- Case Studies Chapter 3: Case Study 3 Sierra Lin has recently been hired by a local scuba dive shop, it has been in business for7years and seems relatively successful. The owner has managed the business to the best of his abilities, but the business is growingthe owner IKnows that he needs help and the business could be even more successful if managed properly. Sierra is the manager of theljob. She has a huge task in front ofher, as the store to this point has not really controlled costs, nor put any policies or procedures into place. K' Open in Rea: apter 3 - Revenue Streams and Costs in Sport , 3f": answerer] nework . Due m aday Four Steps of Control Breaking down the process of controlling costs is best done by assigning steps. There are four steps to control costs: -Establishing standards and standard operating procedures. By establishing standards and standard operating procedures, all members of the organization have a guide of sorts to follow. These standards should be quantifiable, -Training all employees/volunteers/placements, etc to adhere to the standard procedures k By trainingthe people that work in the organization to adhere to the standard procedures, it should ensure efficient operations, which in turn should positively affect costs. Monitor performance and compare actual performances with established standards By monitoring the performance and comparing actual performance with the standards, identifying any deviations should be relatively easy. ,' Open in Reading Jake appropriate action to correct deviations from the standard T - Case Studies Figure 7.9 , . 1. Why is it important to control co'Sts? 2. What are the techniques that Sierra can implement to improve the efficiency of the operation? 3 Assume the owner is hesitant to make changes how would you convince the owner that ting these new techniques would be a positive decision? \"a- open m Ream implemen Chapter 3 - Revenue Streams and Costs in Sport Homework . Due in a day 3/5 answered Why is Understanding the Different Categories of Costs Important? It is important to understand how different costs react to the volume of revenues, so that it can assist us when we are budgeting and planning for the future. If we know that our variable costs will increase as our revenues increase, we will consider that when creating a future budget. We would also know that fixed costs are independent to revenues, so we would know when budgeting that these costs/expenses would remain constant regardless of forecasted revenues. We would also recognize that we would need to separate out the fixed portion of a mixed cost and a variable portion, this will help our budget to be more accurate. Controlling Costs A major function of managers is controlling costs. It is just as important as planning, organizing staffing and directing employees. The process of controlling costs helps to identify errors and to make any corrective actions required to minimize any deviations from the goals of the organization. Control is used by management to regulate costs and guard against excessive costs. Four Steps of Control Breaking down the process of controlling costs is best done by assigning steps. There are four steps Open in Reading MacBook Air F6 DD F8 DD F12 $ % & 5 6 8 9 O R T Y U O P G H C K Lpter 3 - Revenue Streams and Costs in Sport ework . Due in a day 3/5 answered Control Techniques There are many different techniques that organizations use to control their costs. Some different techniques managers can use to control costs are as follows: Establishing standards - quantifying the goal or the standard so that the organization has a comparator. If a standard is not set, there is no goal. There is no way to compare internally whether the organization is meeting the set standard or not. Without a standard, there is no way for an organization to identify if there are running their organization efficiently (remember efficiency saves money) .Establishing procedures - creating the "how to" to reach the established standard, knowing how to meet the set standards is crucial. One should never assume that people should use "common sense" to meet a standard .Training personnel - training can be presented through printed material, modelling, video, etc, by training your personal to understand what the standard is and what the procedure is to achieve that standard, you are setting your organization up for success. Setting examples and directing personnel - modelling is a highly effective way to set an example for employees and managing or directing personnel is critically important to running an efficient Open in Reading organization MacBook Air DD DD 888 DII FO F11 F12 FA F6 o & 5 6 7 8 9 O M T Y U O P G H K L