What are the benefits and shortcoming of only using...

What are the benefits and shortcoming of only using qualitative techniques to make long term financial decisions? (5%) Qualitative techniques are used to make long-term financial decisions among small and medium enterprises (SMEs) with great consistency. The qualitative based decisions are made on experiential knowledge of the various factors involved rather than on monetary measurements, yet they have significant impact on profitability. Techniques used for long-term decision-making are interpretive and seek to achieve in-depth understanding of the companys overall situation. Companies use techniques such as SWOT, PESTLEI, human resource management, and Stakeholder analysis to guide their decisions. These techniques are considerate of†¦show more content†¦However the sales boost of focusing on a niche market that already has a following for the high end products is a risk with a high pay off made possible by qualitative analysis. It is widely acknowledged that regardless of cost, it pays for employers to invest in employee morale. Companies that consider the ‘numbers’ over the actual benefits when deciding upon salary decreases, layoffs or canceling benefits, disregard the effect on morale and therefore on productivity and loyalty. Qualitative analysis will consistently acknowledge the people factor of business. Many SMEs quite often value their staff as the foundation of their business and consider the well being and affect on staffing before implementing a financial decision. Sole focus on quantitative data tends to hinder innovation within SMEs. Innovation requires management buy-in into qualitative judgement as a real asset. Companies usually take a number-driven approach to innovation but many of the best decisions were not financially sound. Companies such as Facebook, encourage employees to pitch ideas directly to Mark Zuckerberg emphasizing the importance of insights enervation. Chairman and CEO of GE, Immelt has turned to GEs core customers for actual product and research and development ideas during what he has coined dreaming sessions which quiteShow MoreRelatedNet Present Value1958 Words   |  8 Pagesbeen alleged that the traditional appraisal methods of payback, discounted net present value (NPV) and internal rate of return (IRR) undervalues the long-term benefits; that traditional financial appraisals assume a far too static view of future industrial activity, under-rating the effects and pace of technological change; that there are many benefits from investments in new technology which are difficult to quantify and are often ignored in the appraisal process; and lastly, it is claimed thatRead MoreReview on What Aspects of Vocabulary Knowledge Do Textbooks Give Attention To1920 Words   |  8 PagesIntroduction This paper is devoted to the discussions about three main areas of the selected article-- What aspects of vocabulary knowledge do textbooks give attention to. 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