Introduction
The financial alternatives that are required for the proper functioning of the Lawrence Sports Group should be based on the proper analysis of the financial environment, evaluation of the risks involved as well as risk-avoiding recommendations. Additionally, contingency recommendations will be required, as well as the implementation plan for the proper performance when the financial decisions are taken.
Alternatives
The reliable alternatives that may be implemented for the existing situation are associated with crediting restrictions, debt loaning or capital policy restructuring. All the alternatives require accurate reasoning and assessment, as particular consequences will be traced depending on the alternative selected.
Risk Evaluation
The risk of the financial alternatives will depend on the marketing environment before and after the decision implementation. The crediting restrictions is risky for the opportunity to lose the partners. Considering the fact that consumers and partners are experiencing some financial difficulties, the restriction of crediting means the restriction of trust. Consequently, the relations will worsen. Additionally, this restriction will inevitably worsen the financial position of the partners.
Debt loaning looks more reliable, as the parties will have an opportunity to find a compromise. While the consumer and partners get an opportunity to return the debt within the stated period, the Lawrence Sports Group receives compensation for the late payment.
The capital policy restructuring seems the most reliable, however, the most demanding alternative. This means that the company will have to restructure the supply chain, as well as financial flow management principles. The existing relations are simple and single staged, the aim of restructuring may presuppose the involvement of the main consumer in the retail network. However, this will require the capital merging of two companies, which may require a reassessment of the partnership principles. (Khan and Hildreth, 2004)
Implementation Plan
The implementation of the financial alternatives is closely associated with the restriction of the current financial activity. In fact, the partners, as well as consumers, are no longer reliable, and the company has either search for the other elements of supply network, or restrict the creditor’s activity towards the existing partners.
As for the matters of restricting this activity, it should be stated that the generally accepted practice is negotiating the restrictions with partners. In order to keep the efficiency of financial relations on the high level, all the aspects of these relations should be clear. The debt loaning is a reliable option; though, the expenses associated with this type of activity should be consolidated in order to prevent the malfunctioning of the financial flow strategy. Hence, in accordance with McMenamin (2007, p. 411), the following statement should be emphasized:
Loans, like credit cards, can get overwhelming if you have many of them. Different interest rates, due dates, amounts and lenders can create situations where you’re paying too much money in interest and sometimes you end up missing payments as well. Eliminate the confusion by consolidating your debt into one, lower interest rate loan. One payment, one lender, one interest rate, and you are done.
Capital policy restructuring needs to be based on the merging principles, as the only way to perform this merging is the discussion of the key principles of financial and supply management. The appointment of the persons responsible will be required in order to avoid miscommunication in allocating the financial resources, considering the possible debts of the partners and consumer.
Anyway, independently on the selected alternative, the necessity to perform in depth analysis is crucial, as the risks analyzed in the corresponding part of the paper are too general, while the actual circumstances will require all-round analysis of the consequences and effects.
Reference List
Khan, A. & Hildreth, W. B. (Eds.). (2004). Financial Management Theory in the Public Sector. Westport, CT: Praeger.
McMenamin, J. (2007). Financial Management: An Introduction. London: Routledge.