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Operations management could never become effective until and unless the cost management is not proper. Cost management is the tactic through which company put control on its expenditures and tries to minimize them through practicing various activities. It is to acknowledge that cost structure is the most important aspect of the operations as it put its impact at the pricing and profitability ratios of the company. In different businesses, the relevance of cost management is diverse as per the nature of the business. Reasonable pricing could be set as the cost has been managed, and this benefit could be transferred to clients or customers. Another advantage is that through effective cost control the company can invest the financial resources in other business activities. In short, the investment decisions could be improved, and most importantly the investment plans could become stronger (Wareham and Gerrits, 2009). New technology for the company could be introduced, and in return, it could lead towards the better performance of the organization. Thus, it is clear that the cost management strengthens the operations and has its impact on the wide spectrum of business.
In catering operations also, the cost management may affect the profitability ratios. The catering business runs on the estimation and probability aspects, and in these situations, it becomes tough to avoid the situation of overstock and understock. Managing the inventory, logistic, acquiring the raw material adequately, are certain basics fundamentals that could help in controlling the cost. Proper planning at every stage can also show its expediency in cost cutting procedures (Wareham and Gerrits, 2009). Through proper planning, the catering business can utilize the resources accordingly. So there are various ways through which the cost could be managed by the companies. Here in this report, the special consideration has been given to identifying the various ways through which the cost structure could be controlled properly. The study of the cost-control mechanism is the central idea of the study, and the whole report is revolving around the catering business and its nature. For the same purpose, the case study of Benugo Ltd. has been taken under study.
The Benugo was acquired in the year 2007 by the Baxter Storey that has immense potential to grab the available opportunities within the market. The founder of the company B. Damer cited the fact that this merger could enable them to sustain within the market and most importantly the competition could be handled properly. The organization has retained its success and can definitely work towards improvement in current business practices. Now Benugois multi – faced company, it operates high street restaurants as well as outlets in public spaces such as parks and workplaces, a 24% leap in turnover to £70.1 million from £56.5 million the previous year, while operating profit for the period reached £4.9 million, up 48.5% from £3.3 million. The company has their operations at various ventures that allow them to cater the huge customer base. It includes the Albert Museum, Victoria Hall.
The company is fulfilling the satisfaction level of customers and most importantly the customer expectations have been met properly. The staffs consist of 90 people who worked at various locations and served all categories of people from adults to children to old age people. The stores of Benugo have become an attractive place for the foodies very much. It allows them to increase their market share as the sale ratio reached at pinnacle tremendously. The team is excelling in every department. The food quality, client relation, supplier relation, customer handling, stores management and so on. It enables them to work in a more professional manner so that the business operations could be operated in most smooth manner. The department heads understand their responsibilities. It defines the firmness of the organizational structure of the organization. There are many internal and external factors, which influence cost in the catering business. Those will be examined in the following sections as well as how they interrelate with internal processes.
The primary reason behind the current topic is to understand the complexities of the cost structure especially concerning the catering business. In this industry, the cost is needed to be handled properly as mismanagement could cause trouble in over inventory or under inventory, and it could put its impact on the company. Another major reason is to assess the various ways through which the cost could be managed by the catering business professionals. It could increase the intellect on the cost management and its various dimensions.
The aim of the study is to assess the current practices which could be used to control the cost structure in the catering business. The whole study is focused on Benugo Ltd.
Chapter 1: Introduction:It is the very first section of the research study that shapes the overview of the entire study. This section is mainly divided into various elements which could act as an information piece for the readers and viewers. The major portion of the introductory section is to cite the aims and objectives that serve as a foundation for the whole study. Through aim and objectives, it could become easier to move into the right direction and selecting the related dimensions for the subject matter. At the same juncture, it could be acknowledged that the rationale for the study explains about the actual reason for the study. Thus, the expediency of introductory section is immense into the research process.
Chapter 2: Literature Review: It is a section that has relevance with the detailed investigation of the subject matter. In every research report, the role of the literature review is immense with a view of dealing with the complexities of topic or the content of the study. It is to acknowledge that in the current process also the researcher has conducted a vigorous research analysis with respect to understanding the catering business and various cost control mechanisms. It increases the intellect related to subject matter, and the research gap could also be identified appropriately. The major advantage of literature review section is that it enables a researcher to attain the research objectives.
Chapter 3: Research Methodology:In this section the researcher adopts the logical approach while selecting the research tactics for the study. Various research techniques provide the scientific approach to the study and help in conducting the study in a logical way. Here also, the researcher has selected various research techniques which are helpful immensely with a view of justifying the whole research process. It includes the data analysis, data collection, sampling, philosophy and approach, nature of the study and so on.
Chapter 4: Data analysis: Chapter 4: Data analysis: In this part of the study, the researcher practices the significant aspect related to the research. Data analysis is the major section as the whole study is based on this chapter only. It acts as the essence of the research as it provides the result or interpretation which is the basis for the entire study. Here, it is clear to explain that without data analysis section, the researcher can never accomplish the research. It could be done with the help of statistical tools and analytical tools.
Chapter 5: Conclusion and Recommendations:Chapter 5: Conclusion and Recommendations: It is required to be assessed accurately as here the researcher provides the summary of the whole report. The researcher tries to connect the findings and results with the research objectives. Thus, this section corroborates about the accomplishment of aims and objectives of the study. Additionally, the section of recommendations is ultimately based on the identification of problems and challenges in the study. Through recommendations, the researcher can exhibit the extra knowledge regarding the subject matter. It could be helpful to reach a conclusion and to find a gap for further studies.
A literature review is an important part of any research investigation. It provides an overview and thorough understanding of different studies conducted in past on the topic. It is considered as an important component of any research study primarily because of the reason that it enables both the researcher as well as the reader to understand different concepts and theories pertaining to the topic. In this regard, it may not be wrong to say that through literature review section proper understanding of the topic can be obtained, in addition to determining the best ways to use the same. Literature review section of the present research sheds light on different topics that can be used in this investigation along with various other theories that may be necessary for this research.
