Role Of Finance In Tesco

Submitted By mattygchambers
Words: 998
Pages: 4

Task 3

Finance is the money available to spend on business needs. Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money. Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.
Marketing is perhaps the most important activity in a business because it has a direct effect on profitability and sales. Larger businesses will dedicate specific staff and departments for the purpose of marketing. The marketing section of a business needs to work closely with operations, research and development, finance and human resources to check their plans are possible.
In Tesco the two different functional areas that could share their information is the finance department and the marketing department. For example they could do this if finance carried out a research about sales of products and from this research they see that products are not selling very well and there is more disposable income, then they would communicate this information to the marketing department to set a budget with them to identify key areas where they can spend more. The sources they would use would be more reliable sources such as the local government as they are a trustworthy source. As well as that, they would use research that they have carried out themselves to identify future promotional activities or further financial benefits.

The marketing and finance department use similar information from sources such as the local government or the national statistics to identify whether they are going through a difficult period and if there is more disposable income or not. Although they use similar information from sources the way they make use of the information is different. For example the marketing team would look at the information and then they will decide whether or not they want to promote more expensive products and as well, who they want their target audience to be and base it around them to make them more attracted and interested in the product. On the other hand, the finance department would use the information to produce cash flow forecasts. As well as that profit and loss accounts to identify whether they have the money balance to make these promotional strategies possible. An advantage of this is that the information they have is from the local government then the in formation would be reliable as the government are a very reliable source. However, a disadvantage of this is that the information from the local government could be dated and also, used by previous statistics.

Both the marketing and finance department will have had to use strategic decisions when gathering information. When a business forms a strategy they are producing a large scale plan with plans to achieve one or more goals set by the business. When making a strategic plan a business will have to take into account all factors and plan for them. Strategy is imperative for a business as not only does it give them a sense of direction and some goals to achieve, but also resources are usually limited so you have to a strategy will help to guide the business and make the best use of the resources that they have. Strategy give the business direction, it helps them to see whether they are over achieving/under achieving and meeting the goals they have set themselves. If a business is doing well and then they can alter it accordingly and set themselves new targets to aim higher.

Strategic decisions have major resource