Managing Capital and Liquidity in Business †MyAssignmenthelp.com

Question: Discuss about the Managing Capital and Liquidity in Business. Answer: Introduction: The core principle of business should be emphasized on how to maximize the profit on one hand and how to run the business in a profitable manner on the other hand. The business practice of including the longevity aspects of the business along with contributing back something to the society at large is known as sustainable business practice. In our class the Triple bottom line was taught to us which helped us gain further understanding about the concept of sustainability in its practical form. The major problems of implementing sustainability are how to measure the sustainability of a business, how to decide on the proper model of sustainability and what practices must be defined as unsustainable. The three principles of triple bottom line include profit, people and planet. Hence in this approach the three fundamental areas of sustainability, economic sustainability, social sustainability and environmental sustainability are covered (Willard, 2012). The people aspect of the triple bottom line covers the social responsibility and the responsibility includes the people related to the business, the employees their family and people of the society as a whole. We have learnt that this helps in making the employees satisfied who work with more productivity and maximizes profit, on the other hand to invest for the people on a larger context which implies the poor, will help the company in gaining good will which is the most valuable intangible asset of the company. The planet asp ect refers to the environment, and most of the big companies invest a large amount of their money designated for corporate social responsibility into environmental causes, preserving the environment around is a must needed activity not only for any business to survive but for the people to live a healthy life. Apart from that the Triple bottom line approach also includes the principle that the lesser resources are extracted by a business from the environment the longer it will survive. The profit aspect of triple bottom line emphasizes upon the contribution of the business in its own financial stability and the stability of its network and peripheral economic entities (Elkington, 2013). It was very enlightening for us to know and understand the triple bottom line approach to sustainability in business. A business runs on capital. Now as we have known traditionally the meaning of capital usually refers to the money that goes behind running a business successfully, but there are various capitals that are needed for successfully and sustainably running a business (De Visscher, 2016). The financial capital is the first form of capital which is needed as it is known to everybody. However, we have learnt in class about other five capitals that are very much needed. As well. Manufactured capital is the second type of capital This is the process and networks through which the raw material is transformed into a valuable product which is then made available to the potential customers through distribution processes. Energy, operational processes and distribution all fall in this category. Intellectual capital is the amount of knowledge and creativity that is preserved in the business organization. This may include all the intangible assets like trademarks, patents, and brand equity (Beattie Smith, 2013). The value of these aspects comes into billions of dollars in large companies. Human capital is the most complicated but necessary capital that is needed to run a business. Employees are said to be the most expensive assets of an organization. Social capital signifies the level of goodwill and good relationship the particular business has in the market it is operating in. Goodwill is the reason many companies are still successful and profitable in spite of their lowering of the quality of product or services. Maintaining a healthy relationship with the stakeholders and rivals is very important for a business to survive. Natural capital is the availability of resources which the business draws from the natural sources. A proper study of the relevance of all these different forms of capital reflect the fact that a business cannot survive in the absence of any of these, this knowledge will help me in taking productive actions that will enhance these capitals in the busines s environment I will work in. The six phases business approaches to sustainability by Dunphy, Greiffiths Benn (2003) describe the following phases- Rejection, Non responsiveness, Compliance, Efficiency, Strategic proactivity and the Sustaining corporation. In the first phase most of the people related are in the position of rejection which then turns into the state of not rejection but non responsiveness. Then the stakeholders turn to reactive minimalists or they start the process of compliance, next the employees are efficient in their endeavors and are industrious, in the next stage there is no need of external push by the managers and the employees are themselves proactive in their endeavors, the last stage is the final stage for the employees when they turn into the transformative futurists. Therefore, it is comprehensible that with time the employees evolve and their participative degree in the business evolves as well (Benn, Edwards Williams, 2014). Dunphy has stated these six phases of evolution in the p erspective of overall business environment of an organization. I have understood that the organizational sustainability depends on the attitude of the employees and their level of reactiveness. There are various companies working extremely well in the field of sustainability and corporate social responsibilities. In the field of stakeholders engagement PepsiCo is the leader, on the other hand, General Electric is way ahead in terms of employee engagement. The best sustainability in Supply chain management has been achieved by Ford Motor Company, and in the field of biodiversity PGE is the most efficient. Johnson and Johnson is very efficient in sustainability in the field of Human rights and in investors rights Starbucks is way ahead of others. I have understood by studying these models and the various examples of the companies that take sustainability as the most important part of their business activity, that immediate profit making must not be the ultimate goal of a business, it should invest in processes and initiatives that will help it run for a long time. Reference: Beattie, V., Smith, S. J. (2013). Value creation and business models: refocusing the intellectual capital debate.The British Accounting Review,45(4), 243-254. Benn, S., Edwards, M., Williams, T. (2014).Organizational change for corporate sustainability. Routledge. De Visscher, F. M. (2016).Financing transitions: Managing capital and liquidity in the family business. Springer. Elkington, J. (2013). Enter the triple bottom line. InThe triple bottom line(pp. 23-38). Routledge. Willard, B. (2012).The new sustainability advantage: seven business case benefits of a triple bottom line. New Society Publishers.