Position1: Financial analysis leads to better decisions VS Position 2: The resou
ID: 350620 • Letter: P
Question
Position1: Financial analysis leads to better decisions VS
Position 2: The resources to do a lengthy analysis (time, talent, information) are not always available.
This is a juxtaposition discussion question. Choose a side. If you choose the green side, find material to support your response…but you also have to find a way to resolve the counter-side on RED. If you choose the red side, find sources to help support your position…but you also have to resolve the counter-side on GREEN. Your response should be 250 words.
Explanation / Answer
I will choose Position 1, which is for doing financial analysis leading to better decisions. In today’s world with constantly changing things and where business models are rapidly evolving, trade barriers are flattening, shortening product life-cycles, and demographics is changing dynamically, business managers are constantly under pressure to take decisions. Be it about changing product price or entering a new market or launching new business model, it is inevitable to back the judgement by financial analysis. Without financial analysis, decision taken cannot consider all possible operational and financial parameters, competition and customer trends and company’s internal strengths or weaknesses. Good Financial analysis will provide managers with future potential benefits, value, cost of capital required, ranking of various options available and help managers with charting strategy and action plan accordingly. Financial analysis helps business managers with keeping their actions aligned with the firm’s strategy and long-term goals. Without data analysis, decision will be instinct based and then the objectivity of evaluation will go away. That is why many successful companies adopt culture of metrics and deep analysis for reasoning and strategic thinking. In addition, with the current situation where data available is immense, ignoring data is nothing but suicidal.
Regarding the counter position, the resources to do a lengthy analysis (time, talent and information) are not always available, multiple options can be thought of. If ready available sales data is not present for demand forecasting, use proxy product which has similar characteristics. For talent, there are multiple tools in market crunching the time taken for analysis, and leveraging these tools will reduce the time taken substantially. Here is it is critical to talk about adopting long term thinking in organization, be it while recruiting personal, or bringing in new software tools like ERP or CRM. Organizations must think long term by implementing these software packages to help for financial analysis and metrics visibility. Along with these, prioritization becomes very important. When the initial metrics show a decision not having good benefits (e.g. a market’s overall economy growth can indicate what might be future potential for other companies), then deeper analysis can be narrowed down to fewer options.