Financial Marketing: Discussion problems

Giorgi Tsaava Doctor of Engineering and Economics, Full Professor of Georgian Technical University

It is well-known that financial relations are always connected with actual flow of monetary means and under the conditions of “key strategy” its circulation is performed at the second stage – distribution and third state – exchange – of production.

At the same time, the features of cost (monetary) movement are differing at the mentioned stages that do not give an opportunity to assign distribution and exchange stages directly to the field of financial functioning1.
Therefore, at the second stage of production – distribution stage – one-sided circulation of monetary form of the cost (without countering equivalents) and at the third state of production – exchange stage – double-sided (countering) circulation of cost circulation takes place; at the same time, one of them has monetary form and another – commodity form that can be clearly seen at the scheme (see. Pic. 1).
Distribution character of financial relations is a significant feature of finances as an economic category. Besides this, it should be noted that only distribution characteristic of financial relations is not enough for complete characterization of the essence of finances. Variety of distribution relations leads to involvement of various economic categories in the second, distribution stage of production process: finances, credit, labour remuneration, price etc. It should be noted that finances essentially differ from the rest of the categories functioning at the stage of cost distribution (credit, labour remuneration, and price).
Foundation form of distribution of public product cost enables organic unification of consumption and production and thus consumption transforms into new stage of production cycle or a new reference point. If considering production process in the dynamics, then is will be represented as the unity of continuously repeated cycles that consists of four consecutive stages: production (pr), distribution (dr), exchange (ex) and consumption (cmp), the last is divided on its part: demand, enterprise and private needs (see pic. 2).
Pursuant to the abovementioned, despite long history of financial science, its essence is not fully studied. The task of conceiving essence of financial science is complicated by the fact that it is deeply hidden in the foreign forms of its exposure that is revealed on the surface of public life as various financial events.
It is a reality that laws developed toward circulating monetary units of the times of Adam Smith, Carl Marx and John Keynes cannot be perfect in modern conditions and monetary system left without precious metals guarantee (today money is mainly secured by assets of national bank) and modern financial (market) security requires new in-depth research. Therefore, classic economic and financial theories existing today require corresponding restructuring.
We reckon that issue of economic nature of financial relations and borders of its origin is quite debatable. Traditionally two approaches of finances are distinguished in enterprise activities within the frames of “key strategy” at commodity markets.
According to the first approach it is reckoned that finances take origin at the final stages of production in the process of distribution and redistribution of the value of public product.
According to the second approach finances are considered in integrity of production categories and at the same time, monetary relations created at exchange stage are involved in the content of finances.
The situation changes if enterprise is operating in the framework of “marketing strategy” at the commodity market and under the conditions of considering ecological requirements production process covers following stages: 1) revelation of requirements; 2) elaboration of commodity (service) or financial instruments; 3) production; 4) distribution; 5) consumption; 6) exchange and finally 7) utilization (see pic.3).
Main defining factors influencing development of modern finances are:
1) Transfer from key strategy to marketing strategy at the commodity markets; Abilities of financial management of marketing strategy, started from the stage of demand formation and finished with its satisfaction;
2) Transfer from key strategy to marketing strategy at the commodity markets;
3) Increasing importance of active state intervention in the competitive fight at high-tech commodity and service international markets;
4) Increasing interpenetration of financial relations and property relation that is expressed in: leasing, franchising, convertibles (e.g. conversion of bonds into stocks), mortgage, pledge and other market development;
5) More awareness degree financial systemic relations, technologies, resources, stuff management issues, as the origin of financial problems are frequently laying in these fields;
6) Increase of ecological requirement level in order to improve living conditions of people;
7) Further integration of finances in common scientific processes.
We reckon it possible that as a result of redistribution of right of property on main funds privatization processes might be considered in finances. Use of securities in undivided right of enterprise property enables to transform financial resources.
Doubtless foundation of advantage of discussing wide approach toward finances might be the fact that every category connected with finances and with each other (finances, credit, labour remuneration, price, and insurance) are united by financial instrument such as taxes. Finances are directly related to every stage of production process and various levels of commodity by means of taxes.
Logical matrix of characteristics of economic and financial categories given below might be useful for persons interested in the mentioned issues. (see table 1).
Moreover, following financial instruments are considered within the frames of this broad approach. (see table 2).
Coming out from the above mentioned issues, we can make following assumptions:
Under the conditions of key strategy, finances cover the only one – distribution stage out of four production process’ four stages.
Under the conditions of marketing strategy, considering ecological requirement, finances are originated at all seven stages that enables to theoretically substantiate involvement of important fields of activity in scientific finances. These fields of activity belonged to finances in practice, but in early notions of finances (prices, labour remuneration, credit) they were not involved theoretically.