Financial Resource Analysis assignment – strategies businesses can use to implement effective costing techniques

Question

Task: How to apply effective costing techniques using Financial Resource Analysis assignment research methods?

Answer

Introduction
On this Financial Resource Analysis assignment the importance of finance management is studied. Managing the financial resources in a business plays an important role to plan, develop and accomplish all the activities related to economic actions within a company. Prioritizing the business financial needs and managing the cash flow process through various cost techniques improves the overall inventory process of a business. This Financial Resource Analysis assignmentreport will provide a brief analysis of the different cost techniques that a business can apply so as to allocate the financial resources in a strategic way through proper planning and decision making process. A detailed analysis of the cost management technique will also be performed with respect to the selected organisation of Amazon in consideration to the real world application of the technique for allocating the financial resources effectively within the business process.

Financial Resource Analysis assignmentDiscussion

Cost management technique used on this Financial Resource Analysis assignment can be characterised as the procedure for planning and coordinating the overall budget of a company. There are different cost accounting techniques that can be applied in an effort to increase the cost efficiency while cutting the expense or by limiting the cost growth. Among the several techniques two most important techniques are Budgeting and CVP.

Relationship between selected techniques and strategic allocation of financial resources

On this Financial Resource Analysis assignmentit is observed that Lack of communication, inadequate methods for measuring requests, a lack of resource coordination, and other issues are some of the main difficulties encountered while distributing financial resources inside an organisation.Cost volume profit analysis is a technique that allows companies to analyse the changes in profit with respect to the variable cost and the fixed costs. Organisations mainly use this technique to evaluate the amount of units needed to sell in order to cover the overall costs and to reach the expected profit margin (Haralayya, 2021). On the other hand the budgeting cost accounting technique is another powerful tool which helps companies to plan, coordinate and to control the operational functions of a business while allocating the financial resources as required. As per Haralayya (2021), Budgeting and CVP analysis provides valuable insights about the strategic allocation of financial resources influencing the profit of the overall firm. For any business, the entire financial structure depends on the relationship between the costs, volume and profit of the business forming an essential part of budgeting and planning process. The higher trading volume at which deficits may be avoided and the unit sales at which the company will reach its profit objective are useful starting points for profit planning (Breuer, 2021).The Financial Resource Analysis assignment findings show allocating financial resources may maximise the deployment of resources, such as finance and Research & Innovation (Innovative activities), across the industry sectors of a diverse corporation, allowing for stability. Financial control may be carried out utilising a variety of comparative strategies. The first approach identified on this Financial Resource Analysis assignment is the budgeting technique. The yearly financial plan of almost all organisations must include a section based on the budgetary allocation. Using this technique helps in revealing the amount of resources an organisation is devoting to a certain division or programme(Emerling & Wojcik-Jurkiewicz, 2018). Without allocation caps, expenses might surpass income and lead to a deficit in funds. The second technique that helps business to allocate its financial resources effectively is the Cost volume profit analysis. This approach can be used for both single product based business or for any service based companies. This technique allows sensitive analysis of the changes in the fixed cost, sales price, variable cost and the sales mix (Haralayya, 2021). This technique can also be used in breakeven targets for calculation of sales offering the business case scenarios for increasing the sales while allocating the financial resources effectively within the business models. Essentially, improving resource efficiency in a business requires sufficient capital control. Establishing and enforcing a corporate finance strategy that guarantees cost proportions are followed during the operation of using resources is the role of regulating in finance. Therefore, having an effective system for allocating financial resources enhances the efficiency of cash decisions by making sure that funds are used appropriately.

Financial Resource Analysis assignment organisation Overview

E-commerce has been associated with Amazon since the beginning. The Seattle, Washington-based Corporation began as a bookstore but over time developed into the most widely used digitally service worldwide. From the Financial Resource Analysis assignment research its is observed that a significant proportion of profits and development is attributable to the innovation capability of the company and on-going platform expansion of its subsidiary companies.

Challenges faced by Amazon in strategic allocation of financial resources

From the Financial Resource Analysis assignment it is established that Amazon is a well-known multinational company providing e-commerce services, digital streaming platforms, cloud computing and various AI controlled products. It is one of the most influential economic forces around the world. In spite of the tremendous growth in the e-commerce business sector, the organisation faces few challenges with respect to its strategic allocation of financial resources. The sellers associated with the organisation often face challenges with the details of shipping options, re-negotiating fees, tax setup and many more(Correaet al., 2019). Depending on the structure of sales, the margins and the shipping costs varies a lot within the financial structure of the company leading to an uncertainty in the overall profit. Amazon faces huge challenges while analysing the performance within the market place with respect to its profit gain. In order to analyse the financial data, the organisation have to collect reports from several interfaces and then merge the data to get an insight about its profitability. As a result of a large amount of debt and obligation collected, Amazon has a low net income. They reportedly spent a significant amount of money on purchasing businesses and producing large-scale performances. This sparked intense discussion as to whether Amazon is economical.

