The most important element of financial policy is the development of the right strategies and tactics. A financial strategy is a document drawn up in writing, which contains formulated instructions directly to bank employees related to the structure of the investment portfolio, types of securities and the bank’s strategy in their purchase and sale. As economic conditions change, so does the bank's investment policy. Strategic financial activities are closely related to a number of management functions such as marketing and innovation. This means the highest degree of competence of the financial manager, who is responsible for formulating the concept of the investment strategy and its implementation.
Effective implementation of financial activities contributes to the development of financial instruments of the stock and credit markets, which affect the mechanism and consists of the following stages:
Accumulation of financial capital from investors;
Investors' search for effective investment areas;
Formation of financial instruments beneficial for investment areas;
Ensuring a legal environment on the part of the state that facilitates the effective attraction and placement of financial capital.
The implementation of these stages requires a systematic approach to the regulation of financial activities, focused on obtaining the expected results, starting with the designation of incentives for financial activity and until the final achievement of the intended effect.
Among the risk factors inherent in investments are the following: credit, market and interest factors. Credit risk is closely related to the possibility of minimizing the client’s financial capabilities, as well as the inability of him to fulfill his financial obligations. Unforeseen changes in the economy, fluctuations in quotes on the securities market - these are the reasons why market risk is likely. Assets are also subject to risk due to changes in interest rates, which carry the risk of a decrease in their price on the market. The level of income from investments must exceed the cost of costs associated with raising funds. Sometimes, a low level of profit or its absence is also taken into account. But this is in the case that the program contributes to an increase in profits from other investments.
The financial strategy involves minimizing the decline in the value of the investment portfolio. For corporations, it serves as the main source of liquidity during periods when lending rates are highest. The most important condition for the relevance of an investment strategy is the intensity of changes in external investment factors. Also an essential condition is the future stage of its life cycle. Another condition is a polar change in the goals of the organization, which is associated with new commercial opportunities.
The goals pursued by the corporation when carrying out investment activities are realized through the development of financial policy. When developing it, banks are guided by traditional criteria: liquidity, profitability, risk and interest rates.
Thus, it is customary to distinguish between two main types of financial policies:
1. Aggressive: given with a high degree of risk, but with significant potential profitability (stocks);
2. Conservative: a significant part of investments is occupied by deposits in bonds and other short-term debt obligations, which leads to a reduction in risk, increased liquidity, but a decrease in profitability.
World practice also distinguishes between two types of financial strategy - passive and aggressive.
The passive strategy consists of implementing a clearly thought-out investment policy.
A commercial bank often uses a specific maturity structure for securities called staggering.
An aggressive financial strategy is a strategy that allows you to get high returns on investments in company shares and derivatives market instruments. Characterized by the highest level of risk.
Uniform distribution is one of the most popular ways to solve the investment horizon problem. This policy is popular in small financial institutions and basically consists of choosing an acceptable term, and then investing in securities in equal proportions at each stage within that period.
This strategy is not designed to maximize investment income, but to reduce income deviations in one direction or another, in addition, the implementation of this strategy does not require significant management talent. It often brings some investment flexibility, because certain securities are always redeemed in cash, and the bank in turn has the opportunity to take advantage of some promising nuances that may unexpectedly arise.
Money is invested in certain securities, so that during the next few years each year the maturity date of a specific part of the investment portfolio expires.
Therefore, as a result of this kind of staggered maturity of the securities in the investment portfolio, the funds that are released as a result of the expiration of the maturity date will be reinvested in completely new types of securities with definitely longer maturities and with a higher rate of return.
This approach to investment policy ensures ease of control and regulation, as well as, in part, a certain stability in the receipt of investment income by the bank if the required degree of liquidity is provided.
To achieve the intended goals, it is necessary to formulate a detailed financial strategy, which includes the main interconnected parts: economic, institutional and legal (Figure 4).
Figure 4. Financial strategy
Effective implementation of the financial strategy contributes to the achievement of strategic goals: development of investment activities, formation and development of investment products, mobilization of investor resources and attraction of a new client base.
The institutional block consists of the following components: investment portfolio, investment loans and risks.
