Value For Money
Mercedez Benz !!! All VFM Audits are not the same. An automobile chain based out of Muscat to promote a luxury brand in its showrooms had organized a very big bollywood temptations show at Muscat. Response to the event was overwhelming. The bollywood temptation show gathered huge crowd more than the expectations of the marketing department of the sponsoring automobile dealer. Great advertisements, banners, public and press exposure however, not yielded any significant results as far as sale of the latest brand was concerned.
Internal Auditors were called to examine the case. The task was to comment on operational performance including activity beyond the purely financial domain. Audit strategy required an organized procedure for the effiecient identification of unnecessary cost.
Just one years back Internal Auditors had carried out Value for Money audit using Value Analysis technique. A car seat covering could be made of leather, cloth or a vinyl product each requiring different techniques of production with different costs yet providing same basic service with different quality standard. If the standard provided more than adequate for the perceived need there will be an element of waste in the use of resources. With use of Value Analysis technique, wasteful expenditures were saved.
Internal Auditor required a different approach this time to carry out the Value for Money audit. They selected Functional Cost Analysis technique. Analysing cost objectively identifies the purpose of every item of expenditure and attributes it to specific management activities. Departmental management can then be made accountable to monitor their own performance in terms of exercising both economy when incurring costs and efficiency and effectiveness in the use of resources.
With thousands of the luxury brand on the road in other part of the world, the legions of luxury car drivers certainly included regular folks too. But who were they? Internal Auditor started studying the luxury car buyer's demographics for past years, and the trends were clear:
The luxury drivers had higher incomes, much higher than the average car buyer. In 2005, luxury car owner's incomes were about $100,000 a year versus $65,000 a year for the average buyer. As per 2007 survey 81 percent of respondents earned more than $125,000 per year for the selected luxury car model.
The luxury drivers were a few years older than the average car buyers - closer to 50 rather than the average age of 40. The study of auto industry marketing showed that only 2 percent of the luxury car owners were 24 or younger; while 29 percent were between 45 and 54; and 33 percent were 55 and older. An independent survey carried out in 2007 suggested similar results. And, the most important market factor for similar cars in Muscat - Luxury car owners were the locals i.e. Arabs.
And, the Bollywood temptations show at Muscat by the automobile chain attracted nearly 90 % audience who were young migrants from India having low income levels. Now Smile :)
Internal Auditors were called to examine the case. The task was to comment on operational performance including activity beyond the purely financial domain. Audit strategy required an organized procedure for the effiecient identification of unnecessary cost.
Just one years back Internal Auditors had carried out Value for Money audit using Value Analysis technique. A car seat covering could be made of leather, cloth or a vinyl product each requiring different techniques of production with different costs yet providing same basic service with different quality standard. If the standard provided more than adequate for the perceived need there will be an element of waste in the use of resources. With use of Value Analysis technique, wasteful expenditures were saved.
Internal Auditor required a different approach this time to carry out the Value for Money audit. They selected Functional Cost Analysis technique. Analysing cost objectively identifies the purpose of every item of expenditure and attributes it to specific management activities. Departmental management can then be made accountable to monitor their own performance in terms of exercising both economy when incurring costs and efficiency and effectiveness in the use of resources.
With thousands of the luxury brand on the road in other part of the world, the legions of luxury car drivers certainly included regular folks too. But who were they? Internal Auditor started studying the luxury car buyer's demographics for past years, and the trends were clear:
The luxury drivers had higher incomes, much higher than the average car buyer. In 2005, luxury car owner's incomes were about $100,000 a year versus $65,000 a year for the average buyer. As per 2007 survey 81 percent of respondents earned more than $125,000 per year for the selected luxury car model.
The luxury drivers were a few years older than the average car buyers - closer to 50 rather than the average age of 40. The study of auto industry marketing showed that only 2 percent of the luxury car owners were 24 or younger; while 29 percent were between 45 and 54; and 33 percent were 55 and older. An independent survey carried out in 2007 suggested similar results. And, the most important market factor for similar cars in Muscat - Luxury car owners were the locals i.e. Arabs.
And, the Bollywood temptations show at Muscat by the automobile chain attracted nearly 90 % audience who were young migrants from India having low income levels. Now Smile :)
Labels: Internal Audit
posted by Narayan Mantri at
4:49 PM
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home