Impact of CVP analysis technique in managing the financial resources of Amazon
Amazon along with its e-commerce market services also enhanced its presence in the healthcare sector while launching the Amazon Pharmacy. With this advancement, in order to mitigate the challenges that the organisation faced in other sectors with respect to its profit and financial resources, Amazon implemented the use of CVP analysis to create an impact on the profit incurred from this sector. According to Castellanoet al., (2021), Amazon while adding the pharmacy service in terms of variable costs tried to incur costs to market. The company included its pharmacy products within its inventory while shipping the goods. From the Financial Resource Analysis assignment research it is onserved that all these constituted the variable costs. In this sector, the fixed cost remains the same as they do not increase much (de Lautour, 2018). This included the maintenance of the website, marketing techniques and the technologies used to deliver the amazon products through an already existing system (Miller, 2021). Thus while analysing the CVP of Amazon pharmacy; a huge profit is noticeable with a large increase in the overall sales and creating a little impact on the overall cost.

Another real world application of CVP analysis within the organisation of Amazon is the way by which Amazon Go store reduced the payment of wages in order to boost its overall margin of contribution and profit. As per Hokkanenet al., (2021), while performing a detailed CVP analysis, the organisation spent $1 million in order to install the hardware of Amazon Go in various targeted locations. The overall estimate of the sales incurred from the Amazon Go stores reportedly showed a huge profit for the business (Touet al.,2019). The CVP analysis of Amazon presented overall sales of $2,700 annually, while the other stores generate a much lesser revenue of $1,300 with lesser efficiency in the market (Sharma, 2020). Applying CVP in the Amazon Go business, helped to reduce the cost of convenience while operating a physical store. The application of Financial Resource Analysis assignmentCVP analysis within the organisation of Amazon helped in the overall budgeting process. It helped in determining the quantity of units that needs to be sold while creating an impact on the break-even point (Umar, 2022). This included reducing the fixed cost and increasing the price on profit.

Conclusion
Allocating financial resources enables organisations to create and carry out their objectives. The development and implementation of initiatives from a resource-based perspective are aided by effective resource allocation and cost analysis techniques. Thus, a resource-based approach to diversification can assist companies in avoiding some of the problems associated with traditional product- or market-based diversification inquiry and effectively achieving the strategic goals and objectives. On this note, the CVP analysis tool helps the financial managers of a business to forecast the profits while providing relation between the variable costs, fixed costs and the profit gained through unit sales. The Financial Resource Analysis assignment CVP analysis tool comes in extensive use while planning and deciding about the budget of an organisation and to analyse the desired profit outcome when the volume of sales is known as discussed in case of Amazon.

References
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Castellano, S., Khelladi, I., & Mejri, C. A. (2021). Communicating customer value proposition in the French pharmaceutical industry. The case of OTC drugs. Journal of Business & Industrial Marketing.
Correa, J., van der Hoff, R., & Rajão, R. (2019). Amazon Fund 10 years later: lessons from the world’s largest REDD+ program. Forests, Financial Resource Analysis assignment10(3), 272.https://www.mdpi.com/1999-4907/10/3/272 de Lautour, V. J. (2018). Strategic Management Accounting, Volume I: Aligning Strategy, Operations and Finance (Vol. 1). Springer.
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Haralayya, B. (2021). Financial Statement Analysis of Shri Ram City Union Finance. Iconic Research And Engineering Journals,Financial Resource Analysis assignment 4(12), 183-196.https://www.irejournals.com/formatedpaper/1702794.pdf Haralayya, B. (2021). Ratio Analysis at NSSK, Bidar. Iconic Research And Engineering Journals, 4(12), 170-182.https://www.irejournals.com/formatedpaper/1702793.pdf

Hokkanen, H., Hänninen, M., Yrjölä, M., & Saarijärvi, H. (2021). From customer to actor value propositions: an analysis of digital transaction platforms. The International Review of Retail, Distribution and Consumer Research, 31(3), 257-279.Financial Resource Analysis assignment https://www.tandfonline.com/doi/pdf/10.1080/09593969.2021.1880463
Miller, W. A. (2021). Shaping the future of pharmacy practice. American Journal of Health-System Pharmacy, 78(21), 1940-1943.https://www.harveywhitney.org/wp-content/uploads/2021/11/2021-Whitney-Address_AJHP_FINAL.pdf Sharma, C. V. K. (2020). Financial Decision for Enterpreuerial Success (Learn, Enrich Accentuate & Perform). BFC Publications.
Tou, Y., Watanabe, C., Moriya, K., Vurpillat, V., & Neittaanmäki, P. (2019). A new concept of R&D in neo open innovation: transformation of R&D triggered by Amazon. International Journal of Managing Information Technology, 11(1).https://jyx.jyu.fi/bitstream/handle/123456789/66260/1/11119ijmit02.pdfFinancial Resource Analysis assignment
Umar, A. (2022). Evaluation of management effectiveness in the organization (On the basis of Amazon Inc.) (Doctoral dissertation, Private Higher Educational Establishment-Institute “Ukrainian-American Concordia University”).Financial Resource Analysis assignmenthttp://elib.uacu.edu.ua/xmlui/bitstream/handle/123456789/36/BQW%20-%202022%20Aisha%20Umar.pdf sequence=1