The regulatory block consists of: internal regulatory documents regulating and facilitating the implementation of investment activities, state legislative acts relating to the implementation of investment activities of the bank.
The economic block consists of a system of economic indicators, a system of management and financing of the investment process. This block discusses some criteria for financial strategy.
It follows from this that the main goal of the financial strategy is to develop the ability to “vision” and identify long-term prospects for the bank’s development. This requires diagnostics of domestic banks at an early stage to identify factors that have a direct impact on its functioning and identify hidden opportunities for the bank’s long-term development. This is possible by applying STEP and SWOT analyses. Based on them, an analysis of the bank’s internal and external investment environment is carried out and a strategic assessment is given. Due to this, it becomes possible to create a holistic picture of the financial environment. Analysis of the immediate external environment is based on a study of the banks' market share, analysis of the demand of the client base, and the degree of development of the proposed investment products. Analysis of the distant external environment is based on identifying the potential of other market participants, economic and political factors that have a direct impact on the bank’s condition. Timely identified factors influencing the banking sector make it possible to determine the bank’s investment strategy that is necessary for long-term development.
Thus, this analysis helps to identify the bank’s strengths that need to be strengthened and weaknesses that should be worked out or removed. Using this process, it is possible to identify hidden additional bank reserves and determine their effective direction for further economic development.
The modern concept of strategic management is based on the theory of competitive strategy and competitive advantage, developed by US scientist M. Porter in the 80s. XX century The author interprets economic strategy as a generalized management plan focused on achieving the company's goals by identifying and implementing long-term competitive advantages.
An important role in strategic management is also played by the differentiation of types of enterprise development strategies by their levels. In the system of this management, there are usually three main types of strategies - corporate strategy, functional strategies and strategies of individual economic units (business units).
Corporate strategy determines the development prospects of the enterprise as a whole. It is aimed at fulfilling the mission of the enterprise and most comprehensively ensures the implementation of the main goal of the operation of the enterprise - maximizing the well-being of its owners.
At the corporate level, strategy covers such important issues as the choice of types of economic activities (types of business), ways to ensure long-term competitive advantages of the enterprise in the relevant product markets, various forms of conglomerate reorganization (mergers, acquisitions), principles for the distribution of all main types of resources between individual strategic areas management and strategic economic units. The development of corporate strategy is mainly carried out by senior managers of enterprise management.
The functional strategies of an enterprise are formed, as a rule, according to the main types of its activities in the context of the most important functional divisions of the enterprise. The main strategies at this level include: marketing, production, financial, personnel, innovation. The functional strategies of an enterprise are aimed at detailing its corporate strategy (implementation of its main goals) and at providing resources for the strategies of individual business units. The development of basic functional strategies is carried out by managers of the main functional divisions of the enterprise.
The strategies of economic units (business strategies) of an enterprise are usually aimed at solving two main goals - ensuring the competitive advantages of a particular type of business and increasing its profitability. Strategic decisions made at this level are usually related to the creation of new products, expansion or reduction of existing product lines, investments in new technologies, and the amount of advertising fees. The development of strategies at this level is carried out by heads and managers of strategic business units with the advisory support of managers of functional departments of the enterprise.
Financial strategy is one of the five functional elements of strategic management (production, marketing, innovation, human resources and finance).
Being part of the overall economic development strategy of the enterprise, which primarily ensures the development of operational activities, the financial strategy is subordinate to it. In relation to the operating strategy, the financial strategy is subordinate. Therefore, it must be consistent with the strategic goals and directions of the enterprise’s operating activities. Financial strategy is considered as one of the main factors in ensuring the effective development of an enterprise in accordance with its chosen corporate strategy.
At the same time, the financial strategy itself has a significant impact on the formation of the strategic development of the operating activities of the enterprise. This is due to the fact that the main goals of the operating strategy - ensuring high rates of product sales, growing operating profits and increasing the competitive position of the enterprise - are related to the development trends of the corresponding product market (consumer or production factors). If the development trends of the commodity and financial markets (in those segments where the enterprise carries out its business activities) do not coincide, a situation may arise when the strategic goals for the development of the enterprise’s operating activities cannot be realized due to financial restrictions. In this case, the enterprise's operational strategy is adjusted accordingly.
