Strategic Financial Management JUNE 2025

Description

Strategic Financial Management

Jun 2025 Examination

 

 

Q1. Imagine a company, XYZ Corp, facing increasing competition in the market while also dealing with rising operational costs. The management team is considering different financial strategies to ensure the company’s growth and profitability over the next decade. How might strategic financial management help XYZ Corp navigate these challenges and secure its long-term success? (10 Marks)

Ans 1.

Introduction

In today’s dynamic business environment, companies face multiple challenges such as heightened competition, fluctuating market trends, and rising operational costs. XYZ Corp, a company currently experiencing these pressures, must act decisively to sustain its growth and profitability. Strategic Financial Management (SFM) emerges as a powerful framework to support long-term planning, financial efficiency, and value maximization. Unlike traditional financial management, SFM aligns financial decisions with overall corporate strategy, enabling a company to remain

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Q2. Scenario : XYZ Corp, a mid-sized manufacturing company, has been experiencing fluctuating profitability due to rising raw material costs and increasing competition from international players. Recently, a new market opportunity has emerged in a neighboring country, where demand for their products is growing. However, entering this market would require significant investment in supply chain restructuring and compliance with new regulations. Additionally, the firm has limited financial resources, making it essential to optimize its capital allocation.

Question:

How can strategic financial management help XYZ Corp align its internal resource capabilities (such as capital, workforce, and production capacity) with external threats (competition and cost fluctuations) and opportunities (new market entry)? What financial strategies should the company consider to balance risk and growth? (10 Marks)

Ans 2.

Introduction

In an increasingly globalized and competitive environment, mid-sized companies like XYZ Corp must navigate complex financial and strategic challenges. Fluctuating profitability caused by rising raw material costs and competition from international players has placed pressure on internal resource capabilities. Meanwhile, a promising growth opportunity has emerged in a neighboring country, offering the potential to increase revenues and expand market share. However, limited financial resources and the need for regulatory compliance pose significant hurdles.

 

Q3A. Explain the importance of financial planning in strategic financial management and how it aids in achieving a firm’s long-term goals. (5 Marks)

Ans 3a.

Introduction

Financial planning is a cornerstone of strategic financial management, enabling firms to align their financial resources with long-term strategic objectives. It provides a structured approach to managing income, expenses, and investments while preparing for uncertainties. In the context of long-term growth, financial planning ensures that a company remains focused, efficient, and resilient. Without a sound financial roadmap, businesses risk misallocating resources, overlooking risks, or missing growth opportunities. Strategic financial management leverages financial planning as

Q3B. A retail company, TrendMart, has been operating successfully for a decade, but recent shifts in consumer preferences, supply chain disruptions, and economic uncertainties have put pressure on its financial stability. The rise of e-commerce and digital payment solutions presents both a challenge and an opportunity for the company. While some competitors have swiftly adapted by investing in technology and agile financial strategies, TrendMart struggles with outdated financial planning and rigid budgeting processes.

In what ways can adaptability in strategic financial management help TrendMart respond to these market changes, mitigate financial risks, and capitalize on emerging opportunities to sustain long-term growth?  (5 Marks)

Ans 3b.

Introduction

TrendMart, a well-established retail company, now faces growing challenges due to shifts in consumer behavior, economic volatility, and digital disruption. While competitors have adapted by modernizing financial strategies, TrendMart’s outdated financial systems hinder agility and responsiveness. In this context, adaptability within strategic financial management is critical. It allows companies