COLEGIO DE DAGUPAN
Arellano St., Dagupan City, Pangasinan
S.Y. 2018-2019
MANAGERIAL
ECONOMICS
CASTRO, NESSABEL B.
12 BSA -03
“As you grow in this business you learn to do more with less.” Actor Morgan Freeman
may have been talking about his profession when he said that, but his point could be equally
applied to business. Many organizations gained valuable lessons from the recent banking crisis
when sales declined and they were compelled to operate with fewer resources, both capital, and
human. Some adapted and thrived, but others floundered, however, for some businesses,
competition is on going and relentless, forcing them to meet challenges head on.
The situation:
For the past three weeks our sales are increasing but my overhead is eating up my profit.
Since I’m catering to student. I believe people would mind if I will increase my pricing giving me
lesser number of walk-in customers. Hence, I’m thinking to introduce a “budget-meal” but my fear
is that, it may increase the number of walk-in that I have but relatively I’m afraid that people will
go for the “budget meals “instead of the regular items. As I introduce my budget meal the goes as
well part of the profit and I have limited resources.
What do you think?
My Advice:
Well, honestly speaking it’s a part of business cycle namely Expansion, Peak, Recession,
Trough and Recovery.
Peak
Recession
Expansion
Recovery
Trough
At the moment the business is on the Recession Period wherein sometimes the overhead
expenses eating up the profit. Running a business requires spending money just as much as it
requires making it. The overhead cost, which many business owners place in the category of
spending money to make money, can become significant drain on the organization bottom line. At
the given situation above, it turns out that overhead cost is taking a bigger out of the revenue, so
this is the time to reevaluate. First thing to do to lower your overhead cost is you must lower your
overhead expense by reviewing everything, start with the things that it is no longer necessary and
the price if it too high. Next is communicate with your employees and assess them by asking some
question to know if whose member is not performing, you must control purchasing when it is not
needed don’t buy it and consider how much space is really need. You will need to carefully
evaluate your current situation in order to determine the most efficient way to generate the profit.
Keeping cost down should be year-round effort. With these, I must say that it will help the business
to lessen overhead expense. Make sure you have the correct food cost, food menu should be priced
to reflect its food cost, both to keep profits up and offer affordable prices to your customers.
With the Second situation about offering “Budget Meal”, Since budget meal is affordable
to everyone especially for the students who have small budget. Budget meal is not threat to the
regular/main items, to have a lower price at start, it will get higher demand of dishes and
customer’s-meaning “MORE CUSTOMER, MORE PROFIT”, as Law of Demand says that “the
lower the price, the higher the demand”.
I will offer “Budget Meal” since many canteens offer budget meal it is not hard to start it
too because there is an already opportunity and it is for everyone, but we will make the price low
at first, we will consider the Marketing Strategy. First in line is the Cost-plus pricing wherein
we must review the Fixed Cost and The Variable cost. Once you identify all your Fixed and
Variable Cost then you can start pricing your budget meal. Next is Competitive Pricing, it is not
impossible that you don’t have competitor by introducing budget meal so that it is needed to know
your competitive pricing to know what price is your budget meal because knowing your
competitive pricing you can choose if Lower the price, High the price and suit to their price. And
the market strategy that can help is the Penetration, with these I will offer the budget meal in
low price first because it is not the regular items that offered. I will make a strategy to spread
and to know others that the business offers affordable budget meal. Offering budget meal does not
to increase price first and it is not advisable that offering budget meal with a few servings that is
why before offering “new” product in the business, it should be done by promoting it and make
new concept or twist to the budget meal offer, post a sample picture of it to make and catch the
attention of the customers. Knowing these different pricing strategies, it will help you to decide
what best price for your budget meal and incase of adding another dish. It is easy for you to decide.
This suggestion doesn’t mean that the food your orders should be the cheapest available, because
the quality is the most important aspect of creating additional menu or meal. But you should try to
balance high and low food cost for a reasonable profit. Using a budget is a key component in
driving your business financial future. Because a good budget could have a great impact on your
overall operations.
