Mehrzad Manuel Ferdows, a leading entrepreneur, advisor, investor and industrial Engineering graduate from University of Southern California has given speech at a conference held in Dubai on factors influencing financial decision making in organizations. Mehrzad Ferdows stated that financial decisions are crucial for the well-being of an organization because these decisions determine the firm’s ability to obtain plant and equipment when needed to carry the required amount of inventories and receivables in order to avoid burdensome fixed charges when profits and sales decline and to avoid losing control of the company. Mehrzad Ferdows stated that the nature of financial decisions varies from one organization to the other. It may also be different in the same organization over a period of time. It is in fact because the nature of financial decisions is influenced by different internal and external factors.
Internal Factors Influencing Decision Making in an Organization
Mehrzad Manuel Ferdows stated that internal matters within an organization can influence the process of making financial decisions within an organization. The first internal factor influencing decision making is nature of the business. Manufacturing or public service providing its investment in fixed assets is large and hence the capital structure has a large share of long-term capital. It is also large in organizations that produce capital goods. On the other hand, in trading concerns, a greater part of the investment is found in current assets. Size of business is also a significant factor influencing financial decisions. The larger the size, the more capital is needed. Large organizations need their own building or plant. Legal form of organization is another important factor heavily influencing decision making when it comes to financial issues whether they can have cases of borrowing or others. Pattern of ownership also influences financial decision making whether it is a closely-held company or one with many shareholders playing their roles. Another element is level of risk and stability in earnings which means greater risks will result in higher discount factors. It can be argued that risk influences the long-term investment decision or capital budgeting decision. It will be the opposite in case of higher risk and not stable income when the finance manager tries to impress on the shareholders for more retention of earnings rather than adopting a liberal dividend policy. But with stable income and lower risk the financial decision will be just the reverse.
Liquidity Positions and Impacts on Financial Decision Making
Mehrzad Manuel Ferdows stated that liquidity position will also influence financial decisions. If the dividend is normally paid out of cash, firms with a sound liquidity position adopt a liberal dividend policy but if the working capital is very large or the firm has to meet significant past obligations, it will have to follow a conservative dividend policy. Any titles towards liquidity will alter the nature of financing and dividend decisions.
External Factors Influencing Financial Decision Making
Mehrzad Ferdows pointed out that along with many internal factors there are a number of external factors influencing financial decision making in organizations. These decisions are concerned with long-term assets. It can, therefore, be said the more correct these decisions are, the greater will be the growth of business in the long run. In addition to that, these affect the future possibilities of the business. The state of economy, the structure of capital and money markets, government regulations, and tax policy can be considered among the most important external factors.
The State of Economy and its Impact on Organizational Financial Decision Making
Mehrzad Manuel Ferdows stated that financial decisions conform to changes when the state of economy changes from time to time. When the economy is proceeding towards recovery, the finance manager should be eager to avail of investment opportunities. When the economy is facing a slump, the finance manager should proceed with care. In times of a downtrend, the stress should be on internal financing. During an uptrend, higher dividends can be declared but during downtrend conservation of cash is necessary and therefore a strict dividend policy should be followed.
The Structure of Capital and Money Markets
The structure of capital and money markets is another chief factor influencing financial decision making. Well developed markets with multitude of financial institutions and venturesome investors will make the finance manager to find it easy to select the proportion mix of capital structure and accordingly financing decisions will be broader. It can be managed with a comparatively lower amount of cash as the finance manager can get funds whenever he desires. The dividend policy is also broad in such cases as the shareholders are not necessarily interested in regular and large dividends but if the investors are not venturesome they will wish for large dividends and the finance manager will have to adopt a liberal dividends policy and will not be able to opt for trading on equity to any great extent.
The Effect of Tax Policy on Financial Decision Making in Organizations
Mehrzad Manuel Ferdows stated that managerial decisions are considerably influenced by tax policies for instance the choice of location, buying or leasing decisions, the proper mix of debt and equity in the company’s capital structure increasingly demand qualified employees in an economic environment that is becoming more and more complex. Due to the worldwide economic integration and constant changes in tax legislation, facing with new challenges has become inevitable. Taxation rules also shape corporate decisions since it absorbs a great deal of an organization’s income, therefore, measures need to be taken to minimize the tax burden.
Mehrzad Manuel Ferdows concluded that organizations, be them small or medium need to scrutinize the effects of internal and external factors on financial decisions that are made within the organization. He stated further that it is management attitude towards risk that will determine the pattern of capitalization of the organization. Conservative decision makers always prefer to tread on beaten path and would always avoid incurring fixed obligations for raising additional capital.
source: https://mehrzad-manuel-ferdows.medium.com/mehrzad-manuel-ferdows-speech-on-factors-influencing-financial-decision-making-in-organizations-866e17891b5e
Mitra Ferdows's Speech on Product Promotional Strategies
Mitra Ferdows, Business Management graduate from the United States Loyola Marymount University and consultant in start-ups, expresses her point of view on product promotional advantages and strategies. Mitra Ferdows stated that understanding the significance of promotional and marketing strategies helps a business develop in a number of ways. Business promoting is an active process which has to be closely scrutinized for obtaining the best results. The manpower can be utilized to the fullest to come up with strategies to promote a business and let it flourish. Promotional strategies and marketing are closely linked as marketing of your brand or product entails various aspects of manufacturing, promoting and selling products. Promotion is a key element in conveying the benefits or impression of a product or service to the customers. In fact well-designed marketing and promotional strategies will ensure long-term success, draw more customers and ensure profitability for businesses.