One of the most important aspects of working of an organization is related to its supply chain management (Guide, 2011). Firms need to pay a lot of attention to managing it in an efficient and effective manner so that the organization can sustain in the market for a long period of time. Further, if the enterprise does not pay proper attention to it, then its existence can be put into a state of jeopardy and hamper its operations in a negative manner. Value chain analysis essentially is a systematic tool through which core strengths and activities of the firm can be analyzed in an effective manner (Clarke, 2008). It is a management concept which defines a business organization as a collection of different activities which, if are managed in a proper and effective manner, could prove to be very beneficial for the firm.
According to Liyanage and Kumar (2013), value chain analysis can be a very useful concept that could help in identifying and understanding different business activities, and helps in prolonging the firm’s existence in the market. Through value chain analysis, those activities which add value to firms’ operations can be identified and separated from the ones which do not (Rees and Fielder, 2012). This way steps can be taken to improve firm’s overall functioning and make such activities efficient and effective for the organization. In relation to the study conducted by De Kok, Uhlaner and Thurik (2009), value chain analysis of organizational activities can be very helpful in understanding the importance of cost management practices and determine areas where the aspect of cost management is required (Wareham and Gerrits, 2009).
Over the years, numerous organizational theories and approaches have been developed. However, the process based approach is the latest one and holds prominent importance for companies. It is being developed into a system through which companies can improve their functioning and add value to their overall operations (Yandrasevich, 2011). This way the organization’s existence in the market can be enhanced by significant margins. Therefore, it may not be wrong to say that if an enterprise aims to enhance the quality of its overall operations, then it needs to use the process based approach.
The process based organizational approach states that every organization must pay thorough attention to its activities so as to identify those processes that may be adding value to operations of the company and those which do not do so (Fruitticher, 2010). This way the overall operation of the firm can be made efficient and effective, along with ensuring that all activities are in line with organizational goals and objectives. Many types of functions and systems can be used by the firm to improve its functioning and pay attention to the processes that it uses to manage daily operations. In this regard it may not be wrong to say that cost management practices can be made more efficient and effective, helping the firm to become a leading player in the market (Walker, Pritchard and Forsythe, 2013). Here, different quality systems can be used by the company to enhance its functioning and thus achieve the goals and objectives with ease and comfort.
For organizations, it is crucial that they have a healthy and positive relationship with different players in the supply chain, as any mistake in this regard can turn out to be very dangerous for the firm and put its existence in a state of risk. In catering industry the supply chain is crucial, as it forms the basis through which the business can succeed (Porter, 2004). Herein, it is important that such organizations develop proper and healthy relations with the vendors, as through it organizations’ operational quality can be enhanced significantly. Developing and maintaining such relationships can prove to be good and efficient for the company. According to Kirk (2010), it would help an enterprise to attain its goals and objectives along with determining ways through which efficiency and effectiveness of organizational operations can be enhanced. Therefore, it may not be wrong to say that an enterprise can achieve its goals easily and effectively by developing and improving its relationship with B2B vendors (Liyanage and Kumar, 2013). Furthermore, such relations can help the organization to sustain in the market for a long period of time.
Cost management is one of the most important aspects of business operations. If proper attention is not paid towards the issue of cost management, then it can negatively influence the company and put its existence in a state of jeopardy. Worsfold and Griffith (2013) determined in his study that the catering industry has evolved significantly in recent years as numerous companies have entered the market due to which cost management systems and practices are critical for such organizations (Summers, 2009). However, on the other hand, Clarke (2008) states that catering companies need not consider it to a great extent because even if organizations do not use such systems, they can still manage their business operations in a very efficient and effective manner (Kirk, 2010).
It is a well-known fact that the catering industry is a very competitive landscape and therefore companies, in order to sustain in the market, need to reduce and manage their costs significantly. This means cost management practices are of significant importance for catering companies. There are a lot many benefits that they can avail through the same. If costs are not managed properly, then the same may be passed on to the customers, who because of increased prices may become dissatisfied (De Haes and et. al, 2011). Due to this reason image of the firm could be negatively affected and might soon have to close its business operations. In this sense Walker, Pritchard and Forsythe (2013) recalls that cost management must be directly linked to overall organizational goals and objectives. Therefore, it may not be wrong to say that by using cost management mechanisms, an organization can sustain in the market and fulfil its goals and objectives with ease and comfort (Chang, 2015).
There are numerous points and factors which state the need and importance of cost management systems. One of them is that it can be considered as the basis of the determinant of the success of the enterprise. Cost management index, if is managed in a proper manner, then it may not be wrong to say that the company is successful. Through different cost management techniques, management can use various resources available to the firm in a much efficient and effective manner (Saunders, Lewis and Thornhill, 2012). Thus, it helps in preparation of plans for development & expansion and their successful executions.
Effective decision making is another aspect that describes the importance of cost management practices for catering companies. According to Saunders, Lewis and Thornhill (2012), it provides scientific analysis of facts and figures. This helps in evaluating the profitability of the project in the given circumstances so that a proper decision may be taken to minimize the risk involved in the project (De Kok, Uhlaner and Thurik, 2009). On this basis, it may not be wrong to say that cost management systems and approaches could help the management in taking effective and proper decisions, through which not only the image but also the existence of company can be enhanced.
Further, these systems can also be considered as a source of measuring the performance of the business organization. By measuring financial standing or earning made by the company in a time period, the performance of the firm can be evaluated (McPherson, 2008). Value and effectiveness of an organization can be measured by its ability to take risks and the profit(s) that it earns in a time period. The value of an organization would diminish in cases where financial decisions taken by the management are risky in nature; while a financial decision which increases the profitability will enhance the value of the firm.
