Financial Planning: objectives, procedures, and budgets

The process of defining organizational goals, processes, and spending plans in relation to relevant economic activities is known as financial planning. According to Porter (1996), restructuring refers to changing a specific commercial area's structure, evolving manufacturing programs, and engaging in entrepreneurial activities. All of this guarantees that a corporation will invest its funds effectively and efficiently. As a result, the company achieves a reasonable balance between cash inflow and outflow, invests resources swiftly, realizes development and expansion plans that are essential to the company's long-term existence, and removes uncertainty related to shifting market trends. Where all of these are taken into account and other factors are maintained, the business eventually makes it through and makes money. However, Bowman & Singh (1993) suggest that corporate restructuring is a complex and multidimensional undertaking.

This paper analyzes the case of Triple F. Health Club, and begins by illustrating the theoretical explanations and implications regarding corporate restructuring. This article also takes into account impacts of restructuring as applicable to such a private business. With many issues precipitating restructuring, this club considered reviewing the method of fee charging customers to change its cash receipt. The new fee structure improves the cash income because there is increased reservation for annual costs that are under a one-off payment as well as unique promotional campaigns that would encourage more members to the new scheme. Since annual charges remit at the beginning of the period, chances of the smooth business running are relatively guaranteed. The uncertainty of some members discontinuing their membership because of fees changes is likely to be countered by new members who see it a better arrangement. Automatic conversion of active members into the new plan would gain the confidence of the customers which urge them to remain in the club in future. Consequently, there increase chances of more membership in the future.

Restructuring a company is not easy and requires careful planning. The management of the club needs to adapt to the ever-changing situations. They need to compare various scenarios and the impact they have on short term and long term basis. For example, if all the members carted into the new plan or all of the members in the old plan are disinterested and the impact it has on the club financially. New ones would offset the estimation of lost members within six months of instituting the policy may be inaccurate and thus lead to losses. The management also needs to identify potential resources to resuscitate the company if it runs at a loss out of wrong estimations and decisions. Prospective customers may decide to fall into the plan because there is a tendency of people trying to test new things (Alderfer 1969). Other members may find the arrangement unsatisfactory because they may interpret it to mean that they would be charged even for days that did not attend if they subscribe to an annual plan.

A detailed review of working capital and prospective, involving differences between short-term and long-term turnover, between different arrangements determine the relative financial strengths and weaknesses. New Triple-F Health Club's cash management would differ from the old one in the sense that most of the money would receive at the beginning of the plan. Revenues collected decline significantly where annual fees for individual and family membership reduces. The administration is obliged to prepare and distribute finances throughout the year for a balanced annual budget and reduce chances of risks that could lead to business failure, (Gourio, 2012). Organizational restructuring may result in better performance and is statistically significant.

References

Alderfer, C. P. (1969). An empirical test of a new theory of human needs. Organizational behavior and human performance, 4(2), 142-175.

Bruton, G. D., Keels, J. K., & Scifres, E. L. (2002). Corporate restructuring and performance: an agency perspective on the complete buyout cycle. Journal of Business Research, 55(9), 709-724.

Gourio, F. (2012). Disaster risk and business cycles. The American Economic Review, 102(6), 2734-2766.

Porter, M. E., Goold, M., & Luchs, K. (1996). From competitive advantage to corporate strategy. Managing the Multibusiness company: Strategic issues for diversified groups, 285, 285-314.