What are the characteristics of strategic financial management compared with traditional financial management?

Characteristics of strategic financial management

21st century management is increasingly modernized and internationalized, enterprises in order to adapt to the economic system and the requirements of the economic environment, not only need to rationally plan and use their own resources, but also will be related to their own business activities, such as customers, suppliers, distributors and other business resources combined, so as to monitor operating costs, flow of funds, accurate feedback information to improve the flexibility of the market response, to grasp the market in all aspects. Improve the flexibility of the enterprise to reflect the market, all-round mastery of the market. Strategic financial management is based on the background conditions of great changes in the external environment of the enterprise, and fully draws on the basic ideas of strategic management, and looks at the financial management activities of the enterprise from a higher perspective. Compared with traditional financial management, the basic characteristics of strategic financial management are:

(a) global traditional financial management activities by the old corporate financial management environment, focusing too much on the daily financial work of the enterprise, the affairs are strong, little attention to the financial management activities with the overall situation, strategic financial management due to the face of the complexity and change of the financial environment, so the scope of the wider range, which both Emphasis on the management of tangible assets, pay more attention to the management of intangible assets; emphasis on the management of non-human assets, pay more attention to the management of human assets, and at the same time pay attention to the existing activities and possible future activities, and can provide extremely important non-financial information such as quality, market demand, market share.

(ii) outward-looking The essence of modern business operations, is in the complex and changing internal and external environment, to solve the problem of dynamic balance between the external environment, internal conditions and business objectives, traditional financial management is basically limited to the internal financial management activities, little research on the external environment, and thus the ability to adapt to poor. On the contrary, the strategic financial management of the enterprise and the external environment into one, observe and analyze changes in the external environment and financial management activities of the enterprise may bring opportunities and threats, enhance the enterprise's adaptability to the external environment, which greatly improves the enterprise's ability to compete in the market.

(C) long-term traditional financial management of most of the shareholders to maximize the wealth of the financial goals, short-term characteristics are more obvious, the lack of strategic awareness, in the event of drastic changes in the environment less adaptable, is not conducive to the sustainable development of enterprises, to achieve long-term competitive advantage. Strategic financial management is oriented to strategic management, requiring financial decision makers to establish a strategic awareness, from a strategic point of view to consider the financial activities of the enterprise, the formulation of financial management development of long-term goals, give full play to the resource allocation of financial management and early warning function, in order to enhance the enterprise's resilience in a complex environment, and continuously improve the enterprise's sustained competitiveness.

Second, the strategic financial management under the financial management objectives of the new solution

The overall goal of financial management in the current academic point of view is usually considered to be focused on the "value" point of view, and less from the "material" (or technical) point of view to consider. As one view puts it, the value movement is a reflection of the material movement and reacts to the material movement. Obviously, financial management objectives are similar to the status of financial strategy, but also have a relative independence (focus).

Traditionally, the goal of financial management is often taken as one of the following three: profit maximization, shareholder wealth maximization or enterprise value maximization. The latter two reflect the principle of time value, risk and reward symmetry and other principles have been emphasized. However, one-sided emphasis on maximizing shareholder wealth is difficult to accept because it does not meet the reality of political and economic conditions; maximizing enterprise value can be accepted by all stakeholders, comparatively speaking, it should be the best choice of objectives; profit maximization is contradictory to the aforementioned modern concept of financial management and has been repeatedly condemned.

The understanding of financial goals should take into account the following points: first, enterprises of different organizational types and stages of development can and should have different financial goals. It is clear that the same objectives cannot be pursued between sole proprietorships, partnerships and corporations, and between start-up and mature enterprises. Secondly, the theoretically calculated financial objectives should be a set of objectives that can be chosen or used in combination rather than a single measure, and a particular objective can only be understood as an objective that satisfies a particular hypothetical platform. Third, financial goals should not be understood only in terms of ultimate static value, but should also take into account dynamic material and technological processes. In the context of a shift in control to a technostructural class (from bankers to engineers), technological growth is a base point that should not be ignored when defining financial goals. Fourth, the goal of maximizing profits may not be as irrational as one might think. With complete knowledge of prices and technology, and assuming that firms produce only for outsiders, profit maximization is a logical outcome of goal selection.

Therefore, in today's domestic enterprise product market competitiveness is not strong, the enterprise financial management objectives should pay more attention to the enterprise in different stages of growth of technological innovation on the financial management requirements. Financial management only through value management to promote technological growth, enhance product competitiveness, so as to realize the value of the product, in order to achieve the strategic development goals of enterprises.