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Cost Reduction

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  • Level: High school
  • Pages: 7 / Words 1761
  • Paper Type: Case Study
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  • Downloads: 7601

Introduction

The increasing external difficulties will impose challenges on the business in terms of handling all kinds of costs. The major concern of an entity is to deal with their cost as these factors will determine the strengths and weaknesses of an enterprise. Qatar Petroleum has been selected for this project report as the main emphasis of this enterprise is to cater the external business entities. The cost reduction strategies will be applied by an enterprise throughout the project report. This report has given great importance to the major categories such as labour cost, operating cost and the capital expenses covered in an enterprise.

Labour Cost Reduction

Review of the Level of Compensation

The cost of labour needs to be reduced by reviewing the level of compensation paid to all employees (DRURY, 2013). Salaries and wages tend to move in one particular direction which will create significant changes in the markets and financial conditions. The oil and gas industry is strong enough in order to beat all the existing competitors. The payment schedules can be reviewed properly which will help an entity in order to assess their current working pay as per the external market trends. The overall level of compensation. The time should be eliminated between the breaks given to an employee at work which will result in delays in the overall work. This working delay will decrease the productivity of an enterprise. The employees should be paid according to their work as in this industry the profit margin is less which will deteriorate the current position of an enterprise by paying higher to all the employees higher than the desired target. The demotion in the salaries and wages of the factories will not be imposed but it needs to be implemented after speaking to all the current employees (Bagliani and Martini, 2012). This information regarding the current business models will clarify all the problems currently faced by an individual. This transparency in the decisions will be helpful for an entity as it will result in increasing productivity. The expected rise in the income of an individual will increase the overall jobs by inviting a wide number of candidates. The skills and capabilities of an individual will increase with the business complexities.

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Reduce Employee Turnover

It is one of the essential aspects of every business as this will decrease the productivity of the overall business. The company operations include paying salaries and wages which are engaged in the recruitment, selection, employment and training provided to new employees (Ball, 2013). The lack of satisfaction will increase employee turnover in an enterprise such as invisible costs incurred in an entity which include poor quality, longer production times, greater waste, greater oversight and theft and misappropriation. All these reasons will increase employee turnover in an enterprise which needs to be minimised by motivating a wide number of employees. It plays a significant role in an enterprise in maintaining the stability of all the employees in an entity as one of the effective measures of cost-cutting.

Cross Train Employees

The unnecessary training provided to all the employees will increase the cost of an enterprise and reduce its sales and revenue. The major concern of the business is to reduce the overall cost which is possible in an entity. The specialist and normal workers are trained in diagonal situations in order to nurture the existing skills and talents of an individual (Braun and Tietz, 2013). The ability of an entity will require making significant changes in the business operations. The trained workforce of an entity is required to perform a variety of operations which will enable an entity in order to make changes. These changes will include lay-offs, and the ability to deliver products or services to the different variety of customers. The services of an entity are to be polished before transferring to the other stage which is the end consumers who utilise the end products which are finished products by paying consideration in return for the given services.

Reducing Payroll Expenses

The handling of these kinds of expenses is handled by human resources managers who are specially appointed to handle these kinds of expenses. The payroll expenses are taken into consideration which will consider all working hours and able to design wages of the monthly by considering single holidays and overtime compensation earned by an employee.

Operating Expenses Reduction

The increasing sales and the revenue of an enterprise will result in higher profit but operating costs will reduce the earned revenue of an enterprise (Ball, 2013). The reduction of cost requires immune business strength as it can be a painful process which deals with achieving all kinds of expenses by deducting it from the sales and the revenue of an enterprise. There are various ways by which Qatar Petroleum can reduce its overall operating cost which are given as follows:

Establishing Cost-Cutting Goal

The goal of overall cost cutting must be cleared which will assist an entity in setting goals. The development of the goals and objectives which will save the business revenues. This target of achieving the goal will inspire an entity in order to complete its desired aim in order to achieve all the goals and objectives of the business.

Re-evaluate Suppliers

The suppliers of the business need to be properly evaluated as it will help an entity in order to prioritise their existing suppliers. This assessment of the suppliers will assist an entity in order to maintain the quality as the good quality of products will be able to gain customers' satisfaction. The suppliers are called upon which will inquire into the current matter of the business suppliers in order to cut the overall prices (Bozkurt, Dokur and Yildirim, 2014). The schedule of the suppliers has been prepared which will help an entity in order to make significant changes in the existing Business Conditions.

Maximize Employee Efficiency

The lack of individual efficiency of an employee is strong enough in order to reduce the overall business capabilities. The overall productivity may get hampered due to the wrong actions of the employees which will destroy the current brand image of an entity. The employee's efficiency may get increase by enhancing their current skills and talent by focusing on their existing capabilities. The task allocation should be perfect which will increase the business efficiency.

Employee Benefits

The reduction in nth employee benefits will increase the surplus available with an entity as their main role is to cater the external business demands. The changes related to politics in terms of different varieties of rules and regulations will help an entity by complying with all the legislations (Bagliani and Martini, 2012). The reduction in the incentives and perks provided to all the employees should be minimised which will reduce the external burden on an enterprise. The employer needs to front all the employees in order to communicate all important information to all the employees all at once to reduce the external pressure on an e

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