Interdependence - Finance

A business is a single, organic entity that involves all 4 Key Business Functions simultaneously. 

The artificial separation of a 'whole' business into these functions is only to aid structure and comprehension. 

Understanding business is kind of like colouring in a circle. 

It is hard to do it in a straight-line. It requires back tracking, leaps forward and repeated coverage of the same territory. 

The best way to get this understanding is by clicking on the hyperlinks to other parts of the course that are embedded in the text on each page. By traversing across the full terrain of the course, the development of a 'holistic' business intelligence will gradually emerge.

Here are the main ways that Financial management is interdependent with other Key Business Functions:

• Operations: requires investment in capital equipment and other inputs—finance must be organised (equity or debt) to make these asset purchases; operations is a large cost centre in a firm—performance can be improved with cost efficient operations (leading to higher profitability).  

• Marketing: is an expense for a firm (promotion spend intended to generate revenue) and performance of marketing must be monitored and controlled; the price set by marketing influences revenue levels and profitability; product and place strategies are designed to maximise revenue. 

• Human Resources: Staff are required to monitor and control financial resources of a firm; staff within a business are a significant cost—firms must ensure productivity of employees and make expensive investments in increasing human capacity through training and development; payment and rewards for staff are critical.