AAF046-6 Strategic Finance Assignment Sample
Module code and Title: AAF046-6 Strategic Finance Assignment Sample
Introduction
Demonstrating the financial strategy and corporate governance of a particular company is the main objective of the report. Decision-making criteria and Differing financial strategies are the main method or application that has been used in the report to evaluate the overall performance of the company and understand its structural outcomes. General Motors is the chosen company that has been analyzed by evaluating their financial strategy and corporate governance.
i) Background of General Motors and their Key Stakeholders
General Motors Co. is a car manufacturing company that operates its business globally. The company manufactures different categories of cars and it is the major business operation that generated revenue for the organization. Engaging in designing, manufacturing cars, and selling cars, trucks, and automobile parts is the main business operation that General Motors Co. incorporates (Gm, 2022). Moreover, the company is also listed on the London Stock Exchange, and its number is NYSE: GM.
According to the financial report of the company, it has been evaluated the company increased 25% sales to 551,796, and its market share increased to 16.25% which is the highest in the USA (Annual reports, 2022). According to the financial statement, the company’s third-quarter net profit is attributable to stakeholders, which is $3.3 billion and their EBIT adjusted value is $4.3 billion. After analyzing the third quarter of the financial year 2022, General Motors Co. generated 41.9 billion. Capturing the global market is the main objective of the company and the company’s current revenue is $56.69 billion.
General Motors Co. has different stakeholders in their company and they are the most responsible operators who run the business. Blackrock Fund Advisors is the biggest stakeholder in the company with a 4.69% stake in the company and its valuation is $2,617,717,677 (Money, 2022). On the other hand, SSGA Funds Management, Inc. is the second largest stakeholder in the company with a 4.07% stake in the business.
The “Showroom Purchasing Model ” is the potential model that has been incorporated by the stakeholders of the company to increase their financial structure and revenue margin as well. After analyzing the internal business model and corporate governance of the company, it has been evaluated that “Employees” “Customers”, “Communities”, and “Suppliers” are the primary stakeholders of General Motors Co.
ii) corporate governance theories and their implications in Company
Transparency and Accountability are the major corporate governance strategies that companies follow to operate feasibly and it also helps the organization manage their internal business operations. General Motors UK Limited is a subsidiary company that ruined its business operation in the UK it is the most anticipated business operator and it’s headquarter is in Luton. Car manufacturing is the major business; however, the company developed major revenue from selling and distribution.
Good corporate governance can help the company to build an environment of trust and it can also increase Transparency, Accountability, and necessary forecasting in long-term investment. Therefore, “the “G” in ESG – is the most important, yet overlooked, element of sustainability” in General motors’ which increased their trust bandings among the consumers and the employees as well (Seekingalpha, 2022).
Moreover, it has been incorporated that General Motors Co. is the company that is inverting its corporate governance to increase its Long term investment and it can also increase financial serial stability. Therefore, “The Board of Directors and governance structure prioritizes ethical operations” is the major interest of the stakeholders and they are majorly responsible for enhancing the corporate governance of the company and it can also reduce financial risk from the business.
Developing a Governance Policy that maintains its “Key Disclosure” is important for General Motors Co., which is also a primary reason that the company increased its customers’ trust in the last couple of years. “The G20/OECD Principles of Corporate Governance are the international standard for corporate governance”, which is the major key responsibility that the company generated in its business model (OECD, 2022).
Economic Efficiency, Sustainable growth, and Financial stability is the corporate governance theory that has been implemented in the company and it is the major reason that companies reduced their disability risk and they also increased their sustainability factors (Old, 2022). “The global market and corporate ownership landscape” is a major theory that GM co. implemented in the internal business model and it is the process of analyzing elements that can increase the transparency of the financial feasibility factors.
“Stewardship Theory” and “Stakeholder Theory” is the major corporate governance theory that has been developed by GM co. and it is the major theoretical perspective that enhances the Accountability factors in the business model. On the other hand, it has also been analyzed that GM is one of our top stock picks due in large part to its executive compensation plan that links 50% of the long-term stock.
iii) Evaluation of corporate governance practices
Governance Framework
Transparency, Accountability, and necessary forecasting in long-term investment are the major corporate governance practices that General Motors Co. incorporated in their business operations. Therefore, it has been analyzed that the “Governance Framework” is the major practice that needs to be developed in the company and it can also increase the transparency level of the company (Investor, 2022).
“Stakeholder’s Trust Building” is also a major practice that can be done by developing a proper corporate governance sustainability factory. The documentation process is the initial practice that can enhance the effectiveness of the business operation and it can also enhance the disability factor in the business.
“Office of General Counsel in Corporate Secretary ” is the governing body that manages the corporate practice for General Motors Co. Managing transparency and developing accountability is the major concern that has been developed by the governing body. Most of the time a company’s financial performance can be affected by financial disclosure, which is also part of government practice.
Governance Documentation
“Open Government & Transparency” is the state that has been practiced in GM Co. and it is the primary strategy that has been developed by the company for better financial and nonfinancial growth (Pwc, 2022). On the other hand, the “Responsible Mineral Sourcing Policy” is the primary corporate practice that is enhanced in the business model. Managing company assets and developing policies for growth can also be incorporated into the internal business practice for GM companies.
