services in order to create, exchange and satisfy individual and organisational objectives
(Grnroos, 1989).