Business level free essay sample

For this task I will be discussing the effects of un-monitoring cost and budgets, and seeing how business could suffer if they are not look after responsibly. I will show disadvantages of not using this method properly. A cost of goods is what it should spend to make products. At the start of each period budget of production will be ready, using cost of goods and predicted production quantities. At the end of each period a variance report is prepared to compare the budget costs with the actual costs. The variance report can tell how well Gardiner Store PLC did at carrying out their budget aims. A favorable variance shows that actual costs are less than budgeted costs. An adverse variance is just the opposite actual costs are bigger than the budgeted costs. By using a budget the management team can predict their future costs and cash needs, plan production, etc. We will write a custom essay sample on Business level or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Variance reports can help the managers to identify specific functional areas where they came in either over or under budget. They will try to repeat their successes and get rid of their failures. Each month they hope to become a little more efficient. If budgets and costs are unmonitored Two things mainly: Costs can run out of control, causing organisations to spend more than they need to, run inefficiently, reduce their potential profit or at worst turn a profit into a loss, and budgets can be overstated and if an organisation actually spends less than it expects to in a particular area than those funds can be made available elsewhere in the business. If costs arent monitored effectively such opportunities can be missed. If budgets are not controlled there are serious implications to the well-being: They will have to cut cost: The business need to do this because they haven’t monitor the business’ budget, so the actual costs will be higher than the budget costs, which gives out an adverse result on April (shown on the budget table of M4). So they need to cut cost to cover the loss on April by May. They will have to make people redundant: People redundant can help the business to cut costs, but there will be not enough staff to work in the supermarket, which some service can’t be carried out to customers. But because firing some staffs can help cut a lot, so they may need to take action. Other competitors will sell more products: Because the supermarket of Gardiner Stores PLC doesnt have that much money for input because they need to cut costs to cover the loss of profit on April, also they make people redundant (explained above), so their competitors will take advantages on them, so therefore they will sell more product. Changes in costs Variances can arise for a large number of reasons: Errors in estimating Poor management of resources Unforeseen price changes Equipment breakdown Labor problems Poor planning Shortage of raw materials Budgeting and Variance accounting presume that managers should fix problems, not bury or hide them. It also presumes that these problems are short-term problems, and can be effectively controlled in the future. Sometimes there is a change in actual costs that necessitates a change in standard costs. For instance, a new labor contract could increase total labor costs by a predictable amount. Standard labor costs should be re-calculated to reflect the new actual labor costs. Once a new standard cost is calculated, future variances will be correctly reflected in the monthly variance report. If standard costs are not updated periodically, the monthly reports can show unrealistic favorable or unfavorable variances. The purpose of variances and budgeting is to give management an effective tool for controlling costs. But the system must be continually reviewed and kept up to date. This is also important, because variances are entered into the books as journal entries, so they must be based on reliable main rules. These rules must pass the critical eye of the companys certified auditors, so they must be current and correct. Business Level free essay sample Marks and Spencer face many ethical issues in their daily activities and these affect the public and their business in different ways. Society and Ethical Views When Marks and Spencer set the prices of their products, consumers think why they are priced at that amount. If Marks and Spencer source products from under paid farmers in China then this will be considered unethical in Britain as most consumers who shop at MS want a â€Å"fair trade†. Ensuring MS source their products from fair trade organisations their customers will be encouraged to shop there as they are doing their bit to prevent poverty in other countries. Marks and Spencer donate 1% of their net profit to a charity. MS have to take in to consideration what charity would be ethically right to donate to. For example, donating to an organisation such as BNP would cause controversy and would be unethical due to the parties’ extreme views that do not reflect the whole of society. We will write a custom essay sample on Business Level or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Choosing a charity such as Cancer Research would be more ethical as it is a charity which most of society agree on. This will encourage customers to shop at MS as it they know that some of the proceeds go to a good cause that they believe in. Marks and Spencer’s recruitment process aims to be fair and not to discriminate groups of society. For example, if an old person applied to a job at a manager level and a middle aged person applied for the same job, it would be unethical to choose the middle aged person based on his or her age alone. Choosing their staff with ethical decisions will benefit MS as they will not be accused of discrimination and won’t gain bad press because of it. When Marks and Spencer create their electrics they must make sure that they conform to health and safety regulations. If a batch of products were to get sent out into stores with safety hazards on them it would be down to MS whether to recall it or not. The ethical decision would be to recall the products and protect their customers from any harm, if a customer was to use a faulty product and get damaged from it then MS could be liable to being sued and having negative press printed about the company. Also, the trust would be ruined and people will be cautious to shop at MS. When Marks and Spencer bid to secure contracts overseas with suppliers there are financial ethics taking place. In some countries it is â€Å"ok† to bribe businesses for contracts and this is an ethical decision MS has to take when sealing contracts. If they bribe suppliers for contracts then they run the risk of being exposed and having bad press, this will be frowned upon in Britain’s society and customers will not want to support such activities. When Marks and Spencer trial their beauty products they have ethics in production to consider. For example, testing eye liner on animals and genetically modifying ingredients will clash with some of society’s beliefs and ethics. Groups of society that don’t believe in animal testing will be active in creating bad press about