Financial alignment and cost allocation strategy in an MNE: A case study
Abstract
Financial synergies are performance advantages gained by leveraging financial resources across strong long-cycle international businesses in a multi-unit firm. Typically, financial alignment and the appropriate allocation of costs are not given the attention needed. Cost mapping is critical to the measurement of business-unit performance. The participants in this case study identified items in financial reports that required attention to enhance clarity in reporting, such that opportunity discovery and appropriate action can be taken. Furthermore, misallocations are a source of frustration for P&L owners that are accountable for their financial performance. Cost awareness and control in a business unit by P&L owners is important for financial performance accountability and control. Finance, as a support function, has a critical role in successfully completing focused actions that result in the realization of growth. The author adds to theory of financial performance driven by alignment and allocation through this empirical study.
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