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Cost Management Essay

Cost Management

 (A Situational Analysis

On the Handmade Wear Business Operations)

Case Situation
The handmade wear company tries to increase the number of the people that patronizes the products that they are able to complete. Although the company is indeed a small-scale business organization, it could not be denied that the employees of the company certainly work hard towards the aim of expanding the business operations. Their constant application of the talents and skills that they have for the sake of the betterment of the reputation of the company in the market certainly impacts the way the public accepts the product that they manufacture. (Eldenburg, 2005, 15)

     To be able to do this, it is necessary for the administration to consider several points of business success that needs careful attention. The said matters of victory in the field of business include identifying the competitive advantage of the company within the industry [cost leadership or differentiation]; identifying the opportunities for added value; and identifying the opportunities for reduced cost (Hilton, 2006, 18). As a small company as it is, the organization of the Handmade Wear business certainly needs to expand its knowledge on how to reduce the cost of their manufacturing [or tailoring] expenses, without

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necessarily toning down the quality of their products to be able to increase the rate of revenue that enters the financial system of the organization. From this point, the agents of business change that has been mentioned shall be identified within the paragraphs that follow to be able to understand how much impact they are supposed to make upon the existing system of the business being examined herein.

Weaknesses of the Organization Needing Change
Primarily, as it has been mentioned within the study that has been performed regarding the Handmade Wear Tailoring Business, the organization is focused upon the need of providing the employees with the best source of income that they can generate for the continuous growth of the said organization (Hensen, et al., 2006, 57). On the contrary, the said mission at some point makes it harder for them to give clear vision to the mission of the organization in extending the market that they are catering to. Most likely, although the organization makes it a point that they are giving the best benefits of effort to their employees, there is quite a lack of attention that is given upon the aim of the company to become one of the pioneer organizations that carry the reputation of making or manufacturing made to order clothes that are of high quality and is of a great influence to the human society at present.

     Most often than not, it is believed that if the workers are motivated enough in making great changes for the company through the fact that they are being compensated well, treated fairly and assisted consistently by the organization’s administration, it should also be noted that giving ample attention to what the clients want from the company is also an important part of enriching the company’s functional business operations (Cokins, 2001, 47).  Hence, to attend to the said weaknesses, the three elements of organizational change shall be given close attention with the business examination procedure that would follow through.

The Elements of Organizational Change
As mentioned earlier, there are certain matters of elemental change in business that needs to be considered when dealing with the customer-focus enhancement of the organization’s system as per observed earlier with regards the operations of Handmade Wear Company. In this manner, it would indeed be very helpful if the procedures of taking charge in making revisions and enhancement within the organization’s system shall be faced with a certain planned approach that is based upon several guidelines or key systems that would lead the organization’s administration through its victorious journey towards business success. (Blocher, 2004, 87)

(A) Identifying Competitive Advantage

     [cost leadership or differentiation]

     In this particular procedure of adjustment, the organization’s administrative sector is expected to handle at least survey or maybe at least environmental observation upon the situation of the organization. This is to ensure of the organization’s position within the bracket of business competition that it is primarily involved with. Through the said environmental observation, it could be observed that there are numerous organizations that exist and are devoted in doing the same business operations like that of the Handmade Wear Company.  Knowing that there are other organizations of the same status in the business industry, it must occur to the officials of the organization’s administration that several changes in the system of applying their skills and their talents in manufacturing the products or ordered tailored clothes that the Company accepts from clients must be considered.

     The changes that are to be implied should be based upon the competitive position of the other companies against them. Through the manifestation of the fact that the other companies of the same industry have several leverage against them, the administration should be able to create a possible path that the whole body of the company would depend their business operations upon to reach the leverage of other companies against them, or better yet to even out-do what the other organizations have already done in the industry of tailoring (Blocher, 2006, 18).

     Administrational Learning

     Through knowing the fact that the organization is havign some competition with other organizations in the industry, the administrative sector of the company should indeed find a way in which to set the organization’s foot in leverage against that of the other’s position in the business competition. Primarily, it is necessary to consider the fact that different organizations, although they are the same in terms of industry, have their own limitations as well as capabilities that in many ways could lead them in becoming more known within the said industry (Eldenburg, 2005, 87). Once they are able to notice the character or the element within the organization that sets them apart from the others through careful observation of the edge that they particularly possess, they are in no doubt in the way towards knowing the best capabilities that they have that could be utilized for future business success.