By offering additional dish from your business you must also need to consider some Nonprice Factors: Preferences, Location, population and competition. Preferences refers to the
choice of the customers, that is why offering budget meal need many choices of dishes so that the
customers can have a choice. Your menu should be easy to read, keep your menu design simple
and avoid using too much culinary jargon. Location and population refer to the location of the
business, make sure that your business is catchy, easy to see or find, near to the place where there
are always people like schools and mall. Competition are the different establishments or different
types of business nearby to your business location. Depending on the size of the city or town your
situated in, a customer’s choice can come down to your place at one corner of the block and another
establishment just two blocks over.
The last problem that is given in situation is the business have a limited resource. As your
business suffer this it is obviously to hire another staff or employee to act fast but the business
has an overhead expense high than profit so with this situation, observe the peak hours of the
business and the number of your labor, during the peak hours if your labor can assist, offer and do
their assign job it is good so adding a Budget meal as one your dish then it is really need to hire
new staff to be assign in Budget meal dish. If lack in resources, just keep it simple and Budget
meal should be easy to prepare. Menu should be one of two things: easy to prepare and easy to
prepare ahead of time and reheat avoid lack in resources. Your resources should be versatile,
manage your inventory. No item on your menu should stand alone, because other dishes end up
spoiling if you don’t sell it and throwing food away in a restaurant kitchen is akin to throwing
money away. Successful business seems to be able to take limited resources and turn them into
sometimes unbelievable results. It doesn’t just happen without effort, though. It seems that
whenever they face obstacles or challenges, they’re looking for ways around, under, over, or
through. Creative problem-solving and making the most out of what resources are available is a
way of life. Continually looking for ways to do things better and more efficiently. Increasing
productivity and making the most limited resources is a critical part of small business success.
There are three keys that will help you. Make sure you have access to accurate information.
Running a successful business involves a lot more than keeping people busy. Choosing the right
work to focus on can make the difference between a successful business and one that struggles.
You need to determine what type of information is important to help you make business decisions
and start collecting it. Focus on bottom-line activities to reduce cost. When everyone in the
business is looking for small changes that can have a positive impact, the total gain can be
exponentially greater than the sum of the parts. Make your vision accessible to everyone. We
must share the metrics and make sure that we they all understood why they are important and what
he thought moving the needle would mean for the business. Maximizing limited resources to get
biggest bang for the buck doesn’t just happen. It takes a lot of creative problem-solving, some
discipline and a willingness and commitment to look at how you do business and ferret out ways
to improve.
Think of an ideal way to be creative in your thinking and innovative in your approach.
First is Prioritize your tasks and reap the benefits. Decide what needs your attention urgently
and act accordingly. Be decisive and realistic. You may need to eliminate some projects that are
costly and in your new circumstances unnecessary. Effective planning is a winning strategy.
Decide what needs to be done first and ensure everyone is onboard. Ensure all members of your
team know their roles and the necessity of delivering on time and budget. Keep your lines of
communication open. Ensure everyone knows what is expected of them. Be open to other views.
The more you can empower and engage your employees, the better off your business will be. Know
your organization, build the right team.
Another is do not afraid to add additional dish if it would increase the profit of the
business. Do not think that it will affect and threat to your original or regular items, make
sure that all your main course or regular items are worth the pay especially the taste of it because
you’re in the Food industry it is really important the taste of your dishes, if your regular items are
delicious, whatever dish you may add , or make the price high, your customer still buy or adore
your regular items and it will not be ignored, because the quality is the most important aspect of
creating additional menu or meal.
All in all, I must say that it is normal to face some challenge if you’re in the business
industry because as an entrepreneur it is not new to face some risk especially in less profit, just
think that all of it are opportunity. Opportunity to make new concept of marketing strategy, test
your managing skills to increase your knowledge, build communication to your employee because
there are times that some of the manager/entrepreneurs are lack of communicating to their
employee and opportunity to improve as an individual. Always remember the business cycle that
I have shown above, after your tough or trough experiences there is hundred way to recover and
make your business back as it like it is the first day.
References:
Three Keys to Making the Most Limited Resources By: Ty Kiisel
Ten Budgeting Tips for Your Business By: Larry Light
Tips on Managing the Food Business By: Nicole Long
Things You Should Know About Restaurant Menus By: Lorri Mealy
How to Be More Productive with Limited Resources By: The Teamwork team