Cutting operational expenses is something ever organization must learn to balance to ensure productivity and profit margins increase for the company. An increase profit margin is the bottom line for any business and its stakeholders. In order to cut operational expenses productively Artemis Sportswear needs a comprehensive look at the everyday operational expenses. Cutting the everyday expenditures is in need of balance, because to much cuts can cause lose of productivity which in the end will not achieve the desired affect of increase profits. Cutting operational expenses also affects the work force of Artemis Sportswear. This proposal is to define the expenses that need or could be to cut to ensure the success of Artemis Sportswear and how these cuts will affect the workforce.
Cutting everyday expenses can help lower operational expenses. When purchasing office supplies, generic is going to be less expensive than brand name products. Buying the store brand name is generally sold at a lower cost. Buying supplies in bulk is cost effective over a long period of time. Leasing equipment is better than buying equipment. When leasing you have the opportunity to upgrade or downgrade when necessary. Technology is always changing and improving, so by leasing there is the option to stay current with the new changes in the equipment. Leased equipment always comes with an insurance policy, which is not needed if there is a currant insurance policy with the company. To avoid being double charged register with your companys insurance broker then submit a copy of the new insurance to the leasing company to have it dropped.
Smaller equipment such as telephones, printers, fax machines and calculators should be purchased not leased. Usually the smaller equipment will hold its value over time and can be easily replaced if needed. Shopping for bargains or sales of the smaller equipments can save a considerable amount of money. Finding a 3 in 1 package which would include a telephone, fax and printer can also cut costs. Printing in bulk is another way to keep costs down because each copy is less expensive when purchased in larger quantities.
Researching various companies for the best rates on telephone services; checking both long distance and local calling plans. Companies that have plans of unlimited local and long distance are generally the best deals. Another possibility to look into is how much a telephone company charges for each fax that is sent. Most companies charge a flat rate of a minute instead of six second increments which adds up over a period of time.
Out sourcing is a great way to significantly cut down costs. The way outsourcing works is when a company obtains a contract with another company to provide services for them. There are many types of companies that specialize in many different services. Companies can rely on outsourcing if they themselves cannot afford or do not want to spend the money on the expensive equipment. These companies can produce less expensive products and labor. In most cases they do not pay their employees benefits and the hourly amount the employees receive is usually very low.
These companies typically have less overhead to worry about, making it possible to pay less for their work. These types of contracts are generally done overseas, such as China and India. Outsourcing not only cuts down costs, but it also can aid in expanding the business by building foundations in different countries. The benefit to expanding is more income coming in. Another benefit from outsourcing is that it helps to reduce the work that managers perform allowing them to take care of bigger issues. Of course outsourcing has its disadvantages; it can take away from the personality of the company, by not having a personal communication between the company and clients.
In business, your profits are your reward for your endeavors. In fact, profitability is the only reliable measurement of a business’ success. Profits are the very lifeblood of a business. They fuel growth, support the owners, provide for the well being of the staff, and ultimately determine the success or failure of the business. Peters Elworthy and MooreCutting operational expenses to increase profit margins is key for Artemis Sportswear to continue selling quality sportswear. First cutting operational expenses in house is a must. In house is where everything begins so thats the first place to begin cuts. Hiring a company to help budget Artemis Sportswear is a smart way to educate employees to cut costs. A budget company will first evaluate immediate saving opportunities for Artemis Sportswear by reviewing operating expenses and guiding higher office and employees to cut operational expenses. Investing in a company to help budget Artemis Sportswear is a smart way to cut costs and raise profits.
There are other ways to cut cost without hiring professionals to help budget the company. Using the internet to search for ideas is also an inexpensive way to save money. After saving money from not hiring a budget cutting company, it will add to Artemiss profits. Ideas such as those on ehow.com, ezinearticles.com, and pem.com can save money and just as important, time. Simple tips and ideas like not making cuts without considering the consequences, to leasing gives the option of upgrading or downgrading, depending on needs and changes in technology.
Sitting down with the companys decision makers and brainstorming strategies to cut spending is another inexpensive way to keep costs low. Look over company expenses and create a list of needs or must haves. Review the companys business plan and see what necessary costs have to be made in order for the company to meet its objectives, goals and overall mission. Think about cutting full-time workers into part-time workers or making the positions contract without benefits.
Proposal for Artemis Sportswear CompanyWhen discussing cost cutting measures, it is imperative to consider the costs to the employees. When payroll is cut, how Artemis carries the process out can have a negative effect on the employees left and most certainly will have an effect on their work production.
Keogh (2001) claims, Economic trends have been at its worst since 1991 (p 17). A few things have been learned about payroll slashing since then. Some companies are asking the employees what to do in order to cut costs before cutting payroll and have received replies as simple as saving energy to more convoluted solutions. Energy savings alone can result in savings of thousands of dollars.
Another fact that has been learned is that it takes a community to support a business. The resulting cuts can have people losing their homes and moving away from the city that Artemis Sportswear resides in. With loss in population, higher tax levies for businesses may result. The local retail trade is affected. This will also affect the local unemployment rate with an increase in government supplements and food stamps.
When people have worked with a company for many years, they dont have any skills for searching for a job. Even termination can be done with care. It is advised to give ample notice of termination and information about benefits. A company can be hired to help workers cope with career transition (Austin, 2001, p 60).
When layoffs are activated, the resulting production of the left over employees may or may not be affected; depending upon how the terminations were made. When workers are cut, service is cut. A better idea may be to cut per hour costs or offer early retirement packages for senior employees.
A hiring freeze may be a viable alternative. Employees who leave the company are not replaced. Along with lower cost per hour, this might take a while for the company to see profit increase, but if the employees are made to feel part of the solution to its own problems, there may be a significant production increase. This is a point that retraining would come in.
Companies like Federal Express and Saturn have gone to retraining programs instead of immediate terminations. Buckstein (1997) explains that training has yielded $30 for every dollar invested (p 131). Bonuses are paid to managers who volunteer to participate as instructors. Retraining consists of team building and changes in workplace culture. Employers can restate what is expected of the workers and let them become aware of what the new focus of Artemis Sportswear is. Company values and Artemiss mission statement can be communicated. Employees can be reenergized, knowing that Artemis is trying to keep staff and prevent layoffs. Work assignments can be filled by more than one person as well as rotate, to prevent boredom. This can give a boost to productivity.
It is essential to supply information to the workers about proposed changes. Greenhalgh and McKersie (1980) caution rumored use of the layoff strategy leaves employees with a feeling of employment insecurity which affects their work, their relationship with management, and their commitment to continue working for the organization (p 577). If rumors are circulating, Artemis does not have an accurate measure of their cost cutting implementation strategy.
Bleckstein (1997) summarizes, But a firms ability to learn faster than its competitors may be its only sustainable competitive advantage (p 131). This translates to research. Management must consider the costs overall before cutting jobs. Most important, management must consider the costs to their loyal employees when research indicates effective money saving alternatives.
Artemis Sportswear has a few options open to them before cutting payroll. Kinsman (2001) warns, Its time for corporations to start thinking about all the pieces of the success equation before lopping off payroll (4).
Business is ever changing in the new world economy. Artemis Sportswear like any other business and will have to take steps to improve business and profit margins. The use of cutting operational expenses is shown in many different forms from out sourcing to cutting back everyday expenses. These are essential for improving the profit margins of Artemis Sportswear but the consideration of how these cuts can affect the worker of the company.
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Wise Geek. (2003-2008). Wise Geek: What is Outsourcing?. Retrieved April 15, 2008, from http://www.wisegeek.com/what-is-outsourcing.htm
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