ILM Level 7 8624-707 Obtain Financial Resources Assignment Help in the UK

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Assignment Activity 1: Understand methods of raising finance 

AC 1.1 Evaluate a range of methods of raising finance

1. Debt Financing

• Bank Loans: These entail predictable repayment. However, interest is often within competitive limits, and the eligibility conditions along with stringent repayment obligations are risks.
• Bonds: Issues of bonds offer organisations huge financing with ownership retained by it, though interest payment is an addition to fixed cost.

2. Equity Financing

• Issue of Shares: This can raise large sums of money without any repayment obligation. However, this dilutes ownership and decision-making control.
• Venture Capital: Suitable for start-ups. Funding is brought, along with expertise, but usually diverts significant equity.

3. Internal Funding

• Retained earnings: Avoids debt and makes no provision for the dilution of equity while in short supply to reinvest for growth.
• Asset sales: Sale of underutilised assets raises cash instantly but could compromise operational capacity.

4. Non-traditional Funding

• Crowdfunding: Platforms offer access to various investors, but there is need for robust marketing to attract backers.
• Grants and Subsidies: Government or non-profit grants provide funding without repayment but are often competitive and for a specific purpose.

AC 1.2 Evaluate the application of decision making techniques and tools

1. Quantitative Tools

• Cost-Benefit Analysis: Helps evaluate the financial pros and cons of decisions, ensuring resource allocation aligns with maximum benefits. While effective for financial decisions, it may overlook qualitative factors.
• Decision Trees: Visual tools that outline possible outcomes, risks, and rewards, providing clarity in complex decisions. However, they can become cumbersome with extensive variables.

2. Qualitative Techniques

• SWOT Analysis: Examines the organisation’s strengths and weaknesses as well as external options and threats. It is easy and flexible but does not pay adequate depth without major data.
• PESTLE Analysis: Analyses political, economic, social, technological, legal, and environmental conditions to make strategic decisions. Despite being overarching, it involves intensive data analysis.

3. Collaborative Approaches

• Brainstorming: Helps diversify ideas and encourage creativity but is not too structured in its approach, thereby wasting more time.
• Delphi Technique: Encloses expert opinions for better decision-making and therefore ensures informed results. However, it consumes much time.

4. Analytical Tools

• Simulation Models: Utilise predictive data to test scenarios, informing the potential outcomes. They can be expertise-intensive and expensive.
• Six Thinking Hats: Studies a decision from multiple facets (facts, emotions, risks, and benefits), leading to balanced approaches.

AC 1.3 Analyse the requirements of, and influences on, investment appraisal

1. Key Requirements

• Financial Metrics: NPV, IRR, Payback Period, and Profitability Index assess the financial viability.
• Data Integrity: Data on costs, revenues, risks, and market trends are accurate.
• Constitutes as Aid to Strategy: A proper investment that helps in upgrading or building the tactical requirements of an organisation such as growth, sustainability, and expansion in the market.
• Risk analysis: Riles that may impact the evaluation, such as market and regulatory shocks.

2. Factors influencing the Appraisal

• Economic Conditions: Interest rates and inflation, amongst other economic stability, influence the outcome of investments.
• Regulatory Factors: Adherence to the law and other regulations influences the viability and cost of investments.
• Market Trends: Customer demands, competition, and technological progress determine the investment priorities.
• Stakeholder Expectations: The priorities among shareholders, employees, and customers determine the project approval.

AC 1.4 Analyse the constraints on raising finance

1. Internal Constraint

• Creditworthiness: Bad fiscal health, or excessive debt and a lack of consistent cash flows, lowers the amount of creditworthiness of the firm and lowers the chances for loans or investors.
• Asset Limitation: Lack of collateral amounts lowers the accessibility of traditional routes of funding.
• Management Expertise: Poor financial planning and lack of skills in decisions can deter lenders and investors.

