Provide five examples of cost control processes that can be implemented to reduce over-spending.

Case study 2

Rosie is the Area Manager for a national clothing retailer in Australia. She oversees the operations of six retail outlets located across the eastern states.

Rosies responsibilities include monitoring retail sales and expenditure for her region. She must ensure that all six retail outlets are contributing to the organisations financial objectives by meeting monthly sales targets and effectively managing financial resources.

The finance and budgeting department at Head Office have just prepared the draft budgets for the new financial year and have advised all area managers that they are now available for review. Rosie has scheduled a meeting with her six store managers to discuss the new budget requirements.

Before their meeting, Rosie obtains and reviews the budget and financial plans to familiarise herself with the organisations new sales and expenditure targets for her area. When reviewing the budget, Rosie notices that sales targets have increased drastically, yet the budgetary allowance for employee wages remains unchanged. She also notices that there have been large cuts to store expenditure across all operations.

She considers ways in which her team can increase monthly sales without recruiting additional staff, and reduce store-operating costs. Rosie prepares herself for a challenging conversation.

During their meeting, Rosie must also lead her team of managers in developing and documenting contingency plans for possible future events, such as increased competitor activity, environmental and major disasters, changes in customer behaviour and stock delays.

What consultation strategies could Rosie use when evaluating the new sales targets with her team?

1. Rosies store managers have each expressed their concern about unrealistic sales and expenditure targets and have pleaded with Rosie to take their feedback to Head Office. What options could Rosie present to Head Office when negotiating more realistic budget outcomes? Tick all that apply.

q Deferring a portion of sales targets until periods of higher demand

q Making additional savings through resource sharing across stores

q Executing the companys contingency plan

q Seeking cheaper suppliers for cleaning, postage and security

q Succession planning

2. Draw a line to match each potential future event to a contingency response plan that would best suit Rosies team of store managers.

New competitor opening in an adjacent retail store		Have alternative locations ready for continuation of the business or as a temporary operational site.
Major power outage		Hold greater quantities at an increase in inventory costs.
Falls in customer satisfaction ratings		Have a discount sales campaign.
Delays in receiving stock		Increase advertising and promotion.