What Are Business Disciplines? | Your Business
Business finance deals with a broad spectrum of the financial activities of a business Relationships between Finance and other Disciplines. They should concentrate on one target of company and many other things, Relationship of finance with other discipline can be explained in. Common business disciplines are management, marketing, information technology and finance. Service happens throughout the customer-company relationship. Others choose to perform these functions in-house. Besides Solid financial planning includes determining how the company will finance potential growth.
A start-up coffee chain may plan to open three stores within a mile radius by the third year of operation.
Some of the specifics that a strategic business plan includes are how many employees the company will hire and who will fill executive management positions. Marketing A popular saying in business is that "nothing happens until somebody sells something. The discipline involves communicating to a target audience and persuading that audience that your product is the best choice.
A company's marketing efforts could include a combination of advertising, promotions, direct selling, and customer relationship management. The type of business, market conditions and competition level will influence a company's marketing strategy.
Small-business owners might rely more on referrals and direct sales pitches, especially in the first few years.
Service Some business owners see customer service as an extension of marketing. You'll need to know what your customers' expectations are and more importantly "who" your customers are. Service happens throughout the customer-company relationship. Your customers' perceptions of how well you handle their needs often will determine whether they remain loyal.
Service recovery involves clearing up misunderstandings, compensating for mistakes, and being flexible if changes need to occur.
Money Management In order to grow and survive, any business owner needs to manage the company's income and expenses. Some owners hire third-party vendors to handle accounting and bookkeeping tasks. Others choose to perform these functions in-house. In these cases, there is no readily accessible external measure of performance. Consequently, these firms often rely more heavily on accounting based measures of performance to track their progress.
Accounting based measures of performance are discussed in Inspite of the lack of an objective, readily available measure of performance, the fundamental decisions made by entrepreneurs are unaltered.
However, because many entrepreneurs are poorly diversified with respect to their personal wealth that is, they have a large proportion of their personal wealth tied up in the firmthese owners are often more concerned about avoiding risks that could lead to financial ruin than are managers of public corporations. This problem is less severe in many entrepreneurial businesses because managers and owners are one and the same.
Marketing and its relationship with other business activities.
But to the extent that the manager is the owner, there is no owner manager agency problem. Of course, the potential for agency related conflicts between entrepreneurs and lenders still exists and may be greater in the closely held firm.
As a consequence, many small firms find it difficult to acquire capital from lenders without also giving the lender an option on a part of the ownership in the firm or having the entrepreneur personally guarantee the loan. Throughout this book, we will identify situations where the entrepreneurial financial management of small businesses poses special challenges.
In general, we find that small firms often lack the depth of managerial talent needed to apply sophisticated financial planning techniques. Also, because significant economies of scale are often associated with using sophisticated financial management techniques, these techniques are frequently not justified on a cost benefit analysis basis in many entrepreneurial companies.
What Are Business Disciplines?
Development of financial statements, such as the balance sheet, the income statement, and the statement of cash flows. In many small and medium-sized firms, the accounting function and the financial management function may be handled by the same person or group of persons. In such cases, the distinctions just identified may become blurred.
Economics There are two areas of economics with which the financial manager must be familiar: Microeconomics deals with the economic decisions of individuals, households, and firms, whereas macroeconomics looks at the economy as a whole.
The typical firm is heavily influenced by the overall performance of the economy and is dependent upon the money and capital markets for investment funds.
Thus, financial managers should recognize and understand how monetary policies affect the cost of funds and the availability of credit. Financial managers should also be versed in fiscal policy and how it affects the economy.
What the economy can be expected to do in the future is a crucial factor in generating sales forecasts as well as other types of forecasts.