The whole variety of operating strategies, the implementation of which is intended to ensure the financial activities of an enterprise, can be reduced to the following basic types:
Financial strategies are based on clearly defined organizational goals.
Financial strategy includes the ways and main means by which the organization intends to achieve its goals.
Strategic financing:
- consists of a number of steps and stages;
- future-oriented;
- concerns the organization as a whole;
- adapted to the decision-making process;
- determines the long-term goals of the corporation and makes decisions to achieve them;
- determines the way in which these goals are to be realized.
Temporary tactical deviations from strategic goals should not be understood as obstacles to strategy if such deviations will have a greater effect in the distant future. For example, market expansion, which guarantees increased profits in the future, may require an increase in investment costs, i.e. decrease in profit in the current period.
The development of a financial strategy is based on a strategic management system. The main principles of the financial strategy are:
- complete openness of the enterprise for active interaction with the external environment;
- financial strategy as part of the overall development strategy of the enterprise;
- taking into account innovations in the activities of the enterprise;
- taking into account risks in making financial strategic decisions;
- taking into account the corporate culture of the enterprise.
- Financial and strategic analysis
Financial analysis of strategies is closely related to strategic analysis.
Strategic analysis - analysis of internal and external factors important for developing goals and strategy.
Strategic analysis includes three components:
- competitive analysis;
- external analysis;
- internal analysis.
In this case, competitive analysis is distinguished from external analysis, while its results are closely related to internal analysis.
A distinction is made between competitors based on homogeneous products and competitors based on function.
Similar product competitors sell a roughly similar product using similar technology. Examples of competitors for homogeneous products are telecommunications companies, trucking companies, etc.
Functional competitors satisfy the same customer needs, but based on different technology (for example, traditional mechanical watches are replaced by electronic quartz watches, vinyl records by compact discs).
Competitors by function, on the one hand, are more difficult to identify, since they work in a different area. On the other hand, they are more difficult to evaluate due to unfamiliar technologies and production features.
External analysis
External factors in the short term cannot be subject to control or influence by the management of the enterprise. This is approximately 15-20% of all factors.
External analysis is carried out in order to identify environmental factors that have the greatest impact on the operation of the enterprise and its growth. An enterprise, for example, must take into account the possibility of developing new, more advanced technology. This process is called strategic “fitting.” With strategic “adjustment,” the enterprise makes itself dependent on the environment. Therefore, for an enterprise, it is preferable not to strategic “fit”, but to strategic “tension”, i.e. the enterprise needs to strain and solve all the issues related to technology itself.
As a result of strategic analysis, the problems of achieving the enterprise's goals are eliminated. At the same time, they find the best
or the optimal solution is chosen, for example, the type of technological process, determined with suppliers and consumers, etc.
Reaction to the most important problems occupies the highest priority in the activities of enterprise management. Identifying the most important issues in today's economy becomes necessary as the environment becomes increasingly complex. The most important problems arise from the following points:
- the most important factors in environmental development;
- most important strengths and weaknesses;
- entrepreneurial foresight.
Problems should be formulated in the form of questions. For example: “Can our high production costs be reduced if we allow sector profits to decline and at the same time strive to strengthen our competitive position?”
After developing problems, they move on to action and decision making. The decision-making process involves:
- formulation of goals;
- drawing up an action plan;
- drawing up a financial plan.
- specified financial performance indicators;
- desired behavior of the company (company reputation);
- the boundaries of the company and its branches (categories of clients, geography of markets, types of products or services, types of technologies);
- goals related to business areas;
- goals related to the company's social responsibility.
At the analysis stage, for example, it often turns out that the necessary internal and external information is inadequate. Then a clause is included in the plan to revise the system for collecting information and transmitting it.
Another example involves revising the organization's structure, revising and creating business units, improving the qualifications of management and staff, and improving the communication system.
