Under Covers Conflict

Under Covers Conflict

Zhengjie Jiang

Bellevue University

Case 2 Assignment

June 25, 2015

Description

Five years ago, Ruth Skinner and her friend Celia Sturgis co-founded their own business – Nob Hill Custom. Both of them are fifty years old woman, and have their own families. The common work experience in the university and common hobbies make them became good friends. Although they have a lot in common, but they have very different family background, values and work ethics. In terms of work, she is a workaholic and doer. She likes implement her new ideas about the company's sales, and mostly succeeded. Celia is not very keen on work, she hopes for an early retirement to pursue her cultural enjoyment. Ruth and Celia's husband did not like each other. They have great differences in the views of their wife's business operations. The only common denominator between them is that undesired women get wages or high wages, as this would increase their income tax rates. Celia's husband is the company's registered employees, but there is no ownership and voting rights. He believes that the company funds which were used to investments should be completely distributed, although Ruth's husband protested, but the distribution was implemented. Celia's husband participated in the most of general corporate legal work and tax affair, and Ruth's husband is usually not directly involved in the company's business, but to make some helpful suggestions, most of them were rejected by Celia's husband.

 Since Ruth’s good planning and aggressive marketing strategy, a marketing program called "biz" has achieved a net profit of nearly one hundred thousand dollars a year. Most of the sales are through the distribution of charitable organizations and interior designers, product prices are ranging from hundreds to thousands. Because of company’s unique business model, all the goods are mailed directly from the factory to the customer, all the business is through telephone and mail, so it has very little overhead.

Months ago, because of Celia husband’s occupation mobility, she wanted to travel to Switzerland, and temporarily abandon the company's business. After some discussion, Celia agreed to give up her share of income used to hire a temporary bookkeeper. This issue make both sides feel very unpleasant. Then, the temporary bookkeeper told Ruth that her company's financial situation is very bad, and an accountant prove this argument, said the company do not reserve enough money to meet the expenditures in September and October. Ruth feels very angry, and wrote letter to Celia, asking her questions about the company's finances, and Celia's reply made Ruth into the thinking, the company's future and their partnering relationship.

Diagnosis and Theory

There are few reasons in the problem of this case. Firstly, the financial management problems in organizational management. According to the definition of business dictionary, financial management refers to “the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization.”

An enterprise wants to carry out normal business activities and maintain a sustained, there must be a proper financial management concept and a sound financial management system. The uneven of financial management make the competitiveness of enterprise market showing a significant differences. Improper financial management cannot enable enterprises to maximize profit, and also make enterprises bear a number of risks. The inadequate capital budget in the case, which is precisely because of the improper financial management. Capital budget should be the focus of business concern, Ruth and Celia's company lacks a complete set of management system of financial operations and the professional financial executive. As can be seen from the case, the income which is used as the investment fund, by Celia’s husband as the cost of rebuilding of their home. Due to lack of a unified financial management system, the distribution and use of funds cannot optimize the allocation from the whole, thus reducing the efficiency in the use of funds, increased the capital use cost of the company.