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May 01, 2023


Identifying The Areas For Improvement, While Providing Three Business Recommendations To Management:

The three business recommendations to management are the adoption of the Implementation of control on external spending, eliminating the concerns of capacity utilization and a zero-based costing system. The above three measures would mainly ensure that the organisation is able to improve its current operations while having lower concerns in its income statement. The adoption of relevant control on external spending would eventually help the organization to reduce the unjustified expenses that are conducted by external operating companies where relevant work has been outsourced by the organization. The control on external expansion is essential, as without the adequate monitoring processes of the organization the external companies where the work is being outsourced do not work appropriately to minimize expenses incurred in the operations. Hence, the implementation of the control on external spending would eventually help in minimizing the administrative expenses of the organization, which in turn would boost net income. Henceforth, the decision of controlling the external spending is essential for curbing the excessive expenditure and misuse of resources by the external operators of the organization.

Furthermore, the recommendations are adequately eliminating the concerns for capacity utilisation by increasing the capacity of the organisation at appropriate levels. Thus, seeing the overall changes in demand of the organisational needs, relevant improvement in its capacity utilisation conditions needs to be conducted, as it would help in reducing the level of resource wastage and maximize the capital deployed to conduct relevant operations. The analysis of the organization needs to implement the third recommendation of a zero-based costing system, as it would help in locating the appropriate levels of the sources to the accurate department. This would allow the organization to increase internal control and reduce any kind of misuse or wastage of its overall resources while conducting business operations. The combination of zero-based accounting systems would eventually help the organization to control the external funding while adequately evaluating the accurate levels of expenditure required on outsourced administrative activities. Therefore the use of a zero-based costing system would eventually help the organization to control its expenditure and maximize the level of profits from the operations.

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