The action plan should include improving or creating a new corporate culture. This task is one of the most important problems. At the same time, it is necessary to strive to exclude bureaucratic components from the corporate culture. Otherwise, the corporation will acquire a bureaucratic reputation. Bureaucratization will contribute to the predominance of the interests of certain groups and people.
In the process of implementing the strategy, a number of issues are resolved regarding cooperation with partners or joint ventures, regulation of the organizational structure and culture of the company, advanced training of management personnel in accordance with the chosen strategy, and investment choice.
When implementing a strategy, it is necessary to organize control to verify the implementation of the action plan and the compliance of the results with the chosen strategy.
Once an action plan has been developed, it must be converted into a financial model using a fixed policy estimate. Although such a model does not accurately predict the future, it will nevertheless allow one to compare the quality of individual alternatives.
The goal is ultimately to arrive at a package of actions that meets the requirements of the original entrepreneurial vision as well as the company's vital concerns and financial goals.
- Financial planning and forecasting
Financial plans are divided into long-term and current. The term of the long-term plan is about five years, the term of the current plan is one year. The financial plan is drawn up in the form of a balance of income and expenses of the company.
When determining financial plan indicators, various methods are used.
Financial planning methods
Calculation and analytical method. The calculation and analytical method is based on the analysis of the obtained values of indicators for the past period, taking into account their possible development. The development of indicators is associated with the development of production, commercial and other activities of the company.
Balance method. The balance sheet method is used when planning the distribution of funds received. When determining expenses in the planning period, the balance equation is used
Balance of funds Receipt of funds _
at the beginning of the period in the planning period
_ Expenses Fund balance
in the planning period at the end of the planning period
Normative method. The standards used in financial planning are established by federal, regional and local authorities, departments, and enterprises.
Authorities establish norms for depreciation deductions, taxes, and contributions to extra-budgetary funds.
Departments establish norms for contributions to reserve funds, norms for maximum levels of profitability, etc.
Enterprises set standards for accounts payable, raw material reserves, working capital requirements, etc.
Using the specified standards, the corresponding costs and deductions are included in the plan.
Scripting method. The scenario method involves developing several plan scenarios and selecting the best one. When calculating indicators in this case, various optimization methods are used.
Mathematical modeling. Mathematical modeling allows us to establish relationships between various financial indicators and the factors influencing them. In particular, these models are used to predict indicators for various periods.
COURSE WORK
in discipline " Finance»
Financial strategy and financial tactics of the state
PLAN
Introduction
Financial strategy and tactics
Financial strategy and tactics of the Republic of Kazakhstan
Financial strategy and tactics of Russia
Conclusion
Introduction
Any state uses finance to carry out its functions and achieve certain state and socio-economic objectives. Financial policy plays an important role in achieving the goals.
Financial policy is a special area of state activity aimed at mobilizing financial resources, their rational distribution and effective use for the state to carry out its functions. The main subject of the policy being pursued is the state. It carries out: the development of a scientifically based concept for the development of finance; determines the main directions of their use; develops measures aimed at achieving set goals. Also, the subjects of politics are individuals, classes, elites, parties, trade unions and other social communities.
Depending on the duration of the period and the nature of the tasks being solved, a distinction is made between financial strategy and financial tactics.
Financial strategy is a long-term course of financial policy, designed for the long term and providing for the solution of large-scale tasks defined by economic and social strategy, and concerning important major changes in the financial mechanism, the proportions of distribution of financial resources.
Financial tactics are the solution to the problems of a specific stage of development through a modern regrouping of financial ties, for example, the country’s budget adopted for the next year. Financial policy is an integral part of the economic policy of the state. When developing financial policy, one should proceed from the specific features of the historical development of society. It must take into account the peculiarities of the domestic and international situation, the real economic and financial capabilities of the country, domestic and foreign experience in financial construction, as well as the history of financial development.
The relevance of the topic of this course work lies in the fact that currently the economic and social development of society, which is influenced by the state through financial strategy and tactics, is especially important.
The subject of this course work is the financial strategy and tactics of the state using the example of the Republic of Kazakhstan and the Russian Federation.
