When a business consistently is losing money, top leadership may vent a frustrat

Question

When a business consistently is losing money, top leadership may vent a frustration and an urgency that department heads are not doing the kinds of things necessary to prevent the operational demise that is unfolding and to deal with it effectively. To right the organization's operating ship, senior executives may formulate fresh financial and strategic goals that functional heads must follow to the letter.

What are four of the obligations of a Firm’s Board of Directors?

What is the difference between financial objectives and strategic objectives?

Explanation / Answer

a...Obligations of a Firm’s Board of Directors Role of Board of Directors need, no more emphasis than to say that they occupy the steering seat of the ship called a firm or a company, both big or small---irrespective of the size & stature. 1...Their main obligation is to serve the company in a fiduciary capacity ,ie. To act with duty and care ,in the best interests of the firm & its owners, namely the shareholders---at all times. They need to take all genuine efforts ,under their knowledge and control , to ensure the company's prosperity , & also take adequate care of the interests of the shareholders & all the stakeholders of the company---- without any motive for personal gains or benefits, monetary or non-monetary. 2..The Board of Directors, or the Board , as they are collectively called, is directly obligated to appoint a CEO or a General Manager, who will report to them ,on the day-to-day conduct of the business & keep them updated on all major development , as also the true financial performance of the company, at frequent intervals---- so that they can enquire, ask resaons for variations & correct at the earliest ,if necessary. The Board is obligated to adopt transparent, fair, ethically & legally sound, governance practices in all areas of financial & strategic management.They need to create trust, in the eyes of all stakeholders. They are the makers of all strategies in all areas of the firm's business operations.They need to possess the skill for strategic planning , to act with foresight & all engage among themselves in interrogative & pro-active debates about issues confronting the company . For this they have to maintain themselves well-informed and fully engaged with almost all major issues, thatmay have a say about the business. In the current day socio-economic & political scenario all over the globe, it is highly imperative that the Board is collectively equipped with those skills that are needed to identify & steer clear of the increasingly numerous , complex & unpredictable risks , that a company may face ,from time to time. 3..Social Obligation-- they have an obligation to return to the society,which has made the business, a reality. This , they can do by adopting some social welfare schemes ,in its area of operations,like maintenance of schools or parks or roads for public safety.They can decide to give employment to local people. 4..Obligation to State--The Board has a direct obligation to pay all its dues to Federal ,State & other governmental bodies ,in time , before deadlines , without any pendencies b..Financial objective is to plan for the finances of a company, how to acquire , how much to acquire, how much to spend & what amount of profit/savings to be made.It has a target that can be expressed in monetary terms.They are normally stated for a year , with minimally- specific long-term goals. Whereas Strategic objectives are much more important for a business & includes the above financial objectives-- the latter is only a part of the larger strategic objectives-- Strategies are policies, rules & regulations to achieve some well-thougt out objectives , for which the business is formed. These are long-term or near permanent goals, formulated for not less than 3 to 5 years, at a time. They cover various strategies or approaches , the company is going to adopt in different areas such as   marketing, human/employees & other physical resources, productivity decisions, financial plans finalising profit/responsibility areas, for follow- up, dealing with customers, suppliers, governmental agencies research for improvement & innovation Thus it can be said that financial objective is, but one part of the broader strategic objectives , in an organisation & are much lesser in scope when compared to the latter, both in terms of time-period covered as well as application.

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