     The understanding that the administration is expected to gain from learning this particular situation’s impact on the capability of the organization to push towards the limits to be able to reach its new goal in expanding the market that it serves, is indeed vital in the process that needs to be taken to be able to attain the real victory and receive fine reputation from the society’s view of the business. As per observed during the past studies that have been made, the company is putting so much stress in their capability of making things and tailoring their end products through quality application of efforts. Hence, by enriching this particular character, the company as a whole could expect for better days to come in their business. (Blocher, 2004, 54)

(B)Identifying Opportunities for Added Value

     The main reason behind aiming for a larger market is to primarily gain a higher rate of revenue from the target clients of the company. To be able to do so, the importance of putting effort in creating possibilities by which the company could increase the value of the quality of their end-products and at the same time increase the value of the said produced items is indeed necessary. What are the examples of the said values? One is quality, another is practicality and third [as of tailoring jobs] the presentation of the end-products. The fact that the organization aims to serve their clients at the best way possible for them to do so, the administrations should see to it that the company members understand of this stress on the quality production that is aimed by the organization. Once the quality control of the end-products is heightened, it could be expected that the employees would be more careful of what they are primarily producing for their clients. In turn, a better reputation could be earned by the organization thus giving them the chance to demand for larger value of monetary returns from the clients that they serve. The demand that they are to place upon the shoulders should be reasonable enough for paying, if not, the effective distribution of the products or even inviting of the clients would not be truthfully applied at all.

Administrational Learning
Upon understanding of the suggestion written herein, it could be expected that the administration would put further appreciation of the employee’s efforts thus motivating them to create more productive and effective changes of dealing with the business operations of the organization (Hansen, et al. 2006, 27). By doing so, they are not only increasing the possibilities of increasing the quality of their products but also increasing the capability of the organization to build up a reputation that is considerably inviting to a new expanded market that the organization shall serve.

(C) Identifying the opportunities for reduced cost

     The “cost” being referred to in this section of the discussion certainly entails the organization in finding ways by which the production expenses that they spend on every fulfillment of client order that the complete be reduced in such a reasonable way that the company’s organization would be made possible of taking more orders and sending them in high quality results without actually spending too much on the projects. Through this, the company is sure to gain a higher rate of revenue from the business operations that they pursue. Doing so shall also increase the capabilities of the organization in producing more items that are appointed to them because of being resourceful enough in using their materials the best way that they could. Doing so would really challenge the capabilities of the employees in retaining the quality of the products while using a little bit lesser than the usual amount of the resources that they used to utilize in finishing their projects. However, as challenging as it may seem, this particular requirement shall also then be a guide for the administration to follow which in many ways would help them discover better potentials of their employees in making the said procedure possible. (Cokins, 2001, 54)

Administrational Learning
As leaders of the company, the administrative sectors should use this particular situation and requirement of business success in finding great alternatives to the materials that they are currently using. Not compromising the quality of the products completed by the company while lowering the costs of the resources used for business completion is certainly not an easy task to deal with. Certainly, the administration then should find a way by which to train their employees in becoming more innovative as well as resourceful in their job so that no material is being used in an unreasonable procedure. (Cokins, 2001, 54)


     Business organizations, whether large or small-scale certainly face different challenges from competing with other business groups within the same industry that they are dealing with daily. The constant attendance of the administration with the necessary adjustments and the company’s operational changes shall indeed shape the values of the entire organization that they primarily apply in their work-responsibilities. The non-ending search for possibilities of reducing the costs of production and increasing the income of the company should indeed help the Handmade Wear Company in making a great change within the industry that they are joined with (Hansen, et al, 2006, 24). True, with the emergence of the ready-to-wear clothes in the society, tailoring the clothes of several groups of people in the society may not be viewed by many as something really practical for the present trend of fashion-styles. However, with ample and effective market positioning of the Handmade Wear Company, the organization could still gain the interest of several majority groups that would still prefer wearing tailored clothes for certain occasions than simply putting on ready-to-wear clothing lines.


Blocher, Edward . (2006). Cost Management: A Strategic Emphasis. McGraw-Hill/Irwin; 4 edition.

Blocher, Edward . (2004). Cost Management: A Strategic Emphasis, 3rd Economy Edition. Tata McGraw Hill; 3rd edition.

Cokins, Gary . (2001). Activity-based Cost Management: An Executive’s Guide. Wiley Publishing.

Eldenburg, Leslie G. . (2005). Cost Management. John Wiley & Sons Inc.

Eldenburg, Leslie G. . (2005). Cost Management, Problem Solving Guide: Measuring, Monitoring, and Motivating Performance. Wiley; Stg edition.

Hansen & Mowen. (2006). Cost Management: Accounting and Control. Academic Internet Publishers; 4th edition.

Hilton, Ronald W . (2004). Cost Management: Strategies for Business Decisions. McGraw-Hill/Irwin; 3 edition.

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