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Reading 1/1:
Read the article and choose the correct answer A, B, C or D.
Companies both large and small are concerned about profitability and yet they seem to manage to waste resources in
every area. Small businesses are often so busy that they may have no time to keep an eye on savings; and although
huge multinationals can afford accountants to keep track of spending, their companies often overlook small amounts of
wastage. But these small amounts are multiplied many times and therefore can become extremely large sums of money.
It is therefore necessary to regularly reassess expenditure and look for ways to cut costs in order to boost profits. The
changes required can seem obvious to outsiders, but not to those busy running the company. Often the first thing
companies look at are overheads (indirect costs. i.e. money that a business has to spend on rent, electricity, etc) and
direct costs (costs relating to a particular product or service). One overhead cost for most companies is the premises it
uses. So, the first question is: are the premises being used efficiently or do they need to be smaller? Alternatively, could
unused space be rented out to other businesses?
Other areas where overhead savings could be made are reviewing the common processes and procedures, which can
become disorganised across large organisations, and which should therefore be standardised wherever possible.
However, once a system or practice has been standardised, the company must monitor how it is working and ensure
that employees are following any new procedures.
Reviewing supplier contracts can also help to identify ways of reducing costs. A company should have the best deal
available from all its suppliers and needs to regularly renegotiate terms with each one. However, a word of warning!
Companies should be careful of cutting costs at the expense of quality. Using a cheaper supplier is the quickest way to
disaster if the quality is affected. A reassessment of any finance deals and loans is also wise because cheaper deals
may have become available.
Cost-cutting ideas are not the only way to improve profits, and increasing turnover and sales is vital. This can be done
by re-evaluating the product or service and discovering new ways of getting the most out of existing sales. For example.
could a premium version of those products be added or the product range extended? Another way to increase turnover
is to focus on selling more to your most loyal customers. Knowing your customer base well and having a good rapport
with them is very important. Finally, companies should try to remember their most valuable asset. Employees are often
forgotten in the everyday operations of a business, especially in larger companies. Smaller family businesses with little
spare cash realise they cannot survive for long if the staff are unhappy and unable to work collaboratively. In these
businesses, management is still closely involved with the staff, but as a business grows managers tend to lose touch
with the people who have built up the company and keep it going.
Therefore, in order to move forward, companies would be well advised to maximise the use of their skilled staff and
focus on the value of employee contribution to the overall success of the business. By building talented teams and
creating an environment of support and reward for employees, the company will achieve its goals, which will in turn lead
to improved profitability.
1) In the first paragraph we learn that