Some of the prime concerns for any business organization are related to its risk taking abilities and the profits that it earns. The financial decision affects the size of earnings stream or profitability and the riskiness of the firm. Policy decision affects risk and profitability (Richardson and Thompson, 2009). Moreover, McPherson (2008) discusses that the cost management systems are important also from the viewpoint that they play an advisory role for the company. Through proper cost control systems, the financial performance of an enterprise can be judged and evaluated much easily and effectively (Jones and Mellett, 2007).
Optimal utilization of resources is another aspect through which importance of cost management can be understood. Effective cost management emphasizes the optimum utilization of resources of the enterprise (Ozdemir and Caliskan, 2013). It is not always right to relate an organization’s failure to inadequate availability of finances. Lack of effective cost management systems is also a cause for the failure of an enterprise in the market. If such systems are available to an enterprise, then it can determine ways to effectively use resources of the organization. Jones and Lockwood (2012) stated that proper utilization of financial resources is of utmost importance for an organization. It gives maximum returns by increasing the productivity of capital funds.
For companies operating in the catering industry, it is imperative that they undertake different measures to control cost(s) they incur in the day to day operations. In today’s extremely volatile and unpredictable business world, it has become imperative for companies, regardless of their area of operations, to develop ways to cut cost and manage it in a much efficient and effective manner (Jones and Lockwood, 2012). If the firms do not pay proper attention to it, then there are chances that the organization may not be able to sustain effectively in the market. Cost is one of those aspects, which if not managed in a proper manner, then can prove to be extremely dangerous for the enterprise and hamper its overall operations in a negative manner. Moreover, in recent times, it has emerged as one of those areas where companies are operating in the same industry constantly competes with one another (Pirson and Lawrence, 2010).
Since marketplaces have saturated to a great extent, cost competition has increased. Companies compete against one another so as to reduce their overall costs of operations so that price of the product and/or service to the ultimate customers can eventually be reduced. According to Ozdemir and Caliskan (2013) cutting down on costs can help an enterprise to improve its operations significantly. This is primary because of the reason that it would enable such organizations to focus only on those areas which are of utmost importance for the firm and determine efficient ways to carry out day to day functions (Worsfold and Griffith, 2013).
Over the years, various methods and techniques for managing costs have been developed. Since the catering industry is a very competitive sector, functions of cost management hold extra importance for companies in this sector (Rees and Fielder, 2012). These organizations need to use these methods, so as to not only improve its functioning and increase the profits but also to reduce the overall price that is charged from the customers. Those organizations which are able to pay proper attention to this aspect can get a chance to improve their standing in the market and also attain their goals and objectives with ease and comfort (Kpedor, 2012).
One of the main reasons which describe the importance and necessity of cost management mechanisms is that aspects such as wastage are significant in the catering industry. It is the customers who have borne the burden of such wastages, which ultimately negatively influence the image of the company in the market. Therefore, if a firm has to improve its image in the market, then it is crucial for the firm to pay a lot of attention to the phenomena of cost management (Boutros and et. al, 2014).
There are many areas in which cost control mechanisms can be developed and implemented. It includes the likes of dish costing, food control in the kitchen, volume forecasting, etc. In this regard, Guide (2011) states that catering companies, because of intense competition in the market, need to ensure that they use one or the other form of cost control mechanisms. Future of the company, to a great extent is dependent on it.
One of the many approaches to cost control mechanism is to monitor the wastage. Since it has been observed that there is a lot of wastage in the catering business, the best and most effective to resolve the issue is to conduct an analysis of the organization so as to identify areas of such wastages and only develop plans to control them (Fruitticher, 2010). According to Wareham and Gerrits (2009) wastages can be in any part of business operations. Management and other such authorities need to identify these areas as soon as possible so that steps and procedures to overcome the same can be developed as soon as possible. Use of this method would enable the management to work on improving overall operations of the company, satisfy the customers and thus enhance its image in the market.
Cutting down on the labour cost can be very helpful in this regard. A lot of manpower is required in the catering industry (De Kok, Uhlaner and Thurik, 2009). However, many times it has been observed that human resources are not managed and used in a proper manner, or the employees remain idle and do not perform their tasks. This results in increased costs for the company. Therefore firing such employees can be helpful as it would reduce overall costs of the company. Use of this method will allow the company to improve its functioning along with taking steps to reduce its costs in an efficient and effective manner. Labour or the human resources form some of the most important assets that a business organization, regardless of the industry that it may be a part of (Kirk, 2010). According to the study by Fruitticher (2010) cutting down on labour cost can help the firm to manage its costs in an efficient and effective manner. Further the study also revealed that labour costs can form a major part of costs incurred by the firm.
Another way to manage costs is to procure catering software. It can be a very effective way of managing and reduce the overall cost of the company. Such software would inform the management to make a budget and implement it in the firm. Through such software, those areas where excessive cost is being incurred by the firm can be identified (Worsfold and Griffith, 2013). Once such aspects have been recognized, it would become a lot easier for the management to take steps to control and manage them in a proper and effective manner. Jones and Lockwood (2012) states that it is crucial for the catering companies that they pay a lot of attention while using the cost management systems, so as to be able to reap significant benefits from it. Therefore, it may not be wrong to say that image of a company can be improved substantially through the use of cost management systems (Chang, 2015).
For making any research investigation successful and effective, it is crucial that section of the literature review is carried out with utmost care and attention. It helps in developing a base through which both reader as well as the researcher can obtain conceptual clarity and develop a sound theoretical base. While carrying out analysis of past studies and theories on the topic, it was observed that catering companies need to develop and maintain healthy relations with suppliers or the vendors. They have a significant impact on operations of the company and also the way costs are managed to be kept as low as possible. Herein it was also noted that since the catering industry has become so competitive, that it is almost compulsory for companies in this sector to have an effective relationship with the suppliers. If they are not able to do so, then there are chances that performance of the firm would be influenced in a negative manner
On the basis of the study, it can also be said that cost management practices are essential. In some cases, they form the basis of company’s success. According to past research studies on the topic, through cost management practices, management can take effective and accurate decisions that may allow the organization to sustain in the market for a longer period of time. Further, effective cost management systems are also important from the viewpoint that they act as an advisor to management of the organization. Here, the past studies revealed through cost management practices; the company can improve their financial performance. In addition to this, during the study, it was also found that numerous cost management systems have been developed over the years.
