Simulation Aid Document
Phase I: Capital Shortage
Cost-Cutting Options Selected
Track spending and the implementation of telecommuting are the cost-cutting options selected. These strategies are significant or a variety of reason. First, track spending encompasses the tracking all the expenses. The monitoring of the expenditure is elemental because it allowed for the determination of various sections of the expenses that could be stopped or reduced. On the other hand, ensuring that the employees telecommute rather than working on the premises was elemental because it allowed for the reduction of the rent or lease payments (Dias, Marques, & Martins, 2012).
Loan Option Selected
The loan option selected was the working capital financing. Liquidity and cash flow are the lifeblood of many organizations. For this reason, opting for this option would help in case of the capital shortages. The anticipated as well as the unexpected expenses due to such aspects as delayed payments and loans or debts could be solved by the loan option. Since the healthcare organization is undergoing financial difficulties, the working capital financing would be elemental in reducing the impact caused by these difficulties on the operations of the healthcare organization.
Outcome of the Capital Shortage Decision
First, the cost-cutting strategies and the loan option both aimed to annihilate the financial crisis of the healthcare organization. For this reason, the decision to employ these options was essential for the organization. That is, having some of the employees apart from the health professionals to telecommute, monitoring, and tracking all the expenses provided an overview of the reasons for the capital shortage. For instance, rent expense and notes payable were some of the reasons for the shortage.
Phase II: Funding Options for Equipment Acquisition
Cost-Effective Equipment Selections
Fiscal visibility was a factor in the selection of the cost-effective equipment for the healthcare organization. This option and selection would be elemental for the making of the costs and revenue production as well, which would be essential in the provision of the working capital. The decision for the enhancement of the technologies was also another selection because its analytic approach and evaluation suggested the usefulness of technology in cost reduction and enhancement of the effectiveness of the equipment. The impact of the selection to the organization was evident in the protection of the liquidity.
Outcome of the Cost-Effective Equipment Acquisition
The outcome of the equipment acquisition decision was felt across the organization in a variety of ways. First, the decision, being cost-effective, influenced the finance department and the operations of the department through cost-reduction. The acquisition decision also led to the valuing of the organization to determine the potential areas for the reduction of costs. That is, the decision, which encompassed the provision of funds for the purchase of equipment, called for the review of the financial state of the organization.
Phase III: Funding Options for Capital Expansion
Source of Funding for Capital Expansion
The source of funding for the capital expansion selected was equity financing. The organization would have the option of issuing stocks to raise the funds required for the capital enhancements. The issuing of stock would help the healthcare organization to maintain strong statements of financial position through the avoidance of debts, which is a negative trend for organizations. Nevertheless, the organization would need to make considerable and calculated judgments during the issuing of stock because in case of emergent shares, there would be a dilution in the value of the existent shareholders (Egami, 2009). The issuing of the stocks would also provide the ownership interests for the increasing of the funds for the organization.
Outcome of Source of Funding for Capital Expansion
The equity financing option would improve the operations and the service of the organization because of the provision of resources in terms of finances, including equities. The procedure and process of getting funds would benefit the savings and venture capitals of the healthcare organization. Facilitating the equity exchanges would also provide the organization with capital investments. As such, the option would protect the investments of the organization from the vulnerabilities. Moreover, raising of the funds for the expansion of capital would also annihilate the issue of capital shortage, which would help solve the problem of financial turmoil.
Summary and Conclusions
Lessons Learnt from Simulation
What Would Be Done Differently
If I were to perform the simulation again, I would expand more on the cost-effective strategies and the funding options for capital expansion because these are elemental for handling capital shortages.
Application of Lessons Learnt
I would focus on the concepts of options of cost cutting for the provision of effective performance and the required job skills for the enhancement of the organizational operations.
References
Dias, D., Marques, C. R., & Martins, F. (2012). Labor cost-cutting strategies microeconomic evidence from survey data.
Egami, M. (2009). A framework for the study of expansion options, loan commitments and agency costs. Journal of Corporate Finance. doi:10.1016/j.jcorpfin.2009.01.004
