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Business resources M2

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Introduction

Merit 2 It is very important for an organisation like Sainsbury to control its cost so that it can manage it financial resources effectively. The reason Sainsbury needs to controls its cost properly would be that it would end up where it would save money on expenses and increase it revenue. This will help the company increase its profits and this would allow the company to invest money if they required. The reason Sainsbury needs to controls its cost and budget properly is that it would save its money by having the right amount of stock in the shop floor and stock room then the company will have full benefit by selling those stocks and not holding up cash which could be used for other areas of the business. It is very important for an organisation like Sainsbury to control its cost so that it can manage it financial resources effectively. The reason Sainsbury needs to controls its cost properly is that it would save its money by having the right number of staff then Sainsbury would benefit as they would have cash available to pay for other expenses in the business. ...read more.

Middle

The company might even end up in a situation where it can't pay for its expenses no more and this would lead the business to shut down. If Sainsbury do not control its cost and budget properly then this would mean that the company would purchase too much stock and the stock be held in the stockroom. This would then mean that the value of the stock would decrease. As a result this would increase the cost of the company expenses. Also this would mean that the company would be wasting money in a non beneficial area so if the company wanted to use the money in another area it wouldn't be able. Then again, if Sainsbury do not manage its costs and budget properly then this would mean that the company would not be collecting the money owed back in time to pay for their expenses and stock. So therefore this would mean that Sainsbury will have to borrow money in order to pay it s creditors and stock. As a result, this means that Sainsbury will have to pay interest in the money which they borrowed and will end up paying more money. ...read more.

Conclusion

In addition to that, the other problems which can arise if the budgets are left unmonitored are the targets may not be achieved so therefore it may be difficult to identify what was the cause. It will be difficult for neither Sainsbury to implement changes if the performances are nor being monitored. If the management are not aware of where the business is going therefore they may not use resources adequately. Furthermore another problem will be that too much stock may bought and this would mean that the stock would be left in the stock room and then when the stock goes out of fashion then the business will have to put discount on the stock. So therefore they will lose money on those clothes. Another problem which can arise is that the company the company may not keep track of they debtors and this means that the debtors are not paying on time. So therefore they might find it difficult to pay it creditors and might even need to borrow some money to purchase stock and the company will make a loss as they would have to pay an interest on the money borrowed. ?? ?? ?? ?? Abdulaziz Omar Unit 2 - Investigating Business Resources ...read more.

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