COUNTING THE COSTS ТЕКСТ К СЛАЙДАМ Well

COUNTING THE COSTS

ТЕКСТ К СЛАЙДАМ Well, of course, there are various options here but every option would obviously consider cutting the € 200, 000 in the HR budget, as the freeze on recruitment means they no longer need the services of a recruitment agency. I would leave bonuses as it. I think we can expect salaries to fall by € 100, 000. So, that’s a saving of € 300, 000 on the HR budget. Some people may opt for increasing the low-quality cheap imported raw materials to reduce the production budget. This, of course, would mean down grading from the current top-of-the range image and therefore reduce prices and income. In fact, I think I would increase percentage of high-quality raw materials to 500, 000 and reduce the cheap imported stuff with a view to improving quality. I’d return to the previous year’s running costs of € 600, 000. Then, I’d cut € 400, 000 off the budget for advertising new products and invest € 100, 000 of that saving into advertising for existing products. Bringing that budget up to € 250, 000 and helping to concentrate on promoting our current successful brands. Finally, I’d leave the market research budget to 100, 000. So, that generates a saving of € 450, 000 on sales and marketing and an overall saving of € 1. 2 m, or 15 per cent.

HUMAN RESOURCES COSTS (CURRENT SITUATION) 400 000 € 3 200 000 € External recruitment fees Performance-related bonuses Salaries

2 1. 8 1. 6 1. 4 1. 2 1 0. 8 0. 6 0. 4 0. 2 0 PRODUCTION OPERATING COSTS (CURRENT SITUATION) 1. 8 1. 2 0. 9 0. 6 High-quality local materials 0. 6 Low-quality imported materials Previous year 0. 9 Last year Running costs

SALES AND MARKETING COSTS (CURRENT SITUATION) 250, 000 € 600, 000 € 150, 000 € Advertising for new products Independent market research Advertising for existing products

COSTS Ø Human Resources costs – 4 m € Ø Production operating costs – 3 m € Ø Sales and Marketing costs – 1 m € 15% Reduction of 8 m € = 1. 2 m €

HUMAN RESOURCES COSTS 3, 500, 000 € 3, 200, 000 € 3, 100, 000 € 3, 000 € 2, 500, 000 € 2, 000 € 1, 500, 000 € 1, 000 € 500, 000 € 400, 000 € 200, 000 € 400, 000 € 0€ External recruitment fees Performance-related bonuses Last year Proposal Salaries

PRODUCTION OPERATING COSTS 2 1. 8 1. 6 1. 4 1. 2 1 0. 8 0. 6 0. 4 0. 2 0 1. 8 1. 7 1. 2 0. 9 0. 6 0. 3 High-quality local materials Low-quality imported materials Previous year Last year Proposal Running costs

SALES AND MARKETING COSTS 700, 000 € 600, 000 € 500, 000 € 400, 000 € 300, 000 € 200, 000 € 250, 000 € 100, 000 € 0€ Advertising for new products Advertising for existing products Last year Proposal Independent market research

CONCLUSION ØHR costs – 300 000 € ØProduction operating costs – 450 000 € ØSales and Marketing costs – 450 000 € We can save totally 1. 2 m €