On the other hand, transparency of the financial feasibility factors is the major factor that can be developed by applying “Governance Documentation”. Reducing the manufacturing cost and developing car sales is the primary concern for the company and they are mining policy change for better financial growth. It can also reduce feasibility risk from the business operations.
“Anti-harassment Policy” is also a major practice of General Motors Co. in their business, which basically helps the organization to make a better work environment and it also helps reduce crime against women or any employees (Investor, 2022). Crime rate reducing and increasing different work opportunities is the main concern for General Motors Co.
Policies in line with the law and applicable regulations
Policies and guidelines are important because they address issues in the company and it also takes major steps to resolve the issues. Managing Day-by-day operations can be possible because of the policies and the enhancement of management frameworks. “Public Service Delivery” and “Citizen Participation” is the primary policy-driven strategy that is implemented in General Motors Co. Performance enhancement and Elementary performance measuring can also be possible by implementing different policies (Pwc, 2022).
Corporate governance practices can be analyzed by evaluating the “Sustainability Report” enhancing sustainability and protecting the company data are the major issues that General Motors Co faces in recent times which can be solved by developing a “Sustainability Framework”. Moreover, the “Performance & Accountability” strategy has been incorporated in the organization to reduce sustainability risk from the business.
Effective board reporting
Good quality reports can be developed by implementing board reporting in the business operation. The company’s overall performance and feasibility factors can be enhanced and developed by implementing effective board reporting practices (Emerald, 2022). General Motors Co. also practices the effective board reporting model practice in their business, which helps the company to analyze “Time-consuming and Inefficient Process”, “Company inconsistent Styles”, and “Difficulty in ascertaining the purpose and the output required from the board”. Good quality reports contain sufficient information about the company, which can also be beamed during decision-making.
Moreover, it has been incorporated that General Motors Co. is the company that is inverting its corporate governance to increase its long term investment and it can also increase financial serial stability. Developing investment appraisal to decision-making framework, all kinds of corporate work can be done by developing board reporting (Investor, 2022). “Develop business strategies for short and long-term growth” and “overall sustainability of the organization” is the main objective of effective board printing.
iv) Role of corporate governance in strategic investment decision-making
Search for Investment Decision
The Investment decision-making process is the most convincing and adaptive role in corporate governance which increases the sustainability factor in internal business models. Corporate governance also measures “Investment Objectives”, “return on Investment” and “investment frequency” for the company. Moreover, it has been evaluated that General Motors Co. is the company that manufactures cars and deals with different stakeholders and the car manufacturing plant process is the major concern for the company (Irawati et al. 2019, p.1).
A good governing body improves the “Board of members” and “Monitoring the functions”. Moreover, corporate governance in the company searches for investment decisions, which helps the company to make proper assumptions and analyze processes. On the other hand, it can reduce the financial risk from the company and the investment risk from the investors.
Quantitative analysis models
Developing a qualitative analyzing mode is the most effective and important role that corporate governments implement in their business operation and during investment decision-making. Moreover, it has been evaluated Strategic Finance proactive are also been developed by type of corporate governance in the business operation for better investment decision-making (D’Ascola et al. 2019, p.6). Overcoming failure and harnessing success is also a potential element of the quantitative analyzing model.
The corporate governance of General Motors Co. makes “Systematic Investing” during the investment decision which increases the success factor of the investment and also improves the sustainability factor of the company. Other than that, “Advanced mathematical modeling” and “Computer system & data analysis” is the approach that corporate governance takes for developing quantitative analyzing models in strategic investment decision-making.
Screen Projects for Further Investigation
The corporate governance of the GM group needs to ensure transparency during the investment. “Balancing Economic Development” in the company is the essential element those corporate governance millimeters in the business while mankind makes an investment decision. Strategy buying in the stock before settling the history is the major strategy that the corporate governance of the company implements is the company while developing investment decision-making (Bae et al. 2018, p.3).
Therefore, it has been evaluated that “Ensuring the interest of all shareholders” is the major analyzing factor developed by the corporate governance of the company, which helps the organization to manage its financial assets and reduces investment risk from the organization. Corporate governance practices can be analyzed by evaluating the “Sustainability Report” enhancing sustainability and protecting the company data are the major issues that General Motors Co faces in recent times. Furthermore, Corporate governance affects the “Operational risk” and, hence, the “Sustainability of a corporation”.
Evaluate Alternatives
Converting the inventors and developing a proper plan is the primary role that the corporate governance of the GM group develops in their business (Naciti et al. 2022, p.12). Moreover, Inventors analyze a company’s internal and external factors to make investments which make corporate governance the biggest element while making the strategic investment decision. “Sustainability” and “Transparency” of the company can also be analyzed by the corporate governance of GM Group, which determined the significance of the CG during strategic investment decision-making.
There are different investment appraisal techniques that can be analyzed and evaluated by the stakeholders before making an investment decision. NPV, Payback period, IRR, and ARR are the most effective investment appraisal technique that stakeholders and investors can calculate and angle while making investment decision making.