Marks and Spencer’s product creation process. When Marks and Spencer need new software (or intellectual property) they face the ethical issue of whether to torrent (software piracy) or buy it legitimately. Obviously, using a torrent will save money however should information leak out that they have done this activity in order to acquire the latest software it will result in bad press and a lack of trust from ociety towards MS. Ethics in finance: People who work in finance are placed in a fiduciary position of trust; first, by their employers, if theyre not self-employed, but more importantly, by members of the general public, over whose assets they are given control. Their daily business is directly working with other peoples money, or doing other things that affect the publics investment decisions, and if they are unethical people, their clients, and the public, are at hig h risk for being cheated. Finance workers are entitled to reasonable fees for their services, but they are not entitled to engage in investment activity solely to generate more commissions for them, or engage in any other self-dealing while they are doing their jobs on behalf of their clients. And they have to exercise reasonable care when doing their jobs. Bribery – it’s a form of corruption. This is the straightforward use of financial muscle to gain unfair advantage over others. An example would be attempting to gain planning permission by giving Executive pay – excessive pay for top executives is one problem that will not go away. It is a response to public concern about pay rises that are unrelated to effort, plus a number of high-profile cases of failed executives getting pay-offs of up to US $100 million and others having stock options backdated to give them a share of earlier capital gains. This at least tells shareholders exactly what their top executives are earning. Insider trading – insider trading is the trading of a corporation’s stock or other securities by individuals with potential access to non-public information about the company. Such a trade is motivated by the possibility of generating extraordinary gain with the help of non-public information. It gives the trader an unfair advantage over other traders in the same security. Lobbying – Lobbying is attempting to influence the legislative or administrative decisions of state government by oral or written communication with any elective state official, agency official, or legislative employee. Lobbying includes the time spent in preparation for such communication and appearances at public hearings or meetings or service on a committee in which such preparation or communication occurs. Ethics in human resource management: Human resource management deals with manpower planning and development related activities in an organisation. Arguably it is that branch of management where ethics really matter, since it concerns human issues specially those of compensation, development, industrial relations and health and safety issues. There is however sufficient disagreement from various quarters. One group of thought leaders believes that since in business, markets govern the organisational interests and these interests are met through people, the latter are therefore at the highest risk. They believe that markets claim profits in the name of stakeholders and unless we have protocols, standards and procedures the same will develop into a demon monopolising markets and crushing human capital; HR ethics are become mandatory. Ethics in production: There are certain processes involved in the production of goods and a slight error in the same can degrade the quality severely. In certain products the danger is greater i. e. a slight error can reduce the quality and increase the danger associated with consumption or usage of the same exponentially. The dilemma therefore lies in defining the degree of permissibility, which in turn depends on a number of factors. Bhopal gas tragedy is one example where the poisonous gas got leaked out due to negligence on the part of the management. Usually many manufactures are involved in the production of same good. They may use similar or dissimilar technologies for the same. Setting a standard in case of dissimilar technologies is often very difficult. There are many other factors that contribute to the dilemma, for example, the involvement of the manpower, the working conditions, the raw material used etc. Social perceptions also create an impasse sometimes. For example the use of some fertiliser by cola companies in India recently created a national debate. The same cold drinks which were consumed till yesterday became noxious today because of a change in the social perception that the drinks are not fit for consumption. Planned obsolescence – Planned obsolescence or built-in obsolescence in industrial design is a policy of planning or designing a product with a limited useful life, so it will become obsolete, that is, unfashionable or no longer functional after a certain period of time. Planned obsolescence has potential benefits for a producer because to obtain continuing use of the product the consumer is under pressure to purchase again, whether from the same manufacturer (a replacement part or a newer model), or from a competitor which might also rely on planned obsolescence. For an industry, planned obsolescence stimulates demand by encouraging purchasers to buy sooner if they still want a functioning product. Built-in obsolescence is used in many different products. There is, however, the potential backlash of consumers who learn that the manufacturer invested money to make the product obsolete faster; such consumers might turn to a producer (if any exists) that offers a more durable alternative. Estimates of planned obsolescence can influence a companys decisions about product engineering. Therefore, the company can use the least expensive components that satisfy product lifetime projections. Such decisions are part of a broader discipline known as value engineering. Ethics in sales and marketing: To generate sales, sometimes businesses try to employ unethical means. They can do this in a number of ways: Spamming – Spam, or unsolicited e-mail advertising, has become one of the more pervasive ethical issues in marketing since the emergence of the Internet in the mid-1990s. Government regulations and e-mail inbox filters have helped but have not eliminated the problem of companies and marketers flooding your inbox with marketing and sales pitches. Generally, a company should have an existing relationship with you or get formal approval from you before sending you e-mail marketing messages. Spoofing – emails that appear to have been originated from one source when they were actually when they were sent from another. Individuals sending junk emails or spam typically want the email to appear as though it is from a real address, which may not really exist. This way the email cannot be traced back to the originator. Raising their own status This happens when business place false recommendations or blogs onto a website. These recommendations either come from paid individuals employed by marketing companies or are employees of business pretending to be satisfying customers.