At the end of the second quarter (Q2) you receive the following information from
ID: 2791343 • Letter: A
Question
At the end of the second quarter (Q2) you receive the following information from the managing director.
-Due to the current economic climate, sales volume may be 20% below target this financial year. This may severely impact profit projections.
-The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest.
-Employees are concerned about lack of attention paid to wastage: water; electricity: paper and raw materials.
-Sales training given in July suited the needs of only 50% of the sales team.
-The sales team members have become resentful at the threatening tone of emails they receive from upper management.
-50 percent of direct wages costs are attributable to short-term contract employees whose contracts have expired and who are no longer needed.
You are required to submit a contingency plan to your managing director outline was action(s) can implemented to deal with these problems and the time frames for their review
Explanation / Answer
Contingency plan recommended:
1. To repudiate the Short Term Contracts with contractual employees whose period is expired to save a part of direct Wages.
2. To assess the training requirements of existing Sales Team and schedule effective training module.
3. To motivate and boost the morale of sales team and instill confidence of job security as they are feared by the pressure of upper management. for this stress buster exercies or programmes can be conucted.
4. Waste Management is good quality exrcise but not all emplyees need to focus rather than Quality Circles can be created to monior the things.
5. The selling price per unit can be increased keeping the current situation of demand and supply in the market.
6. Focus can be on R&D activity to use existing idle employees ( permenant employees) As cost can be reduced by design and value engineering.
7. The Ovreheads can be lowered with proper cost analysis. Activity Based Costing can be employed to save OH along with Budgetory control.
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