The purpose of our course work is to study the financial policy of the state, which includes the financial strategy and tactics of the state and its implementation at the present stage. Based on the purpose of the coursework, the objectives of the work are: to define the concept of financial policy; its functions; separately consider the components of financial policy: budgetary, monetary, tax and customs policy. Give an expanded understanding of the financial strategy and tactics of the state. Consider the degree of implementation of financial tactics for 2010, as well as determine the directions of the financial strategy until 2030 using the example of the Republic of Kazakhstan, Russia and other countries.
The course work includes 3 chapters.
The first chapter reveals the theoretical foundations of financial policy: the definition of financial policy, its content and the definition of its functions are given.
The second chapter presents modern trends in financial strategy and tactics.
The third chapter examines the signs of financial strategy and tactics using the example of specific states.
When writing the course work, material was used from periodicals, scientific and scientific-methodological literature, as well as Internet resources.
In order to correctly understand the meaning of the financial strategy and tactics of the state, it is necessary to give the definition and content of the financial policy of the state as a whole, since financial strategy and tactics are an integral component of the financial policy of the state. The entire financial management system aimed at achieving certain strategic and tactical goals of the state is based on financial policy, which is an integral part of economic policy.
Financial policy is a set of government measures to use financial relations for the state to perform its functions. In practice, it is implemented on the basis of the adoption of a system of government measures, developed for a certain period of time, to mobilize part of the financial resources of society into the budget and their effective use. Its implementation is carried out by a set of fiscal and other financial instruments and institutions endowed with appropriate legislative powers to form and use financial resources and regulate cash flows. As an integral part of economic policy, financial policy should be aimed at ensuring economic growth, social peace and the importance of the state in the international community.
In the context of the globalization of finance in the modern world, the relatively free movement of capital and other limited resources, the financial policy of any state cannot be built in isolation and take into account only the internal state of the economy, but must also be guided by the relevant requirements and standards of international finance, law and international financial institutions.
An appropriate theoretical basis and a concept developed on its basis regulating the role of the state in the field of finance;
Development of main directions and goals in achieving macroeconomic indicators that ensure the balance of state income and expenses for the current period and the future;
The implementation of practical measures to achieve these goals by the entire set of financial instruments and government institutions.
The basis of financial policy is made up of strategic directions that determine the long-term and medium-term prospects for the use of finance and provide for the solution of main tasks arising from the peculiarities of the functioning of the economy and social sphere of the country. At the same time, the state selects current tactical goals and objectives for the use of financial relations. They are related to the main problems facing the state in the field of mobilization and effective use of financial relations. All these activities are closely interconnected and interdependent. Thus, the general strategic goal of development is the modernization of the economy, ensuring sustainable rates of economic growth, based on increasing the competitiveness of domestic producers and structural transformations that correspond to global trends. At the same time, the following priority objectives of financial policy are highlighted:
Formation of a legislative framework that ensures a favorable investment climate and promotes the development of entrepreneurship;
Significantly reducing the tax burden and increasing the efficiency of the tax and customs system;
Creating conditions for the development of financial infrastructure and achieving medium-term financial stability;
Achieving a balanced budget system and increasing the efficiency of its functioning;
Organization of regulation and stimulation of economic and social processes using financial methods;
Development of a financial mechanism and its development in accordance with the changing goals and objectives of the strategy.
Financial policy in its broad sense includes budgetary, tax, customs, and monetary policy.
Budget policy is determined by the Constitution of the state, the Budget Code of the state, and a set of other laws that establish the functions of individual government bodies in the budget process and lawmaking. The priority objectives of financial policy are largely ensured by budget policy, the main directions of which are:
Financial support for the state to perform its functions;
Maintaining financial stability in the country;
Ensuring the financial integrity of the state;
Creating conditions for socio-economic development.
In accordance with the Constitution and the Budget Code, priority in the development of budget policy belongs to the head of state, who annually determines, in general terms, the priority directions of budget policy for the current year and the medium term.
Fiscal policy includes the policy of budget revenues and expenditures, management of public debt and public assets, fiscal federalism and public financial management system.
