Question

some food service profesionals fed the best way to improve profits is to reduce costs. others feel that increasing revenue is the best way to increase profits. what are three steps managers can take to reduce current costs? what steps can a manager take to increase revenue?

Answer 1

This is the basic principle if cost is reduced, profit increases automatically.

Three steps managers can take to reduce current costs- Are as following:

1. Managers should prepare cost budget so that they can get the future estimation of cost and can also compare this year cost to the past year cost so that they can see where the cost has increased and accordingly can plan to reduce the cost by cutting cost at some levels.
2. Company can outsource the technology, people and advertisement agencies instead of buying new and patented technology. Outsourcing reduces the cost in many ways. Company can employ the persons for part time and not for full time. It saves cost as well as time of the companies.
3. Managers can cut the services and amenities that are not being used, they should make the office environment more green to save the energy and they can replace the tube lights with compact lighting and the lights that can be charged with sun light.

Steps that a manager can take to increase revenue- Are as following:

1. Managers should maintain the brand value of their company's products, they should make their product in that way so that it can be more sellable. If company's product will be unique and it has good quality, company can ask for more price for the product and hence can increase its margins.
2. Managers should avoid the discount and also should delay the payment, they should reduce their break even point.
3. Company can cut its supply chain cost by directly buying the raw material and selling the finished goods to end consumers. Company should also increase its customer base by asking the referral from existing customers. Managers should satisfy their existing customers as new customers come from old customers.