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Chapter 1

4.3 Strategic impact

Strategic issues are those which impact the whole business in the long
term. For example:

 Competitive advantage

If the firm has traditionally competed on the basis of cost
leadership, the financial manager needs to ensure that new
projects maintain this position.

 Fit with environment

Knowledge of the main Political, Economic, Social and
Technological factors which impact the business will help to
identify likely opportunities.

 Use of resources

Knowledge of the firm's current strengths (core competencies) and
weaknesses is critical in assessing which new projects are most
likely to be successful.

 Stakeholder reactions

It is critical that the views of all stakeholders are considered when
financial management decisions are made.

 Impact on risk

Making decisions which change the overall risk of the firm may
alienate shareholders and damage the firm's long term prospects.

Illustrations and further practice

Now try TYU 3 from Chapter 1

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