Organizations have been made to earn economic profit and there are certain factors which should have been taken into consideration for the economic prosperity in total. Organizations have to consider numerous things as far as operating in a certain time period (Kirsche, p.14). In order to increase the financial belongings, it is vital for the organizations to keep its cost up to a certain level because the proportion of cost is the most dominating component of organizational based productivity (John Mullins, p.13).
There are number of things which come specifically under the ambit of finance and financial based provisions, and the name of budgeting is one of them. Budgeting means is to budget a thing from different standpoints (John Mullins, p.15). Actual and Budgeted things could have been analyzed accordingly. The main theme of this paper is to analyze the stance of budgeting and costing of a particular company in total (John Mullins, p.13). The company which has been chosen for the same purpose is Unilever. All of the manufacturing based cost would certainly be taken into consideration for the same thing in total.
The proportion of cost as compared to the revenue is extremely high with the company, which is showing that the financial competitiveness of the company is not so strong because of high cost of production. The cost of production of the company was nearly 59% of the total sales of the company, which increased to a level of 60.11% in the year 2011. This is not a good sign from the standpoint of a company, as no organization could increase its financial belongings due to high amount of costing in total. According to the industry outlook, Gross profit of a consumer based company should be nearly 25% at least, and in this particular answer, it is analyzed with the same action in total. The proportion of cost is higher than that of the cost which is again a negative sign for the Unilever in total. The planning, manufacturing and operational procedure of the company is not so effective it needs to be enhancing accordingly. The cost of the company is higher than the industry in total, but the sales of the company are higher enough from which they could get certain added advantage altogether as far as generating gross profit is concerned. Obviously, an organization cannot escape from the amount of sales altogether and it is equally applicable for the consumer based companies as well, in which the amount of production would be on a higher scale in total. Consumer based companies all over the world are now strategizing to mitigate its operational and direct costs, merely to increase the bottom line and financial belongings of the company as a whole. Unilever though is a big company but the company has to look over its cost more than 3 times, and should keep it lower than that of the industry average.
Work Cited
Kirsche, C. (2013). Economic Value Added: A Detailed Walkthrough. Chicago: John Wiley & Sons.
John Mullins, O.W. (2012) Financial Management: A Strategic Decision-Making Approach, London: Oxford.
