business report concerning the increased cost of production of the employer company
1.0 Introduction
The purpose of the report is to develop a business report concerning the increased cost of production of the employer company that deals with the process of production and marketing footwear. The main discussion in this business report is to give an analysis of the report. Under analysis, we are going to discuss the business problem, organizational context, theoretical underpinning. We shall discuss solution faced by the company in which we look at the options, preferred option, and implementation of the solution and evaluation of the solution (Gregory, A., 2015, p. 78). After which possible recommendation and conclusion of the report will be be made. The problem is vital to the business because it makes the employer find appropriate and applicable ways of solving the increased production cost in the company. The primary goal of the business report to be achieved is to provide an informed decision concerning the increased cost of production in the company.
2.0 analyses
2.1 Business problem
The business realized a significant problem within its mode of operation, and this has been causing a nuisance to the company. One major problem that the company is going through is increased production cost. This happens due to renting cost hiking in significant branches of the company, increased expenses concerning training and workforce and an increase in employees cost. Economists came up with the principle law of increased cost of production which suggests that the moment factors of production such as land, capital and labour have gone to the maximum output and efficiency; therefore, the rate of production will be more than the average. Based on the theory of price demand and supply are vital principles because they are able to point out the price of goods and services (Gaibor and Mesías, 2020, p. 121). The goal of supply and demand is to achieve the equilibrium in which the quantity of the services and goods which have been provided match the corresponding market demand and the ability to acquire services and goods. Therefore, price theory gives the room of adjusting the price as the condition of the market changes. The diagram below shows the tree issues of an increased cost of production
2.2 Organizational context
Organizational context is the characteristics of the company in terms of the centralization degree, formalization, managerial structure and size of the company. The increased cost of production of a company can be influenced by the quantity ordered. It is vital for the company to manufacture more footwear at a time according to the economies of scale in order to increase manufacturing process. When the company makes few footwear, the production process becomes slow; hence this will lead downtime, and the machines will not be appropriately utilised (Jablin, and Putnam, 2004, p. 65). Quality is a factor that affects the cost of production within the company. It is recommended that that produces high quality of products should use the exact specifications required and ensure consistent standard should be maintained in all seasons. Therefore, the company should invest in quality because, in the end, it will be able to get good returns and at the same time, have happy clients. Raw material affects the cost of the production of the company because the material can be easier or hard to handle. For instance, if the material used in making the footwear is difficult to sew, the production process will be slow and more skilled employees are required to hand the materials increasing the cost of production.
It is essential for the stakeholders of the company to ensure that there is proper governance of the company and ensure that they are strict to the values of the company. The company managers and stakeholders should ensure appropriate decision making concerning the production system in order to meet the demands of the market. The management should ensure that there is ready raw materials and skilled personnel who have been trained as per the standard required by the company to produce quality footwear to the clients in order to increase the sales. When the rate of sales is increased, there will be increased input to the company hence the rate of the production cost will be decreased. Some of the constraints facing the company are that there is a lack of proper implementation of technology, poor marketing plan, operating on debts and competition( Kumari, and Vandana, 2020, p. 967)
2.3 Theoretical underpinning
The company has been going through the problem of the increased cost of production because of a poor marketing plan. In the modern world, most of the manufacturing companies have established the use of e-commerce as a major means of selling their products to various clients in various countries. E-commerce involves buying and selling of goods and services through the use of the internet. Therefore, the company should establish strong internet links to sell their products through the use of social media platforms such as Facebook, what’s up and emails to increase the rate of a marketing. Technology is essential in the production field. Technology is used in order to maximize product quality, and it plays an essential role of reducing the production cost because it gives quality assurance and control and it enhances proper decision making (Ma, Harstvedt, Jaradat, and Smith, 2020, 236).
Completion is also affecting the company since the company does not use the current technology to sell their products, and in the production system, it becomes difficult for the company to meet the market standards. The company should explore the current technology in terms of machines used to produce quality footwear to satisfy the customers in the market (Seitel, 200, p. 42). Increase in debt leads to a decline in production growth of a company, and it creates a negative impact on the business. Debt leads to few opportunities for the growth of the business hence does not allow the business to grow well. It is vital for the company to avoid cases of operating under debt because it does provide a proper opportunity for the business provide services and goods at peace since the management will always want to settle them hence may lose focus of making a profit within the business.
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