Companies in catering industry can take help of different catering software to manage and reduce overall costs. Monitoring wastages and cutting down on labour costs can also be useful and effective tips to manage costs and try to reduce them so that profitability of the company is not affected in a negative way. However, this thought was converse to the ideas presented by Richardson and Thompson (2009) which stated that cutting back on labour costs may not be a very effective idea, as human resources are the most vital assets that the company can acquire. If they fired from the company, it might lead to the development of a negative feeling among the employees, and negatively influence their motivation levels, affecting their performance and productivity.
In this section, the researcher adopts the logical approach while selecting the research tactics for the study. There are various research techniques that provide the scientific approach to the study and helps in conducting the study in a logical way. Here, the researcher has selected various research techniques which are immensely helpful to justifying the whole research process. It includes the data analysis, data collection, sampling, philosophy and approach, nature of the study and so on. The detailed description of selected research methodologies in the current context is explained below.
The selection of appropriate research philosophies is required to assessing the thought process and the acceptance of the researcher towards the selected subject matter. There are mainly two types of research philosophies; positivism and interpretive. The positivism research philosophy only includes the universal facts and figures. The scope of any kind of change is not available to the positivism philosophy. The interpretive research philosophy deals with a variety of elements and factors. The scope of changes into the existing theory or belief is possible into the interpretive philosophy. Therefore, in order to understand the subject matter from various angles, one should rely immensely on the interpretive research philosophy (Hoy, 2009). In the current scenario the researcher has focused on the interpretive research philosophy as it could provide sufficient amount of information about the cost control mechanism particularly in relation to the catering business.
It explains the way in which the researcher has undertaken the entire research process. It could also lie within two categories; one is through the inductive approach, and other one is the deductive approach. The applicability of inductive approach is most suitable when the researcher aims to study the already given theory through various observations. Further, the deductive could be applied when the researcher has observed certain events and on the basis of occurrence of events provides the theory. Thus, there is a huge difference between these two approaches. Here in the current report, the researcher has practiced the inductive approach. With the help of inductive approach, the researcher can study the cost management principles and can try to understand the intricacies of the catering business. Accordingly, on the basis of the proper investigation, the solutions, and best cost control mechanisms could be provided. Therefore, it is a most suitable technique in current perspective.
It deals with the structure of the report. It could be categorized into three parts exploratory, casual and descriptive. The exploratory research design is the one in which the researcher explores the content and dig out until the most suitable content is not extracted. Further, the role of casual research design is immense with respect to ensuring that the cause and effect relationship must be established within the study. With the help of descriptive research design the researcher could be in a position to focus on objective information and it discusses the subject matter point to point. Here, the researcher has relied upon the exploratory research design so that the cost management could be easily understandable (Merriam, 2009). Moreover, it could help in relating its principles to the catering operations.
The type of the research has a direct association with the nature of the study. There are three kinds of studies that could be classified on the basis of research nature. It includes the qualitative research nature, quantitative and the mix research nature. In a qualitative study, the research is more subjective in nature and most importantly the whole process is very lengthy. On the contrary, the quantitative study includes the objective information, and it is moreover complex in nature. The numerical and statistical tools could be applied in the case of quantitative nature of the study. A most significant aspect of the nature of the study is that the researcher can focus on both qualitative and the qualitative nature of the study. In such cases, the researcher focuses on gathering the information which is subjective and objective. It is mainly called as mix research type. Here in the current report, the researcher is aiming to study only the availability of cost control mechanisms for the catering business. Thus, the qualitative nature of the study is more suitable for the current report (Hoy, 2009). Since the researcher has conducted interviews with various managers and accumulated qualitative information, it is not possible to apply any statistical tool or technique on the collected data. Thus, it is apt to say that the present work is qualitative in nature. Through qualitative nature of the study, the researcher can include the detailed information about various fundamentals and principles of cost management along with assessing its impact on catering operations.
For any research, data could be collected in two ways either through primary sources of data collection or with the help of secondary sources of data collection. The primary sources of data collection could be helpful in gaining the real time experience or the viewpoints of the respondents. On the other hand, the secondary sources of data collection deal with already existing data and information. The primary sources of data collection are questionnaire, interview sessions and observation techniques. Here in the current report, the researcher has focused on the interview sessions to gather the data from primary sources. Secondary information has been gathered from the books, journals, and online articles. Hence in the current scenario, the information has been collected from both primary sources and secondary sources of data collection.
The role of sampling is immense in supporting the data collection process. Through sampling, the researcher can gather the most relevant and useful information. It is to acknowledge that the sampling process must be undertaken in the proper way as it has the potential to support the accomplishment of aims and objectives. To conduct the interview, the management of cited organization has been approached so that their operational structure could be understood easily (Merriam, 2009). For the same purpose, 3 top management employees have been interviewed by the researcher. It includes the purchasing control director, store manager and NHM manager. Their responses can shed light on their tactics and methods related to managing cost within the catering business.
The data analysis section must be treated properly as it put its impact on the reliability and validity of the study. It is to acknowledge that the data analysis section is most important as it helps in gaining the findings and results in most appropriate manner. Here, due to qualitative nature of the study, the researcher has relied on the thematic analysis. It enables the researcher to divide the results into various themes. It is most compatible with the lengthy information and most importantly the valid information could be sort out properly.
