Financial management plays a pivotal role in increasing shareholder value and customer satisfaction. The qualitative study involves survey as the research design and financial managers as the participants. The research aims at collecting data to establish the effects of financial management on customer satisfaction and shareholder value.
Customer satisfaction and shareholder value are some of the main indicators used to measure the prosperity of a business. The two aspects can be enhanced through the implementation of an effective financial management (Luo, Wieseke, & Homburg, 2012). The management can harmonize the company’s analytical techniques, aspirations, and other management processes to ensure that the two key indicators are given priority. In most cases, good financial management reduces the cost of capital and increases the net cash flow of the business (Edmans, 2011; Torres & Tribo, 2011).
To increase customer satisfaction and shareholder value, the financial management of a business should implement approaches that can increase the unit price of its products and result in the sale of more units of the commodities it produces. By increasing the unit price of its products, a business is likely to generate more revenue from them to increase shareholder value (Edmans, 2011). This approach should be accompanied by an increased production capacity that results in more products being supplied to the market to satisfy the customers’ needs and market demand.
However, an increase in the price per unit of the product is usually not sufficient. For that reason, financial managers need to complement the approach with other strategies such as decreasing unit cost and concurrently increasing fixed cost utilization. The decreasing un...
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...also dependent on customer satisfaction, which influences the market value and position of the organization. How to determine and increase customer satisfaction and shareholder value are some of the key functions of financial management. This paper talks about how financial management can be used to achieve the best customer satisfaction and shareholder value.
Works Cited
Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics, 101(3), 621-640.
Luo, X., Wieseke, J., & Homburg, C. (2012). Incentivizing CEOs to build customer-and employee-firm relations for higher customer satisfaction and firm value. Journal of the Academy of Marketing Science, 40(6), 745-758.
Torres, A., & Tribo, J. (2011). Customer satisfaction and brand equity. Journal of Business Research, 64(10), 1089-1096.
Rocket-Blast, LLC, a beverage maker, has seen its profit margins reduced which presents a real problem for the company going forward (Precord & Macdonald, nd). Management has decided that operating costs must be reduced in order to increase profit margins to
Calculating the right price for a product can be difficult, mostly because it will affect Calibrated’s bottom line. Increasing the price of a product to maximize profit can induce several risks to a company. For example, making a change to the fixed or variable costs, the number of units sold will have an impact on the company’s profitability. Increasing the unit cost of a product and decreasing the number of units sold will have a negative impact on the
Customer Value is a very important factor to all businesses let along business that supply products or services to the public. Value is relative to each individual customer but many researchers have found a simple way of defining customer value. Customer value equal the result produced for the customer plus process quality divided by the price to the customer plus the costs of acquiring the product (McMurrian & Matulich, 2016). The customer must purchase the product or service and experience it for the company to be able to benefit from the feedback. The four mechanisms within customer value, the results, process quality, price and customer access cost, are all very important for a company to understand in order to fully understand customer value.
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
We probably all agree that the primary objective of any business is to achieve revenue and attain a certain profit. But then here is the question that we might ask, is profit the only element that should be considered when making business decisions? In my point of view the answer is no as I will try to demonstrate throughout this paper. One quick alternative of what should be the first top priority of a business is creating a customer as Dr.Peter Drucker said. According to him “The customer is the foundation of a business and keeps it in existence. He alone gives employment. To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise.” (Santayana, George. Is The Tyranny Of Shareholder Value Finally Ending? )
Firm E also has higher technological capability to reach out to market segment that our firm dominates. It has also been noted that the stock price of Firm E rose $7 to $50, increasing its value and giving the firm an incredible amount of capital to be invested for market capture. It has also been identified that our firm mostly compete against other players in market segments that are more price sensitive than those in others. This generally results in generating low returns when the cost of competition is high. For this particular market segment, however, price-based competition does not necessarily lead to increases in the size of the marketplace. Although, price-based competition is minimized with minimal gross margin for economy products, this competition could be intensified by providing our customers with rebates, preferred financing and long-term warranties. With such immediate capital available at hand, firms such as Firm E can attract our customer at its
In company sector business economics external factors and changes in the market place al have a very influence in service. In most of the time customer can t get a satisfaction? For getting good satisfaction from the customer start to learn identify and observed customer needs and requirement.
Williams, P. & Naumann, E. 2011, "Customer satisfaction and business performance: a firm-level analysis", The Journal of Services Marketing, vol. 25, no. 1, pp. 20-32.
This paper will analyze the mission and vision statements of JPMorgan Chase & Co against the performance of the organization. An evaluation of how well the company lives out its mission and vision statement will be provided. The organization’s strategic goals link to the company’s mission and vision will be assessed. An analysis of the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. A competitive and marketing analysis of JPMorgan Chase & Co will be conducted to determine its strengths and opportunities.
The more profitable firms are those that are able to maintain their most valued customers throughout time. To satisfy a customer means to make him faithful and customer satisfaction becomes the index that measures the ability of the firm to produce income for the future.
University of Phoenix.(Ed.). (2005). Foundations of Financial Management, 11e [University Phoenix Custom Edition]. The McGraw-Hill Companies.
In other words, their purchasing power is more focused on their need, health, and efficiency and cost effective. It is with this in mind, this writer would say that there lies a possibility for a company to cater to both its best interest and that of the consumer conjointly. Without customers, there would not be any company; therefore, a secure partnership between the company and customers would be more beneficial for both parties, in that the customers would be loyal to the company based on if they feel valued and if their needs are being met by the company. The company can foster this partnership by building a strong customer relationship management – where they have a customer-centric model in which they learn ways to enhance their product and service through feedback received from the customers. Here, both interests of the company and the customer will be
At the most fundamental level contemporary financial management is concerned with managing assets, liabilities, revenues, profitability and financial system. It goes a step further in ensuring that the economic condition and financial system remains on track to attain its goals and maximizing the growth .
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.
“For example, if the organisation decide to expand, fixed costs will definitely increase. Sometimes, organisations decide to reduce certain fixed costs to improve their cash flow, by moving to a less expensive workplace or reducing the number of employees”.