2. External Constraint

• Market Conditions: Economic downturn, high interest rates, and high inflation rates make borrowing more expensive or less attractive.
• Compliance with financial laws, reporting standards, or tax regulations may limit access to some funding sources.
• Investor sentiment, which might be affected by changed market perception such as political and economic conditions at particular times, may deter investors from funding a given project.
• Highly volatile industries or those whose growth prospects seem to be very poor may not attract funding.

AC 1.5 Evaluate the factors which influence an organisation’s capability to raise finance

1. Internally Determined Factors

• Financial Health: Strong financial statements profitability and healthy cash flows ensure that the organisation can repay or deliver returns.
• Reputation and Track Record: Proven records of successful projects and sound financial management enhance credibility in the eyes of potential financiers.
• Asset Base: Organisations having valuable assets for collateral are likely to source secured loans from lenders.
• Management Expertise: Professionalism in finance and strategic planning helps instil confidence in stakeholders.

2. External Factors

• Economic Setting: For instance, low interest rates and economic growth tend to increase access to finance. Conversely, recessions or financial crises can constrict credit markets.
• Regulatory Setting: Access to specified sources of funding is conditional to making compliant with legal and financial regulations
• Industry Setting: Organisations operating in high-growth or stable industries will have a higher probability of attracting investors than organisations operating in volatile or declining sectors.
• Market Sentiment: Investors’ and lenders’ willingness to provide finance for projects often depends on broader economic and market confidence.

Assignment Activity 2: Be able to identify the need for financial resources

AC 2.1 Calculate the cost of activities and overheads needed to deliver the business strategy and objectives

1. The Key Activities: Enumerate critical operations and projects that are directly linked to the business strategy; these include manufacturing, campaigns, or technology upgrades.
2. Direct Costs: Identify expenses directly related to such activities – materials, labour, direct services, and so forth.
3. Overhead Allocation: Direct overheads like rent, utilities, and administrative salaries are allocated to the different activities; this can be through activity-based costing, as well as by conventional overhead allocation.
4. Strategic Initiatives: Add costs of new ventures, market expansion, or process improvements as required to achieve the objectives
5. Total Costs Summary: Add direct costs and overheads allocated to determine the total cost that will be required to implement the strategy.

AC 2.2 Assess a range of options for delivering business objectives against agreed criteria

1. Types of Options

• Organic Growth: Increasing through internal growth, such as establishing new products or services.
• Strategic Alliances or Partnerships: Partnering with other organisations to utilise each other’s strengths.
• Mergers or Acquisitions: Increasing through acquiring another company to gain market share or capabilities.
• Outsourcing: Contracting external organisations to provide specific operations or services, achieving cost-efficiency.
• Technology Integration: Introducing new technologies to enhance operational efficiency or provide improved product offerings.

2. Evaluation Criteria

• Cost: Analysis of the financial investment required for each alternative and its ROI.
• Risk: Determination of the level of risk attached, including market volatility, competition, and legal hurdles.
• Time: Estimation of the time needed to be devoted to each alternative and accomplishing business results.
• Alignment with Strategy: A determination of which alternative supports long-term goals better and helps in adopting the desired view of the organisation.
• Scalability: Considering whether or not the alternative provides room for expansion in the future.
• Resource Readiness: Determining whether the organisation has adequate resources to implement the choice, such as manpower, technology, and expertise.

3. Evaluation Procedure

• Comparison: Evaluate each choice against the set criteria.
• Scenario Analysis: Project what each choice would entail for the analysis of risks and rewards.
• Stakeholder Consultation: Seek feedback from crucial stakeholders about the viability and implications of the options.

