Faculties and Departments > BBA Discussion Forum
Cost minimization
Faiyaz:
As Mr. Limon said, we should diverse the capital so that the risk can be easily adjusted with return. Other than that, good raw materials should be chosen to make a product because it does not get wasted and also efficient workers should be employed. This thing can also maximize profit as these elements prevent unnecessary or wastage of materials as well as helps to position the product in the minds of customers and thus they prefer it... A sound financial planning could also serve in this respect. E.g- an organization should retain some portion of the profit and not distribute it among shareholders so that it could be used as capital. If this planning had not been made then an org. might have to borrow and thus have to pay interest, which could prevail unnecessary, ill-management of profits and a failed foresighting strategy as well as shows the inadequdcy of investment deed and of course the manager.
goodboy:
--- Quote from: Faiyaz on November 10, 2010, 08:40:28 PM ---As Mr. Limon said, we should diverse the capital so that the risk can be easily adjusted with return. Other than that, good raw materials should be chosen to make a product because it does not get wasted and also efficient workers should be employed. This thing can also maximize profit as these elements prevent unnecessary or wastage of materials as well as helps to position the product in the minds of customers and thus they prefer it... A sound financial planning could also serve in this respect. E.g- an organization should retain some portion of the profit and not distribute it among shareholders so that it could be used as capital. If this planning had not been made then an org. might have to borrow and thus have to pay interest, which could prevail unnecessary, ill-management of profits and a failed foresighting strategy as well as shows the inadequdcy of investment deed and of course the manager.
--- End quote ---
Well said my friend.........We all should learn the cost minimization process so effectively to apply it in business areas.................... thanks for your convenience............
Shajib
101-11-1375
BBA
Sec: B
25th Batch
Faiyaz:
Thnx sajib... I think we all should know why cost should be minimized. The prime reason is to make an organization profitable. There are different aspects to make an organization profitable. Like, adjusting the capital with the org.'s liquidity. As we know, the main reason to reduce cost is to generate profit. So an organization can reduce liquidity and thus generate profitability by increasing capital. Another thing is, an org. should have a distinct knowledge about fixed, floating, direct and indirect expenses. For example- as we know direct expenses include the raw material, direct patern of wages and convenience. Now, if these are mishandeled then although the financial statements would be ok, but the org. would not be able to take a fair decision. And this may cause different misinterpretetions.
tanzina_diu:
Dear students, cost minimization also can be possible if we are aware enough about consuming utilities. Most of us are not conscious whenever we use electricity and water.
Faiyaz:
Thanks Tanzina Ma'am, for your comments. By gathering knowledge about fixed, direct, indirect and floating cost (e.g- electricity etc.) I meant to say having the knowledge to consume it, showing the appropriate expenses to appropriate accounts etc. thus making fruitful financial statements.
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