What is the Role of Promotion?
Mitra Ferdows added that promotion is the voice through which a business is heard in the market and made clear to the audience in the ever-so-competitive market. It is the image by which a business is known. There are many platforms such as television, radio, shopping outlets, billboards, magazines and social media to promote a business or a brand. These platforms implement various promotional strategies to promote and market your business depending on the goals, objectives and priorities. Without promotions, a business would not be able to garner the attention of pre-occupied customers. Promoting a brand will help businesses in many ways. First and foremost, it helps increase brand awareness and provides appropriate information. Promoting a brand leads to spreading information about a company or brand. In addition, promoting will increase Customer Traffic as well as building sales and profits.
Promoting Helps Increase Customer Traffic
Mitra Ferdows pointed out the importance of promoting by focusing on customer traffic which will increase following brand promotion using various tools even by offering free samples. It helps customers know more about your product or service and be more interested. She stated that these days when social media is the most effective tool on the online platform, promotional strategies need to extend beyond conventional means of conveying messages. If a company fails to promote a product, especially a new one, it probably will not gain much attention. According to Harward Business School some 30,000 new consumer products are released annually but as many as 95% of those products will fail to make significant sales. Similarly, there are numerous cases where a product has no flaws and is a perfect fit for customers but unluckily it fails due to poor product promotion.
Some Product Promotion Strategies
Mitra Ferdows outlined some product promotion strategies like contests, social media promotions, mail order marketing, product giveaway and samples, point-of-sale promotion and end-cap marketing, customer referral incentive program, causes and charity, branded promotional gifts, customer appreciation events, and after-sale customer surveys.
Mitra Ferdows redefined the concept and stated that product promotion means disseminating the information about the product line, brand and company to the perspective buyers with the intention of generating sales and developing a brand loyalty. She considered promotion as the fourth element of the marketing mix (product, price, place, promotion) being a mode of communication that a business adopts for achieving a set of objectives.
Promoting helps to provide information about the availability of features and uses of the product to the perspective buyers. Furthermore, it stimulates demand for a product by creating awareness and interest among customers. By creating the brand loyalty, promoting helps to differentiate the product from the competitor’s product and by highlighting the importance and features of the product sales stabilization will be gained.
Kinds of Promotions Companies Adopt
Mitra Ferdows stressed that basically, there are four types of promotion that companies adopt: Informative promotion, persuasive promotion, reminder promotion, and buyer behavior modifications. Persuading customers to buy is the primary purpose of promotion. Advertising, personal selling and sales promotion are among the many sales activities. The importance of product promotion lies in the fact that no firm can survive in the market without reaching the customers effectively and cannot be able to win the competitions with other market players if no unique benefits are offered to the customers. There are several types of promotions such as above line promotions (like advertising, press releases, schemes, and discounts) and below the line promotions (trade discounts, freebies, awards, etc.).
Promotion Mix
Mitra Ferdows emphasized the importance of promotion mix and stated that promotion mix is the integration of advertising, personal selling, sales promotion, public relations and direct marketing. Marketers need to have a balanced blend of these promotional tools. She noticed that through advertising, the marketer makes an effort to build a pull strategy. The customer is instigated to try the product at least once. Personal selling which is the traditional form among promoting tools is targeted at influencing the customer to make a purchase by directly visiting them but in the modern world of business it seems rather unreachable. Mitra Ferdows pointed out that sales promotion-the short term incentive given to the customers to have an increased sale for a given period- focuses on the increased short-term profits and attracts both the existing and the new customers by offering discounts, coupons, payback offers, freebies, etc. she expressed that public relations is of paramount importance as the marketers try to build a favorable image by creating relations with the general public (e.g. customers, employees, suppliers, distributors, shareholders, government and society as a whole) either directly or indirectly. In addition, through publicity which is a form of public relations a company brings newsworthy information to the public.
Mitra Ferdows concluded that nowadays by virtue of technology, it has been made possible for the companies to reach customers without any intermediaries or paid medium using direct marketing tools such as emails, text messages, fax, etc. Thus, using any tool of the promotion mix based on the overall objective of the enterprise as well as the nature of the product/service, the companies can take advantage of the promotion mix to move their business forward and be able to compete in the market.
source: https://mitraferdows.medium.com/mitra-ferdowss-speech-on-product-promotional-strategies-eb75b5973ec4
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