Case for critical analysis “Southern Discomfort”



Case for critical analysis “Southern Discomfort”

Introduction

For a business to be successful, the aspect of profit making is very crucial, and for this reason many of the financial managers are asked to reduce the cost of their operations either by cutting fixed or variable cost. Management always tries to cut down per unit costs of their products or the other operating cost for increasing the profitability and sustainability of the organization.

Management always tries to increase the contribution margin of its sales by;

Fixed vs. Variable Costs

Debt-service costs

Infrastructure and Systems Costs

Human Capital Costs

Salaries

Benefits

Healthcare costs

Advertising and Promotional Costs

Overhead and Administrative Costs

Research and Development Costs

Discussion

Management may employ many of the strategies in order to increase the profitability of the business and reducing its cost of operations. According to PWC, Management tries to understand the direct and indirect impact of cost-cutting strategies on the culture and values of your company.

Relationship-Driven Cost Management Techniques

Relationship Driven Cost management technique include, managing the suppliers and Customer Relationships so that business opportunities may flourish. It includes outsourcing the business operations so that an organization may gain the edge of specificity excellence.

Organization may go for doing Joint ventures and strategic alliances so that the combination of resources may result in exceptional performance and profits.

Financial and Management-Driven Cost Management Techniques

Financial cost management strategy may include cash flow management, managing the employee retention and turnover costs, making budgets and doing costing estimating and quantifying the prices of new product development. It may further include corporate restructuring, reengineering or recapitalizations.



Market-Driven Cost Management Techniques

Market Driven cost management strategy may include competitive bidding for the tenders doing guerilla sales and marketing techniques managing the advertising the cost, customer referrals etc.

Case Study

Mr. Jim Malescowski is a costing analyst in Lamprey, Inc. and he is asked to present a ...