REPORT WRITING Your managing Director is concerned to reduce costs and has asked you to make some recommendations

on how this might be achieved. Write a REPORT for the MD, including the following information: outlining the areas in which costs could be reduced (min 3 areas) describing how savings could be made explaining how these changes would affect procedures recommending how to communicate these changes

TO: FROM: DATE: SUBJECT:

Managing Director (MD)/ Chief Executive Officer (CEO) Damaschin Denisa 6th of April, 2012 COST-CUTTING STRATEGIES

BACKGROUND INFORMATION The principle aim of this report is to determine the ares in which costs could be reduced in our company and to formulate recommendations and a cost-cutting strategy, in order to achieve the maximum financial outcome, considering the current economic context. THE PROCEDURE I have undergone a budget analysis and Ive made a comparison of cost and benefits. I have also done a benchmark between actual performance report and a forecasted outcome if we would reorganize companys operations. The focus group Ive conducted in this topic, with all managers from accros the country, highlighted, as well, important asspects and situations. FINDINGS Research has revealed the areas in which savings would materialise and has provided an accurate basis for increasing and improving corporate financial results. The companys revenues in the last two quarters have dropped from $5 million to $4.8 and $4.7 million respectively, whereas expenses were largely unchanged.With the current trend I estimate that within the next two quarters our cost of operations will be greater than new revenue. The Company should therefore undertake initiatives for reducing expenses in areas like product line, marketing, human resources department, and last, but not least, across the workforce. SETTING A BUDGET MEETING The data offered from both reports, budget and performance reports, provide us with the information necessary to cut products from the existing product line, products that are not popular amongst customers, that are not selling at all. Another strategy to meet the budget limit is to outsource some services, such as human resouces, in order to reduce staffing and maintenance related expenses. We may also cut operational costs by reductions in paper use and other areas, like energy, water and travel. The Company can obtain a higher return on investment, if we would spend wisely on advertising. For example, we could cut some newspaper advertising in favour of social networking sites and viral marketing. Salaries and promotions freezes are also recommended cost-cutting approaches. IMPLICATIONS OF THESE CHANGES/RESULTS These initiatives will increase long-term financial performance. The financial impact of cost-cutting actions on the areas mentioned above will help us overcome the challenging economic times. The overall profit is expected to increase by almost 3% in 2013, compared to 2012, primarily as a result of the savings associated with our cost-reduction initiatives. CONCLUSION AND RECOMMENDATIONS Despite the difficulty to face the financial results pressure it is important to be realistic and to take account of economic circumstances. In this global economic environment, controlling costs will remain a challenge for companies, especially in the long term. Nevertheless the impact over the company can be reduced. I therefore recommend: to monitor the financial performance of the budge; to look to the future and make assumptions regarding variables or situations that may affect the company's financial results; to identify excessive or careless spending; to complete a simple cost-benefit analysis; finally, to implement the above mentioned cost-cutting strategies.