Reject Alternatives
Acceptance of the proposal and investment planning property is the proper reflective alternative that can be analyzed by evaluating corporate governance of the company. accountability, fairness, and transparency are the primary pillar of corporate governance and they can also determine the company’s overall valuation and its encouragement toward future prospects. Major financial challenges can also be visible in corporate governance (Irawati et al. 2019, p.1).
“Rising Cost of raw material” is the biggest financial challenge that has been analyzed in General Motors Co. Investors can understand the financial challenges that the company has and they can also make potential decisions regarding investment decision-making. Shareholders of the company have rights under good CG policies and practices. an alternative way of investing in underlying assets that might generate cash flows or drive future value.
v) Relationship between corporate governance and strategic investment decision-making
Sources of a company’s operations can be analyzed by corporate governance, on the other hand, the company’s financial structure can be analyzed by investment decision-making. However, corporate governance and investment decision-making, both are related to each other (Onlinelibrary, 2022). Overcoming failure and harnessing success is also a potential element of the quantitative analyzing model.
The structure of the company, the future plan of the company, the performance management of the company, the operational status of the company, and all the internal and external factors of the organization can be analyzed by corporate governance. The corporate governance of General Motors Co. makes “Systematic Investing” during the investment decision which increases the success factor of the investment (Bae et al. 2018, p.4).
On the other hand, investors of the company analyze the CG of the organization while making the investment decision. The company’s current funding, different assets, and highest possible return all also come under-investment decision-making. After developing the structural plan and analyzing the competitive adverts, inverters invest in the company, which is also the main objective of corporate governance.
Conclusion
A brief discussion regarding the company and its stakeholders has been incorporated in the report to develop proper corporate governance. The role of corporate governance and investment decision-making factors are also developed in the report for a better understanding of the internal operations of the company. After analyzing the overall financial structure of General Motors Co. it has been evaluated that corporate governance plays a major role in the company and it also plays a vital role in investment decision-making.
Reference List
Annual reports, 2022, General Motors, Available at: https://www.annualreports.com/Company/general-motors[Accessed on: 07/12/2022]
Bae, S.M., Masud, M.A.K. and Kim, J.D., 2018. A cross-country investigation of corporate governance and corporate sustainability disclosure: A signaling theory perspective. Sustainability, 10(8), p.2611.
Bae, S.M., Masud, M.A.K. and Kim, J.D., 2018. A cross-country investigation of corporate governance and corporate sustainability disclosure: A signaling theory perspective. Sustainability, 10(8), p.2611.
D’Ascola, A., Irrera, N., Ettari, R., Bitto, A., Pallio, G., Mannino, F., Atteritano, M., Campo, G.M., Minutoli, L., Arcoraci, V. and Squadrito, V., 2019. Exploiting Curcumin Synergy With Natural Products Using Quantitative Analysis of Dose–Effect Relationships in an Experimental In Vitro Model of Osteoarthritis. Frontiers in Pharmacology, 10, p.1347.
Emerald, 2022, The international journal of business in society, Available at:https://www.emerald.com/insight/publication/issn/1472-0701/vol/22/iss/7[Accessed on: 07/12/2022]
Gm, 2022, GM, Available at:https://www.gm.com/[Accessed on: 07/12/2022]
Investor, 2022, Environmental, Social, and Governance, Available at:https://investor.gm.com/esg#:~:text=General%20Motors%20leads%20with%20transparency,documents%20section%20of%20this%20page.[Accessed on: 07/12/2022]
Irawati, N., Maksum, A., Sadalia, I. and Muda, I., 2019. Financial performance of Indonesian’s banking industry: The role of good corporate governance, capital adequacy ratio, non-performing loan and size. International Journal of Scientific and Technology Research, 8(4), pp.22-26.
Money, 2022, General Motors Co (NYSE:GM), Available at:https://money.cnn.com/quote/shareholders/shareholders.html?symb=GM&subView=institutional [Accessed on: 07/12/2022]
Naciti, V., Cesaroni, F. and Pulejo, L., 2022. Corporate governance and sustainability: A review of the existing literature. Journal of Management and Governance, 26(1), pp.55-74.
Oecd, 2022, Corporate governance, Available at:https://www.oecd.org/corporate/principles-corporate-governance/[Accessed on: 07/12/2022]
Old, 2022, Theories of Corporate Governance (Unit II), Available at:https://old.amu.ac.in/emp/studym/99998205.pdf[Accessed on: 07/12/2022]
Onlinelibrary, 2022, Corporate Governance: An International Review, Available at:https://onlinelibrary.wiley.com/journal/14678683[Accessed on: 07/12/2022]
Pwc, 2022, The eight key effective corporate governance practices, Available at:https://www.pwc.ie/services/human-resource-services/insights/the-eight-key-effective-corporate-governance-practices.html[Accessed on: 07/12/2022]
Seekingalpha, 2022, General Motors’ Governance Drives Restructuring That Creates Value, Available at:https://seekingalpha.com/article/4232634-general-motors-governance-drives-restructuring-creates-value[Accessed on: 07/12/2022]
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