Westmount Retirement Residence

Westmount Retirement Residence

Introduction

This case study is about a retirement home business called Westmount Retirement Residence, which is located in London. The company is currently facing some cost structural problems as they are unable o manage their even increasing cost of operations and need to revamp their costing and budgeting procedures in order to come up a better and more efficient pricing and costing model in order to make the business sustainable and profitable at the same time. This report covers the basic challenges that are being faced by this company along with its current and potential strengths and weaknesses. After that we will be discussing the new pricing model for the Westmount Retirement Residence. However before going into those details, we should analyze the importance and essence of overall budgeting process of the company and to what we have to comply with.

Purpose and functions

In general terms the appointment of budgeting in the company is the of the following features in planning:

Planning and decision-making in the company;

Evaluation of all aspects of the financial viability of the company;

Strengthening financial discipline and subordination of the interests of individual department's interests of the company and the owners of its capital.

At each company can be a purpose of budgeting in dependence on the object as financial planning, and on a system of financial and non-financial goals. Therefore, when the appointment of budgeting, it is necessary to remember that in each of the company in a management technology, it can pursue its own goals and use their own money, their own tools.

First of all budgets (financial plans) are developed for the company as a whole and for individual structural units in order to forecast financial results, target setting financial performance and profitability , the limits of the most important (critical) costs , justify the financial viability of businesses that are involved in this company , or sold its investment projects .

Budgets should give managers of the opportunity to conduct a comparative analysis of the financial performance of the different structural units , to determine the most advantageous for the further development of the sphere of economic activity, the direction of the restructuring of the company (and the collapse of some of the other types of business ), etc.

Budgets are the basis for making decisions about the levels of funding of various businesses from internal (through reinvestment of profits) and external (loans, investments) sources. Budgets are designed to provide continuous monitoring of the financial condition of the company, to supply it with the leaders of all the necessary information, to judge the correctness of decisions adopted by the heads of structural units, developing measures for operational and strategic adjustment of their activities.

In a market is budgeting becomes the basis for planning - the most important functions of management. The entire system in-house planning should be based on budgeting. But it's not only that. If itself planning business need to be clear on where, when, what, and for whom the company or firm will produce and sell products or provide services in order to understand what resources and how much will be needed for this purpose, the budgeting as basis for planning - is the most accurate expression of all planned indicators and resources in financial terms.

Challenges, Strengths and weaknesses

The first and foremost challenge of using the current system is that it would allow the cost to remain unidentified and the overall cost, when slated over the number of residents would eventually give ...