Cost cutting should be used by the company to reduce costs with the goal of increasing efficiency, addressing funding shortfalls, and remaining functional. It may be done in response to economic pressures and it can also be a tool to become more competitive. Authorities from the company needs to decide where costs should be cut and by how much. Decisions to cut costs are based on a variety of needs including concerns about the availability of money, the inability to remain competitive in a market as a result of rising costs, and the desire to run a business more leanly. CSC Manila should be concerned and try to cut cost for they were experiencing negative income because of their expenses. The company should also conduct Cost-Benefit-Analysis and Cost Controllership in order for them to determine whether costs and expenses incurred were beneficial for the company.
Budget or financial planning helps to aid the planning of actual operations by obliging the authorities or the managers to consider how the circumstances may change and what phases should be taken now. Also it will encourage managers to consider problems before they arise, provide forecast of revenues and expenditures, how the business might perform financially if certain strategies, events and plans are carried out, enable the actual financial operation of the business to be measured against the forecast and establish the cost constraint for a project, or operation.
There was a favorable increase of Total Sales for the past three years for the company. One factor was that it had a huge increase in the foreign exchange account. It may be helpful for their company since it helped them to avoid getting a negative profit. If you will check their income statement you will able to see that their operating expenses tends to decrease yearly but the cost of services rises yearly as well that made their income negative....
Please join StudyMode to read the full document