Without ethical aspects, none of the studies could be completed as it increases the confidence level of the report. The researcher is required to ensure that every step in the research process is driven by the ethical elements. The major elements that have been considered as the part of ethical considerations are no alteration into the data, no manipulation in the findings, putting the details of the research confidential and most importantly avoiding the plagiarism. It is to acknowledge that the information on the research must be provided in the genuine and authentic way. It could be helpful for companies to take their decisions. Further, the details of research must be confidential else it could put its negative impact on the future studies. In the current report, the special priority has been given to avoiding the plagiarism. Whole content included within the study is not copied from any secondary source. The plagiarism is one of the major crimes and illegal activities into the research process that has been avoided in a convincing manner (Muijis, 2010). Additionally, the researcher has not manipulated the findings of the study. Every piece of information is correct and based on the gathered data. Therefore, these ethical issues have been covered by the report.
To increase the reliability and validity of the study the special consideration has been given to the data analysis section. By analyzing the data in an appropriate manner, the researcher can interpret the findings which are valid and reliable. Moreover, the reliability could be increased by applying the most suitable data analysis techniques. Next, the researcher has relied upon the data collection process as well. The valid findings could be provided if the collected data is reliable and genuine. All the sources of data collection are highly authentic. Hence, both data analysis and data collection procedures have been undertaken in a very careful manner to ensure superior reliability and validity of the study.
In the current scenario, the time was the major limitations of the study. Completing the project on time was the principal factors which could be taken as a constraint of the report. Due to the subjective information, a lot of time was consumed on surfing the internet, books and journal articles, thus it took the time to gather the most relevant information (Muijis, 2010).
In this part of the study, the researcher practices the significant aspect related to the research. Data analysis is the major section as the whole study is based on this chapter only. It acts as the essence of the research as it provides the result or interpretation which is the basis for the entire study. Here, it is clear to explain that without data analysis section, the researcher can never accomplish the research. It could be done with the help of statistical tools and analytical tools. Here the whole lot of information is available in a subjective manner so thematic analysis could be used for the purpose of providing the findings.
On the basis of interpretation of interview results, it could be stated that the interviewees have shed light on various advantages of the cost management. They directly or indirectly indicate that cost management is essential for the stability of the business. According to the managers, in order to ensure the sustainability of Benugo, they have to have proper cost structure so that financial aspects could be managed properly. The financial resources could be invested or utilized appropriately along with the increment in profitability as well. Additionally, the list of benefits also includes the good utilization of the organizational resources. It is vital that the current catering business use their resources in a proper manner as it could lead towards the cost management. The operations could run smoothly, and any kind of market situation could also be handled properly. These benefits could be availed by the company in long run. Thus, the managers, during the interview process, concentrated on such kind of advantages of cost management.
The purchase control director has mentioned that the suppliers also affect the cost structure of an organization. Their relationship and the business tactics have huge impact on the cost management practices of the catering business. The major element where the Richard West has pointed out is that the quality parameters must meet else the cancellation of delivery can delay the project. It could cost extra money in various ways. The supplier and company relationship is based on the quality products. Although, the pricing could be high, but the services could be improved immensely. It does not hamper the quality of their catering business. Thus, the quality check of the suppliers is also essential.
Additionally, the negotiation could become easier if the supplier and company relationship is healthy. Negotiation becomes possible if there is a regular purchase from the suppliers as mentioned by purchasing control direction. Therefore, the volume really matters, and bulk sale put its impact on the negotiation and rebate activities. Richard West explained that the situation of inflation could also be managed properly. 'No compromise' on the quality of the product is the ultimate objective of the company. On the basis of an overall conversation with the purchasing director, it got to know that bulk purchase actually creates differences. It enables them not to compromise on the quality of raw material and to negotiate with the actual price. It could be termed discount based pricing for the bulk purchases. It helps in managing the stock; there will be neither over stock nor under the stock situation in the company.
According to purchasing director, other than bulk purchases, some precautionary steps also help in ensuring the quality and safety of the raw material. Like maintaining the proper temperature, setting the quality measures and so on. It helps in ensuring the food safety and situation of frequent reordering could be avoided. Here, the waste control is another factor which is required to be given much consideration. With waste control, it is not possible to manage cost in catering business as mentioned by Richard West. Further, the element of waste control laid down emphasize on the fact that the ingredients must not be wasted under any circumstances. Use every ingredient and material in an innovative manner is the secret of cost effectiveness. Here, proper planning could be beneficial in ensuring the waste control.
According to the managers, it is clear that there are various challenges to the cost management practices. The major challenge is deal with the day to day operations. In catering business, the dynamism of activities is very high. Here, in this business, the need for the product is immense, so due to high range of products sometimes it becomes tough to keep a watch on the market. However, somehow the operations team of cited organization manages to watch the trends and ups and down in the market. Other than this, the change in market value or the fluctuations in the price could be a challenge. The price of the products is based on the seasonal aspects. Change in the season could put its impact on the pricing structure. It is to acknowledge that seasonal aspects are completely out of control as it affects the whole lot of pricing structure if catering business. The list of challenges also includes maintaining the relationship with suppliers. Any kind of unhealthy aspects could hamper the quality factors, and most importantly the impact on pricing could be experienced. Further, the challenges are also related to avoiding the wastage of resources. In catering business, the items like salads, pieces and ingredients got wasted during the cooking process. In such situations, it just affects the principle of good utilization of resources.
Further, the seasonal work pressure is also one of the major challenges that could be faced by a company. In catering business, during the season time, the work becomes double and in such time the need for manpower increases. Thus, dealing with the situation could be challenging at large scale. The entire year, the same employees could never be employed without such amount of work, as it can raise the cost structure. Hence, the little bit of problems in the planning process could create troubles in managing the profits. Here, the holidays of employees, managing their performance, and dealing with same quality and so on these aspects could also be challenging. Therefore, these are certain challenges that could be faced by the cited organization or the catering industry.
