Gregor Case

1. Their current customer segment is a demographic that is aging rapidly, you can expect a shrink in sales.

operating costs. This could most effectively be accomplished in two ways. First, through a reduction in flying

As companies compete in a global market, several challenges are prevalent. As the business world becomes globalized, more companies and corporations frequently encounter dilemmas based on differences in world and cultural views. The dynamic of cutting overhead cost for companies is no longer limited to products. It has now evolved over time to

My recommendation would be for starters, enroll every sales rep in a sales training class. Upon completion of I would set a goal that each sales rep must contribute at least 10% of the net income for the company. Since there are 9 sales reps this leaves some room for extra. This will not only force the sales reps to work together, and encourage friendly competition. I also recommend you elect a sales representative team leader (for example Miss Peacock who is consistently your top sales person) and empower her to encourage, coach and teacher the other sales reps in her methods and tricks.

The most noticeable growth in this section is seen in sales from 2002 to 2003. These sales have increased from 3.7% in 2001-02 to 23.5% in 2002-03 after the expansion of the store. This truly helps the company to a positive way when seeing such drastic changes. Net earnings have almost doubled and gross profit was on the rise as well, which is also a positive trend for the company that will not go unnoticed. This indicates a positive correlation and increases in profitability.

Cost has traditionally being a major influence on all business as all businesses desire to achieve maximum efficiency as it is a vital factor for businesses in order to reach the ultimate goal and success. Businesses sees cost as the key value to success and aims to become as much cost efficient as possible, by implementing a cost-leadership style approach to the operations variable cost or fixed cost ,while maintain the expected profit margin, business is able to gain a competitive advantage over their competitors in their target market. This is called cost-based competition. By determining the break-even point and applying cost saving strategies, to reducing cost, businesses who apply cost-based competition in their operations is able to maximize the profits and lead business to success.

| Maintaining high quality also keeps costs down to help improve cash flow and keep overhead cost to a minimum.

Store’s future strategy: This store was said out-dated and catered to old people. Although the store had tried some promotions to attract younger customers, McGregor felt they had not been entirely successful. So they need to be catered to younger people as well.

In review of the operating costs, overhead and administration have increased by 8% from 2008-2011 or $116,870. In addition salary dollars continue to increase from 2008-2011 by $111,150 with no efforts to flex. The other expenses are staying steady in proportion to gross revenues. There may be opportunities in these areas however salaries and overhead is the greatest opportunity to scale back costs and contribute to increased net income and ultimately positive cash flows. Flexing salaries and benefit to 44% of gross revenue and reducing overhead and expenses to 10% of gross revenue is recommended for Ms. Ringer to increase net income to $152,956 and equity to $240,214 (exhibit Operating Statements-2012 proforma).

Internal efficiency through the decrease of marketing costs, reduction of order taking and fulfillment costs and improving the retention rates of our customers.

In (Table 3) and (Table 4) we apply these allocation rates with Customers A and B to illustrate how costs are affected by the ordering habits of customers

From the aspect of cost center[1], tracking information of cost expenses would facilitate management to figure out the productivity by an unbiased measurement. In operations, company units such as the human resources department or marketing department, except sales department, are not engaging in market share or generating revenues. In contrast, these departments contribute their capabilities for internal supports and help sales department turn profits to the company. Those efforts are a part of product costs and also are a norm for performance evaluation.

Ms. Ringer is largely supporting operations through her line of credit versus managing costs. In review of the operating costs, overhead and administration have increased by 8% from 2008-2011 or $116,870. In addition salary dollars continue to increase from 2008-2011 by $111,150 with no efforts to flex. The other expenses are staying steady in proportion to gross revenues. There may be opportunities in these areas however salaries and overhead is the greatest opportunity to scale back costs and contribute to increased net income and ultimately positive cash flows. Flexing salaries and benefit to 44% of gross revenue and reducing overhead and expenses to 10% of gross revenue is recommended for Ms. Ringer to increase net income to $152,956 and equity to $240,214 (exhibit Operating Statements-2012 proforma).

Based on the revised costs and profitability estimates, what action should Sippican’s management team take to improve company’s profitability?

The goal of traditional accounting practices is to achieve the lowest possible cost per unit by maximizing employee and equipment productivity. However, the goal of the plant’s