The strategic goals of budget policy are: reducing the tax burden on the economy; streamlining government obligations; concentration of financial resources and solution of priority tasks; reducing the dependence of budget revenues on world price conditions; creation of effective inter-budgetary relations and public financial management. Budget policy objectives for the next financial year may include:
Inventory and assessment of the effectiveness of all budget expenditures and obligations, including targeted programs;
A clear delineation of spending and tax powers between budgets of all levels;
Settlement of budget accounts payable;
Carrying out restructuring of public debt and introducing a unified public debt management system;
Improving treasury technologies and public financial management, etc.
Tax policy is a system of government measures in the field of taxes. It plays an important role in stimulating innovation. The main objectives of tax policy are identified:
Significant reduction and equalization of the tax burden;
Simplification of the tax system;
Minimizing the costs of compliance and administration of tax legislation;
Elimination of turnover taxes;
Reducing the tax burden on the wage fund;
Reducing taxation of foreign trade transactions;
Creating conditions for the legalization of enterprise profits;
Reducing the number of taxes and limiting the arbitrariness of tax and customs authorities while increasing the responsibility of taxpayers.
Modern tax policy in Kazakhstan is associated with the implementation of tax reform, the purpose of which is to achieve an optimal balance between the stimulating and fiscal role of taxes. The new Tax Code of the Republic of Kazakhstan is aimed at:
Improving tax legislation;
07.07.2016Rapid changes in the external business environment, dynamic development of information technology, shorter product life cycles and other factors require companies to adopt. Solutions that will not only ensure the successful existence of a business today, but also answer the question of what it will be like tomorrow? And what needs to be done now to ensure that tomorrow’s business remains no less profitable, sustainable and efficient?
Such strategic decisions concern almost all areas of a company's work - research and development (R&D), production, personnel management, marketing and sales. However, they acquire special, and in some cases, critical importance in the financial sector. Because this is where answers are given to the questions that most worry owners and investors: what will be the market value of the business, how much profit can their company earn, and what will be the final return on invested capital?
Essential answers to all the questions that concern business owners and stakeholders are given as part of the development of a subordinate strategy for the financial development of the enterprise or, in simple terms, a financial strategy. And if there is a strategy, there must also be tactics.
Financial strategy and tactics of the enterprise
The company's financial strategy is not only a derivative of its general financial policy, but is also tightly intertwined with the latter. So much so that they are often confused.
To separate flies from cutlets, i.e. strategy from politics and, at the same time, from tactics, we will use two simple characteristics:
1) the time horizon over which the consequences of decisions made will influence the development of the business;
2) the significance of the decisions made, the power of influence on the company’s main financial KPIs - profitability, sustainability, financial independence.
For example, a decision to slightly reduce the collection period for receivables for counterparties is unlikely to have long-term, global consequences. But the decision to invest money in the development of new projects in the high-tech sector is certain.
The same applies to the second criterion. It is unlikely that by opening a line of credit with a bank to cover current needs, you will fundamentally change your financial KPIs. But a fundamental decision to maintain a certain capital structure, that is, a balance between own and borrowed money, will have much more significant consequences.
Thus, strategic financial decisions have long-term consequences for business development and can lead to significant changes in the most important financial KPIs.
Simply put, the financial and economic strategy of an enterprise is a long-term, long-term course of financial policy.
Financial tactics of the company - the course of financial policy for the current period (within a year or less). Tactics differs from strategy in greater flexibility and mobility.
And together they form a single whole: the financial strategy and tactics of the enterprise together is this financial policy:
Areas of the company's financial strategy
The financial strategy is responsible for making decisions in the following areas of the enterprise:
- accounting, taxes, pricing,
- depreciation, credit and dividend policies,
- , operating expenses and working capital,
- product sales and profit.
These same problems are solved by financial tactics, only, figuratively speaking, “at a short distance.”
To make your business profitable and sustainable, you need a competent financial management policy. If you have problems with this, contact a professional. For example, when contacting, our specialists will:
- carried out the current financial strategy of the enterprise,
- an assessment of its effectiveness is given,
- if necessary, the company’s financial strategy was developed,
- For your convenience, mentoring and coaching formats are provided, in particular - a coaching program
