Impact, Control, and Future Growth Strategies for Amana Ltd in the Post-Covid Tourism Industry

Monthly control report analysis of Amana's original budget, flexed budget, and variances

• Prepare control reports which show original, flexed and actual budgets
• Calculate key variances.
• Evaluate decisions using relevant costing
• Demonstrate decision making abilities under risk.

Amana Ltd is a family-owned tourist business located in England which sells souvenirs to tourists. They have several locations in tourist hotspots across England namely Brighton, London bridge, Westminster bridge, Buckingham Palace, Birmingham city centre and Manchester city centre. Souvenirs are produced by a Chinese manufacturer specifically according to designs made by the Amana team.

They have been operating a successful business for 40 years and have come to understand the dynamic nature of the tourism industry. Recently, the Covid-19 pandemic broke out in England leading the government to impose restrictions on movement and travel which severely impacted the tourism industry. Amana’s revenue took a big hit in April 2020 as tourists could not travel for the Easter holidays, sales picked up slightly in the summer of 2020; however, the prolonged lock down between December 2020 and February 2021 depleted any additional revenue that had been made in the summer.

Required:

(i) Prepare the monthly control report showing original budget, flexed budget, and variances. (25 marks)

(ii) Using your control report prepared in (i) above, prepare a report on Amana’s performance during the year 2020. (20 marks)

(iii) Provide recommendations to Amana’s CEO on areas of improvement. (15 marks)

Mr Amana has noticed that a lot of his competitors now sell online to customers in the UK, Europe and US. He has been considering closing the Brighton, Birmingham city centre and Manchester city centre branches in order to streamline the business activities and move 50% of their sales online. Several factors have to be taken into consideration when making this decision.

1. i) Cost of setting up delivery network – £150,000
2. ii) Cost of upgrading current website to handle large volume of sales - £50,000

Salary of a fulltime IT programmer - £35,000 per annum

1. iv) Based on market research, there would be guaranteed sales of 100,000 units annually The business also has the alternative of selling their products directly on Amazon and would have to take the following factors into consideration when making this decision.
2. i) Amazon fulfilment fees - £50,000
3. ii) High levels of competition between Amana souvenirs and other sellers on these platforms – Guaranteed sales of 65,000 units on Amazon annually with the potential to increase depending on demand.

iii) Lack of control over pricing and return policy.

Required:

In your report, provide an analysis of Mr Amana’s decision to go online and advise if they should set up their own online shop or sell on Amazon. You should take into consideration all the relevant costs.

The guidance offered below is linked to the five generic assessment criteria overleaf.

1. Engagement with Literature Skills

Your work must be informed and supported by scholarly material that is relevant to and focused on the task(s) set. You should provide evidence that you have accessed an appropriate range of sources, which may be academic, governmental and industrial; these sources may include academic journal articles, textbooks, current news articles, organisational documents, and websites. You should consider the credibility of your sources; academic journals are normally highly credible sources while websites require careful consideration/selection and should be used sparingly. Any sources you use should be current and up-todate, mostly published within the last five years or so, though seminal/important works in the field may be older. You must provide evidence of your research/own reading throughout your work, usinga suitable referencing system, including in-text citations in the main body of your work and a reference list at the end of your work.

Guidance specific to this assessment: Specific to this assignment:

2. Knowledge and Understanding Skills

At level 5, you should be able to demonstrate: sound knowledge and critical understanding of the wellestablished concepts and principles of the subject area and the way in which those principles have developed; knowledge of the main methods of enquiry in the discipline. Knowledge relates to the facts, information and skills you have acquired through your learning. You demonstrate your understanding by interpreting the meaning of the facts and information (knowledge). This means that you need to select and include in your work the concepts, techniques, models, theories, etc. appropriate to the task(s) set. You should be able to explain the theories, concepts, etc. meaningfully to show your understanding. Your mark/grade will also depend upon the extent to which you demonstrate your knowledge and understanding.

1.Extent of research and/or own reading, selection of credible sources, application of appropriatereferencing conventions

2.Knowledge and Understanding Skills 20 Extent of knowledge and understanding of concepts and underlying principles associated with the discipline.

Clarity and accuracy of calculations. Use of professional and well-structured layout.

Deployment of methods, materials, tools and techniques; application of concepts; formulation of innovative and creative solutions to solve problems.

Transferable Skills for Life and Professional Practice 15 Attributes in professional practice: individual and collaborative working; deployment of appropriate media; presentation and organisation.