During the interview process, the manager of the company provides the fact that by controlling the labour cost also the cost structure could be aligned properly. The labor gets the proper target so that the earning per head could be increased. The work is divided in such a way so that the expenditure on per head is less than the earning per head. This is very crucial as the excessive salaries, or the improper usage of manpower could lead towards the wastage of resources. The budget also includes the salary structure and other expenditure that has been incurred on the employees. Thus, the company sets the targets and workload for the employees accordingly. It helps in justifying the salary band without creating pressure on the cost structure. Maintaining the worksheet or the allocation sheet as per the availability of work and seasonal employees could also help in managing the cost. Through scheduling and planning, the temporary staff could be arranged, and cost per head could be controlled.
According to Saunders, Lewis and Thornhill (2012), there are numerous points and factors which state the need and importance of cost management systems. One of them is that it can be considered as the basis of the determinant of the success of the enterprise. Cost management index, if is managed in a proper manner, then it may not be wrong to say that the company is successful. Through different cost management techniques, management can use various resources available to the firm in a much efficient and effective manner. Thus, it helps in preparation of plans for development & expansion and their successful executions.
align="justify"On the basis of interpretation of interview results, it could be stated that the interviewees have shed light on various advantages of the cost management. They directly or indirectly indicate that cost management is essential for the stability of the business. Hence, the current study completely agrees with the previous studies as both the studies have stated that cost management has so many advantages in business.
According to Boutros and et. al. (2014), one of the main reasons which describe the importance and necessity of cost management mechanisms is that aspects such as wastage are significant in the catering industry. It is the customers who have borne the burden of such wastages, which ultimately negatively influence the image of the company in the market. Therefore, if a firm has to improve its image in the market, then it is crucial for the firm to pay lots of attention to the phenomena of cost management. According to Fruitticher (2010), one of the many approaches to cost control mechanism is to monitor the wastage. Since it has been observed that there is a lot of wastage in the catering business, the best and most effective to resolve the issue is to conduct an analysis of the organization so as to identify areas of such wastages and only develop plans to control them. According to Wareham and Gerrits (2009) wastages can be in any part of business operations. Management and other such authorities need to identify these areas as soon as possible so that steps and procedures to overcome the same can be developed as soon as possible. Use of this method would enable the management to work on improving overall operations of the company, satisfy the customers and thus enhance its image in the market.
According to the current study, with waste control, it is not possible to manage cost in catering business as mentioned by Richard West. Further, the element of waste control laid down emphasize on the fact that the ingredients must not be wasted under any circumstances. Use every ingredient and material in an innovative manner is the secret of cost effectiveness. Here, proper planning could be beneficial in ensuring the waste control. It can be said that somehow, both the previous and the current study agree with the same fact that wastage in the companies are significant and hence the wastage should be controlled and should be paid a lot of attention.
According to De Kok, Uhlaner and Thurik (2009), cutting down on the labour cost can be very helpful in this regard. A lot of manpower is required in the catering industry. However, many times it has been observed that human resources are not managed and used in a proper manner, or the employees remain idle and do not perform their tasks. This results in increased costs for the company. Therefore firing such employees can be helpful as it would reduce overall costs of the company. Use of this method will allow the company to improve its functioning along with taking steps to reduce its costs in an efficient and effective manner. According to the study by Fruitticher (2010) cutting down on labour cost can help the firm to manage its costs in an efficient and effective manner. Further the study also revealed that labour costs can form a major part of costs incurred by the firm.
According to the current study, the manager of the company provides the fact that by controlling the labour cost also the cost structure could be aligned properly. The labor gets the proper target so that the earning per head could be increased. The work is divided in such a way so that the expenditure on per head is less than the earning per head. This is very crucial as the excessive salaries, or the improper usage of manpower could lead towards the wastage of resources. Hence, both the studies are similar to each other as both the studies have stated that cutting down the labour cost can help in cost management.
On the basis of above report, it can be said that the cost management is essential and most crucial activity. It has a relationship with each and every activity. With the help of current company the impact of cost structure could be experienced in various other activities of business operations. Here, the role of the business model is also understandable properly. It is to acknowledge that there are various benefits of the cost control mechanisms. The advantage is that through effective cost control the company can invest the financial resources in other business activities. It has been found that the company can definitely invest in the installation of new technology in the organization. It is highly essential that the technology must be effective. Many types of functions and systems can be used by the firm to improve its functioning and pay attention to the processes that it uses to manage daily operations.
It has also found that the cost effectiveness lead towards the sustainability of the company and increases the profitability as well. This advantage is very necessary for the medium scale business. It has been found that the list of benefits also includes the good utilization of the organizational resources. It is vital that the current catering business uses their resources in a most proper manner as it could lead towards the proper cost management. Value chain analysis essentially is a systematic tool through which core strengths and activities of the firm can be analyzed in an effective manner. It is a management concept which defines a business organization as a collection of different activities which, if are managed in a proper and effective manner, could prove to be very beneficial for the firm. There are various cost control mechanisms and activities that have been mentioned in the report.
The major one is related to sales forecasting. It is something that allows focusing on minimizing the cost structure. Through sales forecasting, the company can identify the potential of the market and can arrange the raw material accordingly. The stock management could become appropriate. It is clear that the inventory management is highly effective with respect to the cost management. Another technique that has been mentioned in the report is related to the benchmarking. The company sets the quality measures that allow them to deal with the quality factor. The supplier and company relationship could become stronger if the quality of the product is effective.
Further, the cost control mechanism that has been identified is the proper planning and scheduling. Through scheduling the organization can definitely lead towards the step by step implementation of all the operations. Preparing the staff as per the day offs, holidays, weekends so that they can take the pressure and can prepare their resources accordingly. Hence, these small aspects of the operations are part of cost control practices. It is clear that the process could become smoother, and chances of errors could be reduced. It also enables to control the cost.
