Individual Case Project • Paper must be 2 complete pages single-spaced • Font –
ID: 2427885 • Letter: I
Question
Individual Case Project
• Paper must be 2 complete pages single-spaced
• Font – 12-point (Times New Roman – Microsoft Word); APA Format for References – identify your references (if you don’t it is plagiarism)
• It should be based on ANY Managerial Accounting Concept from a credible business source (e.g., CFO .com, Businessweek; Sloan Mgmt Review; Harvard Business Review, NY Times , Forbes). If you are unsure how to find an article, go the library and ask the business reference librarian to assist you.
• Summarize the article (i.e., 1st paragraph -Provide your summary of the article in the first paragraph – do not copy the executive summary; 2nd Paragraph - write a critique (i.e., analyze and discuss the argument(s) of the paper – you must defend why you agree or disagree with the argument and use facts to support your position); 3rd Paragraph - express how you can apply the concepts for decision making in your life, career and/or other endeavors.
• Provide a hyperlink to the article *Any basic managerial Accounting concept will do e.g. job order costing, flexible budgeting, activity based costing etc. Thank you!
Explanation / Answer
Reinvesting in cost savings
Summary: In the day to day course of the business activity or in the life of an individual cost control plays an important part. Be it a primary activity in expenses related to the employee benefits or to carry on day-to-day operational activities. Reinvesting is the one of the processes in which the cost savings are enhanced. Reinvesting is the processes in which the dividends, interests and capital gains are used to re-invest in the cost saving of the company. The aim is to identify the areas in which there is a scope in saving the additional and unwanted expenses as cost savings. The aim is to increase the sustainable cost savings so to use the saved money in the time of need. The cost reduction efforts have already been squeezed after a decade of excessive spending. It is partly true that the companies have cut down costs as a part of focusing on the growth imperative. The companies are focusing on the cost reduction as a way to focus on the company’s growth initiative. This has been confirmed by 82% of the company’s during a survey conducted by Accenture. In many cases the CEO’s and the CFO’s does not even find the priorities that are inclined in the cost savings are aligned to the business strategy. There is a disparity in the percentage of agreeable and non- agreeable. 54% of the CEO says they are positive in such alignment while only 34% of CFO says that on a positive tone. There are bigger challenges in reinvesting in the cost savings as there are more details in seeing as to what could go wrong first. The above attitude has a wide scope in the CFO misalignment. The other challenge in reinvesting in cost savings is the operating models are not fully geared to fuel strategic growth initiatives. Only a certain % of CEO and CFO certainly believe that their operational model fuels strategic growth. People always say that are taking the initiatives for cost savings and cost reductions but soon realize that they are not geared for it. They are not prepared for it. They lack the talent or they cannot free up the talent that they have and they don’t have the means to have a long term budgeting plan that are agile and flexible enough to handle these initiatives. A position of chief disruption officer has been created by one client to take care of the growth initiatives without being hindered by the traditional company processes. In order to continue with a broken link it’s not saving some money and then deciding how to invest it. Instead, he says, start by developing a growth strategy, understand where pools of profits are going to come from, and let that inform your cost-reduction initiatives so that you don’t unwisely cut from areas that will support the strategy. Further, companies should favor funding two or three initiatives that will lead to game-changing paybacks, which generally won’t happen in the situation where individual budget holders are making their own, parochial reinvestment decisions.
http://ww2.cfo.com/capital-allocation/2016/01/ceos-cfos-misaligned-reinvesting-cost-savings/
I agree with the arguments in the above content as most of the companies are not geared up to meet the modern day challenges. They have more traditional approaches in relating to the cost savings or some organizations do not have the concept of cost savings in their workflows. On the human management and other factors that are involved the cost savings are not invited. They are often viewed with suspicion and other assumptions. The decision to implement a cost saving mechanism has to be viewed with jest and has to be accepted by all the persons concerned in the management. Cost saving also involves various steps and has direct or indirect impact on the other functional and technical aspects. There will be an impact on the absorption costs and other costing parameters where the company must be geared to meet. The targets due to cost savings that have been derived are useful to meet the company’s requirement on growth and other initiatives. But this aspect has to be realized with a focus and vision so as to be a driving force in the time of need. So be it at the same time it must not hamper the day to day operations of the organization. Without actually planning for the events like these and the scope of budgeting unavailable the management will not be able to meet the practical requirements of the growth strategies. Unavailability of a proper roadmap and non- provisioning to accommodate the initiatives and the operational costs that are involved and the lack of proper infrastructure to forecasts the impacts in during the upstream and the downstream operations are the hindrances for the proper growth initiatives that aid in cost savings and in-turn reinvest in cost savings.
The concept of cost saving is applicable in the day to day life of every individual. The cost savings concept the available resources have to be used in a smarter way. It is not the question of affordability but it is the need of the hour that governs the use of resources in a smarter way. Individuals can always realize that smart savings on cost for today can have a better impact on the lives of tomorrow. A level of standardization is required in the lifestyles of the individuals. Lavish spending and spending beyond the known sources of requirement can exhaust the resources rapidly thus putting strain on the activities on the individuals and thus freezing the operational mobility to wide greater extant. Every organization has to follow a decision making policy to carry out the day to day activities. These can be adopted by following the book rules or due to spontaneous results that take care of the results. The decisions taken as per the book rules are based on the decision making techniques that are usually scientific in approach the other forms of decision making processes are spontaneous as per the need of the hour. The decision making processes also governs the individuals day to day activities so as to help them navigate the and maneuver their operations