FINANCIAL MANAGEMENT ISSUES ON PRIVATE SECTOR

I. Introduction
Business commences when there is an exchange of goods and services with the intention of
having profit on the viewpoint of the seller and a product or services on the view point of the buyer.
This is a simple definition which configures the intention of an individual’s necessity for himself.

It revolves around the use of money. Stakeholders and company management consider
different strategies and sales marketing to obtain its objective-money and power. Profit makes the
epicentre of its profound objective and business long term goal. This is the reason of voluminous
businesses that proliferates in our country.

The community can determined those that are managed by the business tycoons and the
surviving enterprises. Capitalism notwithstanding the power and influence manipulate the long term
existence of such business. Nevertheless, there are issues that affect the identity of such private
enterprises.

II. Statement of Issues

The following are basic issues that affect private businesses:

1 Employer-Employee relationship and responsibilities. The employer may force its

employees just to meet weekly or monthly sales quotas. Subordinates may overwork,
decrease effectivity and productivity. This may lead to work issues if employee benefits
are not properly review and resolve.

2 Attempt to do illegal activities. Meeting company’s goal and objective is a standard

mechanism of the business. But such may optimize the usage of its power and resources
to obtain such target goals. Considering kickbacks and bribery proliferates nowadays in
many companies especially the bidders and sales marketing officers. This deteriorates
the integrity and ethical standard of the company and if not resolve corruption arises for
personal gain.

3 Low quality products and services. Delivery of low quality products and below the
standard services will affect the company name and reflects the goodwill of the
business.

4 Entering into risky investment. Company lose its accumulated savings when entering
into fraudulent contracts and investments especially when there is high speculation of
get rich scheme.

5 Dissolution of the Business. Periodicity of the business will dissolve if improperly

manage and when dishonesty from the owners and management occurred.

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III. Body
In business, there are three cycles that necessitates the business existence on long term
basis: Capital expenditures, manpower and buying power. The capital or investment of the
stakeholders is the resources needed to start a business. Although, this is one of the
foundations of the business, it integrates with good management and decision making of the
owners of stakeholders to acquire the desired outcome of the business.

Presently, the most influential business tycoons in the Philippines such as Henry Sy, John
Gokongwei, Jr, Aboitiz, Lucio Tan (based on Forbes Philippines) reached the success in
business area due to leveraging knowledge and application in various effective ways.

Big picture is seen in Philippine history as business tycoons but how about the internal
scene, the employer-employee relationship. Good leadership, demonstration and
recognition of good values within the company follow the attainment of such goals in
smooth manner. Leaders influence those who follow them. Dishonest leaders produce
dishonest workers.

In some cases, the desire of the owner to reached unrealistic target sales, work issues may
arise. Employer and employee responsibilities and benefit policies that are not properly
reviewed and implemented will create hindrance to company development. Thus, skilled
employees may resigned and resulting to a loss to the company. Contentment and balanced
relationship between employer and employee should be present taking into account that
the manpower is the heart of the company.

During the operation of the business, there are strategies to lower the cost and expenses
through purchase of low quality products and delivery of below standard services to
customers. This is not the best option to every business since this will ruin the image of the
company. Consider the buying power of the customer to balance the necessity between the
company and its customers.

Because of the above situation, the cash inflow will decrease and the management will be
required critical decisions on sales and marketing aspect. The worse strategy that is
commonly considers is the attempt to do bribery and kickbacks to bidders usually in large
transaction for the sake of generating income.

Company may diversify its accumulated savings to enter into risky investment. Unusual high
interest rate return of investment is a sign of fraudulent and get rich quick scheme and may
lose the invested money.

Financial tension will be created if there are losses and accumulated investment and
company debt. Thus, the operation of the company is discontinued if this occurs. The
company will be dissolved if debts will not resolve.

IV. Conclusion
Financial issues shall be addressed only upon reviewing the source of the problem. It is
neither the power nor the money. The operation of the business revolves based on the

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decision by the management. It is concluded that the financial management issues can be
resolved only through review of the existing company policy and concerned parties involved,
development of new strategies to fill the gap between the target objective and applied
procedures and strict implementation of newly approved policies and procedure with good
leadership and recognize values.

V. Recommendation

Based on the above conclusion, the following are the recommended actions for the said
issues:

1. Build character on every employee through constant communication and commit

responsibilities.

2. Avoid fraudulent activities and risky investment. Diversify through insurance protection,
obtain restricted savings and invest conservatively to meet long-term goals.

3. Consider the value of money against the value of the product and services. Plan purchases
and obtain research on the product information, supplier’s background and legality issues.

4. The government reserves the right to regulate the business so the interest of the public
will be considered. Public awareness and right information should be implemented to avoid
fraudulent act and illegal business investment.

5. Honest leaders and workers contributes to the continuity of business operation.