With the help of above report, it has been found that the training cost is something that could be troubling if the company has a huge turnover rate. Through training, the experience level of employees could be increased. They become more trained and effective in order to deliver their work. It is something that could be beneficial in different perspectives. It also includes the hiring cost of new employees on the regular basis. The budgeting is a part of the planning, and if the turnover rate is high, then it definitely puts its impact in the budgeting process. Thus, it is clear that turnover must be minimized, and staff people must be retained.
Other than this the company can identify the need of employees as per the season or weekends. The work pressure demands the high number of employees. So in such scenario, the company can out their employees on some other productive work. It can also save a certain amount of cost. It is however not ethically correct technique, but seasonal employment could be helpful for the sustainability of the organization. Moreover, the company needs to implement the waste management. Through controlling the waste management the company could be in a position to utilize their resources in most appropriate manner. It is clear that the innovation is required while working in the kitchen so, that the raw materials could never be wasted under any circumstances.
Further, the cost control mechanisms also deal with menu designing as well. Through menu designing, the company can definitely be in a position to understand the demand of customers. The menu could be designed as per the season, and it helps in maximizing the sale. The inventory could be ordered accordingly. Therefore, these are certain tactics which have been identified after the interpretations of results and findings. During the study, various challenges have also been identified. Like seasonal employment, improper training, labour turnover and so on are the major hurdles. The challenges could be immensely problematic with respect to minimizing the cost structure. The planning also becomes tough due to uncertainties. Fluctuations in prices and seasonal changes in the prices of raw material are also major challenges. These challenges can affect the business negatively. The pricing could be hampered, and sometimes a company might end up losing the hold on pressure and can compromise the quality. Thus, positive measures are required to handle the challenges.
In order to deal with the challenges mentioned above, there is a huge requirement of focusing on the fact that the wastage must be avoided. If the wastage of raw materials is avoided, then it definitely helps on the ground of increasing the profit margins. Further, the situation of over order and under order must also be handled by the inventory manager. These activities can show its expediencies immensely with respect to minimizing the cost. The cost structure is volatile and based on various uncontrollable elements. It is to acknowledge that the stock and its related decisions must be taken appropriately. Other than this, the wages is another aspect of cost which must be taken into special consideration.
It is clear that the staff people should get a proper and handsome salary, but their utilization should also be proper. Underutilization of the potential of the staff people directly leads towards the increment in cost structure. It puts the burden on the company and the cost control mechanism could be failed. Here at this juncture, it can be clearly stated that these recommendations could be beneficial at large scale. Moreover, the list of recommendations also indicates towards the implementation of proper training programs. It can definitely help with respect to ensuring the increment in the experience level of employees. The trained employees can work effectively and can contribute well in saving the cost structure.
Further, the company needs to implement such plans and activities that enable them to retain their employees for the longer period of time. With the retention of employees, the training as well as the hiring cost could be minimized. In order to retain the employees various human resource techniques could be applied. Therefore, in this way, these recommendations could be followed in order to ensure the effectiveness of cost control mechanism.
On the basis of above report, I have two kinds of major learning developed. The first and foremost is related to the intricacies of the catering business. On the basis of management aspects, the whole set of learning could be divided into three major parts. One is that the knowledge about cost management and cost structure has been developed. It is very much crucial for the academic as well as professional purpose. In the hotel industry, some sort of knowledge could be applied with the help of this study. Additionally, the second category is related to gaining the intellect about the management aspects or work environment of catering business. Therefore, it is clear that these set of knowledge could be helpful in long run. At last, the third kind of knowledge is related to the application of management theories and models.
While completing above report various models have been reviewed so that the proper understandings of the business could be gained. Value chain analysis is the major model that provides the scenario for supply chain management. The cost management is directly associated with the operations, and supply chain management is part of operations. Thus, with the help of above report, the application of the model with respect to cost management becomes clear. On the other hand, this report is helpful to me in understanding challenges that could be faced in managing the cost structure. The scope of learning was very wide, so I got intellect about the importance of cost management as well. How training and turnover are associated with each other in managing the cost, it is also a part of my learning. Therefore, these are certain learning that has been grasped after constructing the above report.
The second kind of knowledge that has been gained from the report is related to the fact that construction of research report is not very easy task. There is a requirement of huge patience along with the development of knowledge aspects. While constructing the research report the researcher must be clear with the subject matter and topic as well. It could be helpful with respect to deciding the direction of study and designing the aims and objectives. The expediencies of various stages of research report making have become clear. Academically this report was highly beneficial for me. The different dimensions of the study have become clear at large scale. Therefore, huge learning has been associated with the current report.
RW: We do consider previous knowledge history of the supplier, as well as technical accreditation, if is working according to an accredited third party organisation. Not just that, before we start to cooperate supplier has to pass self audit according to the WSH Group expectations.
RW: We work closely with our suppliers, for instance, if we sell £100.000 worth of cucumbers, we do make a deal on 2% rebate, as of bringing business to the supplier based on volume purchases.
As any other business we do benchmarking, however we do want to pay fro the highest possible quality. Although, I must admit that suppiers do offer some complimentary rewards, for exchange of new contract. Besides , as nubego grown its business and still growing , suppliers getting interested of involving in business with us. Therefore, we do consolidate our suppliers, giving chosen more business, however asking some rebates in return.
RW: Inflation is not our biggest concern. We have great relation with our suppliers and usually we do share any cost increases among manufactures, supplier and us, as their customer.
RW: First of all we do have welfare standards. For example we do buy three different type of chicken. For high street shops and in-house operations its free range, for the restaurants freedom foods chicken which is highest RSPCA approved by ethical foods. Its top quality, but its really expensive. Having said that, chefs are trying to get cheaper products in to save cost without conforming it. Although, we have ways to check prevent those. As of checking, if shops order earlier estimated value of chicken in a period of time. If not then, we do verify in the system other used alternatives and restrict that product with no possibility buying it in. Which helps for unit staff to start ordering the right product again. Provenance is another valid aspect. If we decide to develop new dish including salami, it has to be from the country of origin. We have our standards and they are high, either we don’t mind to pay for them.
