Perhaps the greatest benefit of offshoring is the cost advantage it produces, which directly affects the company's bottom line. In tight fiscal situations, any savings in operating costs will contribute toward the company's sustenance and growth. Companies in recession segments sustain themselves and grow through innovation. Lower operating costs means they have more money to invest in innovation, resulting in a stabilized domestic workforce. In the service sectors, the cost saving from offshoring enables companies to create new service lines, many of which had been deferred for want of investment.
Upon reviewing the balancer sheet, Holmes suggested accounts receivable being considerably reduced, since this was an area which was controllable. Sales will be impacted by this move although sale stabilization will occur over time. Conceivably, one could think that this is a no brainer and follow the recommendations. But other factors are not being considered. The turnaround time for Reed is shorter because the store has everything on hand as opposed to other stores which may take orders on “specialty” items.
Managers need to be careful of overpricing or under-pricing goods due to allocation of costs to each product. As was shown with the Wilkerson case on further analysis of costs using the activity based costing method the company had been under-pricing some goods while over pricing others. This was affecting their profits and their ability to make sound business decisions on the pricing of products to meet market demands. 6. Activity based costing is more complex to use however used correctly should improve the accuracy of allocating indirect costs to cost objects.
The total cost approach is a method of coordinating materials management and physical distribution. The cornerstone of the total cost approach is that all relevant logistical cost items are considered simultaneously when making a decision or a change in the logistics system, not just the item that is being changed. The total cost approach requires an understanding of cost tradeoffs. Making one part of the logistics process cheaper may end up creating more cost in other parts, resulting in a more expensive overall system. The total cost approach would recognize this to be the case, and would hopefully result in not implementing such a change.
I believe the direct method is a better way for a business to keep track of cash flow because it accounts for every operating activity. This method may not be convenient for every company but it accounts for every receipt and payment, providing the company more details on each cash transaction. The indirect method is easier and it may be less expensive, it is focus on the difference between net income and cash flow from operating expenses. (Weygandt, Kimmel, & Kieso, 2010. p 618). This method converts net income to net cash from operating activities.
Question #1: Examine the advantages to hiring internally to fill vacancies within an organization. Hiring internally to fill vacancies within an organization has many advantages, both tangible and intangible. Reduced costs during the hiring process and greater employee productivity are quantifiable advantages. Also, hiring internally may be the practice that best aligns with a companies’ corporate culture or strategy. External recruiting can be expensive, and hiring internally provides an avenue to reduce this cost.
The 2012 net income of $44.88B reported showed a 9.30% growth of $3.82B compared to the $41.06B in net income reported in 2011 (ExxonMobil Corporation, 2013). While the amount of growth is substantial when standing alone, it was modest when comparing the 2010 and 2011 reporting periods. That time frame saw a 34.80% growth which equaled $10.60B (ExxonMobil Corporation, 2012). When considering ExxonMobil’s cash flow, one finds that cash flow for 2012 was a negative $3.08B. The company’s cash and cash equivalents started the year with $12.66B and ended with $9.58B, a 24.83% drop during the year.
Also, it can be seen the earnings per share were down by 12% and the return on average capital was down by 10%. However, net sales were up by 2%, and share holder’s equity was up by 25%. (About PPG, 2013) PPG Industries For The Year 2012 2011 2010 In Millions Except for per shares Current Assets $7,702 $6,694 $7,058
Sometimes monetary benefits are not as imperative as the ‘Sense of Purpose’ and ‘Emotional Bondage’ workers have with their organizations. Domino’s Strategy Domino’s, on the other hand, is more focused on changing its managerial practices rather increasing minimum wage level of its employees to gain long-term benefits. Firstly, it is intensively focusing on Store Managers’ hiring and training. By increasing their ‘Engagement’ in job they are making them more committed to their work. Secondly, Domino’s is providing flexible time schedules to its employees as a results employees’ ‘Perceived Organizational Support’ toward Domino’s has increased as it is concern about their well-being.
The importance of IS to STARS: Not only IS would benefit STARS in cutting cost and improving organizational effectiveness, but also it would evolve to generate revenue and improve business effectiveness. Mr. Khan, the new CIO, would have done a great work on his first few weeks by identifying critical issues on STARS IS. The case indicates a heavy reliance on consultants, low awareness of the importance of IS by some managers, low or absence collaboration with IT by some departments, reactionary operating mode with problems, and minimum IS planning. Each would be an area of improvement that would ultimately help STARS save more human lives. The importance of IS comes in escalating benefits (see Figure 1: Escalating Benefits of IT).