Finance & Funding in the Travel and Tourism
Added on 2020-06-06
22 Pages4650 Words49 Views
Finance and Funding in theTravel and Tourism
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Importance of costs, volume and profit for management decision making in CarnivalCorporation & plc...................................................................................................................11.2 Analysis of pricing methods.............................................................................................31.3 Analyse the factors which can influence the profit for Carnival Corporation & plc.......6TASK 2............................................................................................................................................72.1 Types of management accounting information................................................................72.2 ..........................................................................................................................................7TASK 3............................................................................................................................................73.1 Travel and tourism financial accounts..............................................................................7TASK 4..........................................................................................................................................164.1 Sources and distribution of funding...............................................................................16CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONFunding is the process by which a government or company converts its short term, fixedinterest debts into long term, fixed interest debts. In the tour and travel business, they requirefund for their business to expand their business in many locations. This present report is based onCarnival Corporation & plc which is located in London. It is the largest leisure travel companywith portfolio of cruise brands in North America, Europe and Australia. In this report importanceof costs and volume in financial management and analysis of pricing method are covered. Otherthan that, different types of management accounting information, and sources and distribution offunding are discussed.TASK 11.1 Importance of costs, volume and profit for management decision making in CarnivalCorporation & plcDirect expenses: It implies for the one which are related to production of goods or services. In other words, it can be depicted that direct expenses are attributable to the production related activities. It is very effective and important cost in the tour and travel business. Direct costs is important, because In this cost only direct expenses are calculated.Indirect expenses: Such kind of expenses is not highly related to production but company has to incur the same for ensuring smooth functioning of operations. Indirect cost also play the important role in the investment and finance. In this cost, another expenses calculated bythe organisation. Indirect expenses include followings:Fixed cost: This cost includes rent, salaries of personnel etc which remains fixed at each level of production. Such cost or expense does not fluctuate as per the level of output. Variable cost:It varies in accordance with the changes take place in the production level such as material, labor etc. Variable cost is based on change of the business. If they requirement some new planning then variable cost will be apply in the company. There are lots of employees and department work together, and company invest in entire department. They provide them salary and it is the allocation cost in the company (Tribe, 2015). It is also very important cost In the organisation which can arranged by the different types of finance sources. This all cost are 1
very useful in the organisation, because they need to invest in the business. If they want to expand their business in another locations, then they should use some effective cost for investment in the business. When any company can not able to invest their fund in such types of costs then they will not be able to expand their business in another locations. Tour and travel business need more fund expand their business in different areas.Break even analysis: Such analysis or evaluation helps in ascertaining the position of no profit and loss. This in turn provides information to company about the units it needs to be sold for recovering expenses incurred. By applying following formula company can assess BEP such as:Break-even point (in units): Fixed cost / selling price per unit – variable cost PUBreak even analysis entails the calculation and examination of the margin of safety for anentity based on the revenues collected and associated costs. Through this analysis business employee can analyse about the different price level relating to various levels of demand. It is very useful analysis which can be used by the organisation. If they want tom expand their business in many areas, then they should make a planning for break even analysis. When in the tour and travel business, they invest their fund, they should analysis bout the economies of scale. In this system, they can produce more goods for their customers, so they will be able to decrease their cost in the company. It is very important that, their business cost will be reduce. When company will be able to reduce their cost then they can expand their business in any locations in the world. In the Carnival Corporation & plc, lots of employees and department are working, butcompany need lots of fund to handle them. So they can arrange the fund for their employees and department. When they arrange the fund for them, they can face some problems like diseconomies of scale. In this problem, they can lose their employees. When people are not going to coordinate with each another then this problem will create in the organisation. It's also the very effective system for Carnival Corporation & plc organisation in the market. His all volume are very useful in the company. When organisation use these costs and volume in their business, they will be able to manage their financial system and employees in the company. Employees coordination is very important in the Carnival Corporation & plc, because if they are 2
not able to do in this activity, then they can leave their job and company can lose their best employee from the company. Cost-Volume-Profit Analysis:It is the type of analysis In which there is the finding of the cost and volume in relation tobreak even point. In the tour and travel business, finance play the very important role. If theywant to establish their business in the market, then they should have very well planning for theirbusiness. In the business, main requirement is finance and fund, so they should arrange the fundand finance from different types of sources. When they start their business, they should to investsome cost in business. Contribution:Each and every travel and tourism organisation establish their business, because they allwant to profit from their business. So, they are using some effective planning for their enterprise.Profit is very critical thing in the business, because if they will not be bale to get it, then they cannot run their business appropriate. They should follow some effective pricing methods to achieveprofit. There are lots of pricing method in the business, and that are cost led, market led, costplus, pricing contribution etc. This all methods play the vital role in the Carnival Corporation &plc. Marginal and Absorption costingOther than that, they can use absorption and marginal costing process for theirorganisation, because both costing methods are very useful in the company. It help in increasingprofitability In the business.1.2 Analysis of pricing methodsEach and every company can only survive when it earns profit from the cost spenton the goods and services of the business. There are different types of pricing method in theorganisation. They can use any of the method for effective price. Each and every organisationshould set their product's prices according to market trend, other than that, they can set their priceaccording to people or customers who will use the products or services of the CarnivalCorporation & plc.3
Cost led and oriented pricing method:- In this pricing method certain margin is includeto the cost that enables to derive the profit from the business operations. This method is verysimple and easy to understand entire profit method of the company (Johnston and Whitmore,2015). Through is, their employee can know about the upcoming profitability of the enterprise.Cost plus and market oriented pricing method:- This is very useful pricing method inthe Carnival Corporation & plc organisation. When they produce their goods and services, thenthey set their price above the cost of the goods and services, so they will be able to get effectiveprofit from the products and services which provided to the entire customers. In the marketoriented method, price is determined as per the competition of the competitors. There arenumbers of competitors in the market, and they have effective pricing strategies for theirproducts and services. So, Carnival Corporation & plc should use some more effective pricingmethod for beat another companies in the market. If they want to beat another competitor fromthe market, then they should analysis entire market, and then they can set their price according tomake and customers. Prices of products and service should be affordable for the customers whocannot able to survive in this planet. Hence, considering overall evaluation, it is suggested to Carnival Group that it needs tolay focus on undertaking competitive pricing strategy. On the basis of such strategy companyshould offer discounts to the customers during non-peak season. Along with this, at the time ofvacations firm should set prices in line with the competitors. This in turn helps firm in attractingcustomers and thereby contributes in profit margin. 4
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Finance and Funding in Travel and Tourism Sectorlg...
|14
|3265
|65
(solved)Finance and Funding in Travel and Tourism Sectorlg...
|19
|4388
|299
Finance and Funding in Travel Tourism Sector Assignmentlg...
|13
|3127
|79
Sample Assignment on Finance & Fundinglg...
|15
|2895
|256
Finance and Funding in the Travel and Tourism Sectorlg...
|19
|4001
|132
Finance &Funding in Travel Tourism Assignmentlg...
|21
|3052
|74