Overview of VP for Finance & Board of Directors' Roles in Business Finance, Slides of Business Economics

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Business FinanceBusiness Finance

CHAPTER 1CHAPTER 1

Introduction to Financial Introduction to Financial

Management Management

Organizational Chart andOrganizational Chart and

the Roles of the VP for the Roles of the VP for

Finance Finance

• (^) To explain the major functions of key

management positions in a typical organization,

highlighting the crucial role of the finance

manager

Learning Objective

Organizational Chart

Organizational Chart Among the responsibilities of the Board of Directors are:

1.Setting policies on investments, capital structure, and

dividends;

2.Approving company’s strategies, goals, and budgets;

3.Appointing and removing members of the top management

including the president;

4.Determining top management’s compensation; and

5.Approving the information and other disclosures reported in

the financial statements.

Organizational Chart Among the responsibilities of the President are:

1.Overseeing the operations of a company and ensuring that the

strategies as approved by the board are implemented as planned;

2.Performing all areas of management: planning, organizing, staffing,

directing, and controlling; and

3.Representing the company in professional, social, and civic activities.

Organizational Chart Among the responsibilities of the VP for Sales & Marketing are: 1.Formulating marketing strategies and plans; 2.Directing and coordinating company sales; 3.Performing market and competitor analysis; 4.Analyzing and evaluating the effectiveness and cost of marketing methods applied; 5.Conducting or directing research that will allow the company to identify new marketing opportunities, for example, variants of the existing products/services already offered in the market; and 6.Promoting good relationships with customers and distributors.

Organizational Chart Among the responsibilities of the VP for Production are:

1.Ensuring production meets customer demands;

2.Identifying production technology/process that minimizes

production cost and makes the company cost competitive;

3.Coming up with a production plan that maximizes the

utilization of the company’s production facilities; and

4.Identifying adequate and competitively priced raw material

suppliers.

Organizational Chart Among the responsibilities of the VP for Administration are:

1.Coordinating the functions of administration, finance, and sales

and marketing departments;

2.Assisting other departments in hiring employees;

3.Providing assistance in payroll preparation;

4.Determining the location and the maximum amount of office space

needed by the company; and

5.Identifying means, processes, or systems that will minimize the

operating costs of the company.

Organizational Chart

Functions of VP for Finance

• (^) Making decisions as to how to finance long- term investments and working capital which deals with the day-to- day operations of the company
• (^) Determining the appropriate capital structure of the company
• (^) Capital budgeting analysis in support of long-term investments
• (^) Determining how to finance working capital accounts such as accounts receivable and inventories
• (^) Helping to determine how much cash dividends a company should declare

Organizational Chart Several factors to be considered in declaring cash dividends:

1. Availability of investment opportunities
2. Access to long-term sources of funds
3. Capital structure
4. Stockholders

Self-Test Questions

1. What are the reasons why the Board of Directors is the highest policy-making body in a corporation? Give at least three.
2. How is a director elected in the Board of Directors?
3. What are the four important roles of a finance manager? Explain each briefly.