RW: We never compromise quality in nubego. Often we do look at the product engineering. For instance ordering green pesto with fresh olive company for £45 per 5kg, where we spend with them only £500.000 and having the similar ingredience from another approved supplier. Whom, we spend with 6.5 mln pounds a year, therefore we can negotiate a price level. Overall this will not undervalue product but save cost. Besides, before launching product, it has to go true the approval process, including several quality checks.
RW: I have been with this company for past 15 years, some of the suppliers are longer than I am here. Our relation is very good and transparent. We tend to have informal type of contract.
RW: Well, there are no contracts as such, its an open book policy, we do have to trust each other. For instance, we do tend to agree , on our price of chicken breast for short term and then meet and agree again on same or other offer.
RW: Simple, return and reject.
RW: Yes, as I mentioned earlier we are growing as business. We do consolidate our suppliers in smaller number, which gives more business for the rest giving bigger volume and give us lower cost per unit. Win -win for both sites. We are still growing, this will assure our suppliers for new business in and again new possibility to renegotiate buying price. Also we do implement direct negotiation with primary manufacturer, where we can claim discounts based on volume of ordered stock.
RW: We are dealing with food here, it’s always a risk of food safety. According to the policies, critical control points, has to be checked when receiving goods. For instance, temperature of the vehicle, product, visual inspection, cleanliness, pest control.
RW: We do provide a control list, which has all the required checks and product ingredience.
RW: First of all product knowledge, what is more expensive and what’s less. When working in the kitchen, we often see plenty of salad leaves on the floor but not cheese slices or ham, which is much cheaper comparing to the leaves. Chefs, when planning their menu, looking at the seasonal product. More attention to the recipe cards, which could be time consuming but eventually will pay back in cost. Other valid point is a waste control, involving batch weighing, by splitting right amount of ingredience among the production.
GM Phil: Biggest challenge in this business is half term. General week 90k, on the half term by 200k. But we don’t double our team.
February and October because its only a week long. Others are 2-3 weeks. Its short period of time for London to visit.
Contract: 0hrs all team members. After the half term, we decide who to keep and performance. Team members prefer to be employed 0hrs rather than minimum to have more cash in hand. This cost about 6k a week on holidays.
Accrued money on holiday, to be able to balance the figure up.
Pay rate: review every 3-6months. 7.28 – 0hrs, contract 6.70
Phil: We set a budget and they work accordingly. We task them on the money they spend not on the money they make.
What forecast do you implement, does it always work? Attach evidence?
Forecast is set by general manager based on current sales. It works when amount of visitors in museum is there otherwise, if not sales we have to send people home. By law we can send them after two hours, but we don’t like to do that.
We consider Weather forecast , as well as days of the week. For us the most busiest days are : Friday, Sat and Sunday
Time of the day : we check on internal system - stocklink, analysing sales and data and terms of the volume of the customers.
In terms of the serving dish or complicated and slows down the service.
Ideally we should try for 3mths. Otherwise it’s enough time to develop new plan, not to change things to often.
Team leaders, assessing history of the previous habits and office manager, showing how to use the excel.
If , manager is not proactive to send people home on the right time, against stock-link reports or bringing enough people when is busy. Business will loose.
Inspections: Rota, inputs from day before. Forecasted versus actual. Those have to be send to GM for assessment every morning.
GM Phil: We have a cost of goods. Angelo – store manager would input his number in to the system.
What, if there are limited amount of money left to spend?
We do access all possibilities and holding stock. Value and counting error from the actual department. Menu we will do costing’s.
Angelo STORE MANAGER: you have be able to training your staff on how to check deliveries for damaged items, as they have to go back. It can be sometimes up to £50, depends on their packaging.
Implement tracker: expending cost per unit, we know how much we spend in the kitchen and other units. If we have certain budged on food spend, if sales goes down we can always track it back, adjust.
Decreasing wastage: As unit we implement wastage shit. Different tactic on the different product and unit area. To use correct product and with GP. We have to make sure that staff serves the correct amount of food to the customer.
GM: Angelo and head chef Alex. I do want them to come with business plan for the next year. The main goal for Angelo is to find a right product, communicate with suppliers.
Specials of the week, before creating menu. Two different accounts, slightly worse chicken to different unit nut not the main restaurant.
Alex – wastage control.
Standard, portion control, reutilize, smart with they buys. (cost of recipe attached)
Angelo: Everybody! Myself and chef and other staff, otherwise. Team work and the common goal.
GM Phil: Integral part of the business. This helps of control your stock.
Against theft. As process in place to avoid discrepancy.
Angelo: The better and correct inventory and how much of the holding stock we have in the unit.
NO. We just increase pricing. As of location and type of customers and customers expect quality!
Angelo: YES. I do proposal for the rest of the team and management decides, if we can sell. Its depends on the business, its depends on the unit and selling product. Also the concept of the place.
Phil: Benchmark across the rest. Angelo, benchmark product and GM is researching price.
Angelo: Ask supplier for the list of the product you can order from them and then decide what’s the best for us. At the end of the day head office approves.
Angelo: If this approved then I just discuss with GM. Price is the important.
Stock control: Depending on the unit, to involve store management to avoid staff direct contact with stock. Knowledge, theft.
FIFO – first in first out, in place, knowledge of staff - TRAINING
How you do you plan your menu? (no evidence)
Manager NHM (45min)
P&L is based on calendar and budget and we have to stay with a budget. We are looking the school holidays and the calendar month. its all depends on the sales volume. Where you still operate on the dissent stage. But when we approach end of the week its should with a budget.
Previous GM trained how to read the figures profit and loss paper. How you doing against budget and against previose year.
) Half term – we higher by our selves. Due to the big requirements as 13 staff.
Aim: spend per beverage to increase to £5 per beverage.
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