AC 2.3 Prepare a business case for financial resources including objectives, benefits, proposed methods, timescales, costs, assumptions, risks, contingency plans and evaluation arrangements

1. Objectives:This discusses what the funding will accomplish and demonstrates how the objectives are aligned with the overall strategy.
2. Benefits: Include tangible (e.g., revenue growth) and intangible (e.g., brand reputation) benefits.
3. Proposed Methods: Present an approach and resources required to support the objectives.
4. Timescales: Outline a timeline of key project milestones in terms of its implementation.
5. Costs: State initial investment and future costs.
6. Assumptions: State assumptions related to market circumstances, operations, and finances.
7. Risks: State the risks involved and propose strategies to mitigate these risks.
8. Contingency Plans: Develop the backup plans that will be used in case of unexpected challenges.
9. Evaluation Arrangements: Define KPIs and arrangements for monitoring and evaluation.

AC 2.4 Take action to obtain support for the business case from relevant stakeholders

• Identify the Key Stakeholders

Identify stakeholders whose support is important (for example, investors, senior management, team leaders, or other partners).

• Alinement with the Interest of the Stakeholder

Ensure the business case captures stakeholders’ priorities and concerns and shows how the project would benefit them.

• Clear Communication

Presenting the business case clearly and concisely in terms of the objectives, benefits, and alignment with strategic goals.

• Engaging Early

Involve stakeholders early in the process to understand their outlook and gain their input to get buy-in.

• Demonstrate ROI.

Present statistics and forecasts that the investment will add value and fit into long-term objectives.

• Address Your Stakeholders’ Concerns

Be prepared to handle risks, concerns, or objections of the stakeholders by giving them available solutions or mitigating strategies.

• Use Data and Evidence

Support your reasoning with data, market research, case studies, or expert opinions to establish credibility.

• Seek Formal Support

Make formal commitments by presenting through meetings or written acceptance of key decision-makers.

Assignment Activity 3: Be able to obtain financial resources 

AC 3.1 Select a source of finance based on its terms, risks, and other relevant business factors

• Terms and Conditions

Examine the rates of interest, repayment periods, and any security advance being charged against the financing options

• Risk

Consider the risks that are financial and business operational, as presented by net effects on cash flow, equity dilution, potential default or bankruptcy.

• Business Goals

Source of finance must complement the medium and short-term strategic objectives the company may have in mind, whether for short-term liquidity, long-term growth, or capital expansion

• Cost of Finance

Compare the overall cost with financing and compare that cost against the benefits that the funding source provides.

• Financial Stability and Control

Determine if the chosen financing option impacts financial stability, ownership structure, and control of the organisation. Debt financing retains full control. Equity financing involves a sharing process on the owner’s side.

• Flexibility

Determine if the financing option offers flexibility in repayment or restructuring, especially during uncertain times.

• Stakeholder Interests

Consider how sources of finance may impact the respective stakeholders, including investors, employees, and customers.

• Market Conditions

Consider the availability and accessibility of funds for financing with respect to market conditions; which may involve the consideration of economic conditions, interest rates, and investors’ sentiment.

AC 3.2 Agree a contract that specifies amounts, interest, payback terms, timescales and any other agreement that may affect the organisation

• Sums

Quantify the amount of funding available, including draw-downs, premiums or other charges.

• Interest Rates

Set forth clearly the interest rates, whether they are fixed or floating and calculate it either annually, or quarterly, among others.

• Repayment Terms

Mention the repayment terms, such as the beginning date of the loan, pay frequency like monthly or quarterly, and the loan term or duration.

• Duration

Outline the payback timeline, grace periods, full payback dates, and specific milestone repayments, if applicable.

• Contingency Provisions

Identify contingencies that may occur under the agreement, such as an early repayment option, penalties for late payments, and condition adjustments if there are unforeseen events.

• Covenants and Conditions

Define any business operating or financial covenants, restrictions, or conditions the business must meet under the agreement (such as limits on debt-to-equity ratio, and quarterly reporting).

• Collateral or Security

If applicable, define any collateral or guarantees required to secure the financing and how they will be handled in case of default.

• Other Relevant Agreements

Other terms may include but are not limited to, prepayment penalties, refinancing options, or rights to convert debt into equity for convertible loans.