4 Decision making in the process of business financing

Having been introduced to the key sources of funding for both private and public sector organisations, you will now turn to the logical counterpart: the ways in which organisations, in particular businesses, deploy the finances raised.

Any decision made by an organisation should be consistent with its specific goals. In what follows, the relationship between types of funding and the business’ plans will be further clarified. Namely, you will be introduced to the main types of business expenditures and their role in generating revenue, ultimately sustaining the goals of shareholder-wealth maximisation. You will then look at ways of expanding a business, ending with a discussion on the main options available to companies once they generate revenues from their activities.