Strategic

Finance
Management
Shiv Kothari
EDI
SFM
• The identification of the strategies capable of maximizing an
organizations net present value, the allocation of scarce capital
resources, and the implementation and monitoring of a particular
strategy.
• Strategic financial management can be defined as ‘’the identification of
feasible strategies capable of helping a business achieve its objective/
target, the allocation of scarce financial resources among competing
business opportunities and the implementation and monitoring of
chosen strategies’’. Please note that this definition is based on the core
assumption of finance – maximization of wealth
Strategy
• According to Professor Michael Porter of Harvard Business School, Fundamental to the success of any
company and to any effort to develop strategy is having a proper goal for business clearly in mind

• A carefully devised plan of action to achieve a goal, or the art of developing or carrying out such a plan

• Strategy is a course of action – including a blueprint of resources needed to get a desired result. The
combination of skills, tactics, knowledge and experiences that an entity (individual or corporate) uses to
achieve a specified objective is what we call strategy.

• A strategy can be short-term or long-term, depending on the time frame covered by a project or concern

• Questions you need to ask

• What future position do you aim to reach
• How will your organization will achieve its desired financial position
• Where are you now?
• How are you going to get there?
Finance
• Finance: the business or art of managing the monetary resources of an organisation.
• What future financial position should the organisation reach?
• How does it intend to get there?
• How does the organisation intend to manage the competing demands of spend versus
retain?
• Do the organisation’s trustee and management understand the primary statements?
• A good starting point of financial strategy should be the identification and formulation
of objectives. This starting point is obvious as strategy depends on objectives or
targets. Corporate objective can be financial or nonfinancial. Recent research has
shown that non financial corporate objectives are as important as their counterparts
Management
• the organising and controlling of the affairs of an organisation or a
particular sector of an organisation.
• Management in all business and organizational activities is the act of
getting people together to accomplish desired goals and objectives using
available resources efficiently and effectively.
• Management comprises planning, organizing, staffing, leading or
directing, and controlling an organization (a group of one or more
people or entities) or effort for the purpose of accomplishing a goal.
Resourcing encompasses the deployment and manipulation of human
resources , financial resources, technological resources, and natural
resources
 Basic Functions
Estimating Funds Raising Funds Investing Funds

Operations & Means of Raising Making Investment

Working Capital Funds Decision

Liquidity Capital Project Portfolio

Management Estimation & Raise Management

Maximizing Profits & Shareholders’ Wealth

Investment Decision
Investment Decision & Prospect
Planning
1. Evaluation of Project
(FUND/CASH FLOW)
2. Relevant Cost Analysis
3. DCF & NON DCF Methods
4. Capital Rationing
5. Social Cost Benefit Analysis
Evaluation of Risky Proposals
for Investment Decision
1. Investment Decision under
uncertainty
2. Effects of Inflation on
Capital Budgeting Decision
(IRR/Profitability Impact)
3. Sensitivity Analysis
Leasing Decision
1. Lease V/s Buy Decision
2. Break Even Lease related
determination
3. Cross Border Leasing
Financial Market &
Institutions
Institutions in Financial Market
1. RBI, BANKS, NBFC
2. Insurance Companies
3. Money Market Instruments
4. Hedge Funds
5. Mutual Funds
Capital Markets
1. Primary and Secondary
Market
2. Optional/Convertible
3. Rolling Settlement
4. IPO
Commodity Exchange
1. Regulatory Structure
2. Agriculture & Non
Agriculture Market
Security Analysis & Financial Risk
Portfolios Management
1. Security Analysis Financial Risks
2. Market Indices 1. Credit Risks
3. Statistic Models (Moving 2. Liquidity Risk
Averages) 3. Asset Based Risks
4. Theories of Stock Market 4. Foreign Exchange Risk,
5. Portfolio Management Market Risk
Financial Derivatives
1. Futures & Forwards
2. Options (Call & Put)
3. Swaps and Swaptions
4. Interest Rate Derivatives
Financial Risk Manaegemnt
1. Source of Foreign Capital,
ADR, GDR, FCCB etc
2. Foreign Exchange Market
3. Exchange Risk on Capital
Project
Thank You
kotharishiv@gmail.com