Subway Finance and Info Systems the Practice Essay

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Subway Finance and Info Systems

The practice of finance and accounting is a very important component within the context of business operations. As the global economy continues its tepid pace of expansion, cost controls are now paramount to company success. Managing inventory, sales, loss, and other financial aspects are critical to the success of any franchise. Subway is no different in this regard as the company must content with intense price competition along with a consumer with less discretionary income. Throughout the course of my interviews, I acquired knowledge as to how many owner account and control costs. I also gained insights as to how these owners utilize information technology in an effort to forecast future demand while also eliminating inefficient behavior on the part of associates. Through these subsequent conversations, I was better able to garner a better understanding of the finance department. I was also better able to understand how the finance department works within the overall context of the underlying business operations (Behar, 1998).

To begin, the finance department with subway is critical to both cost control and asset allocation. Through the use of the point of sale (POS) system, managers can collect data on consumer product preferences. This data can then be used to cater product offerings and assortments to a particular market demographic. For example, the Fort Kent store sales more foot long meatball subs during the lunch hours of 11-2. However, the Mars Hill location sales more 6-inch turkey subs during this corresponding period. Armed with this POS information, management is better able to ascertain and forecast future purchasing behaviors of its customers. For example, Subway franchises currently view the success of promotional activities on a yearly basis. Through this information, managers have a better idea of what promotions are successful and to what extent there encountered failure.

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This is particularly true for the "$5-Foot long" promotion currently used nationwide. It is important for management to know how successful this campaign is relative to other similar promotions conducted in the past. More importantly, through the use of the POS system, management is better able to understand changing consumer sentiments. If sales for a once prominent item begin to slump, management, utilizing the POS system can view what consumers are instead purchasing (Ducey, 2007).

On a higher financial level, subway has organized its business structure to allow for district and middle level management. This middle management provides a means of interpreting POS data on a higher level. For instance, middle management is better able to view stock levels to ensure individual stores have the goods needed to provide all demanded products. These stock levels will vary depending primarily on demand for certain items. Middle management, through the finance department is better able to forecast future trends in demand for certain products. Another issue that is alleviated somewhat through the use of information systems is that of loss. Technology now allows Subway franchises to track any misinformation within the system. This can include excessive clock-ins, overtime, faulty transactions and more. This PAR system creates opportunities for both lower and middle level management to control costs associated with the underlying business operations of the franchise. This is very important given the uncertain nature of the macroeconomic factors ahead in the United States and abroad. Subway for instance, is currently limiting any form of overtime with the exception of extreme circumstances. Overtime, payroll and improper scheduling in particular is a deterrent to margins and profitability. By managing these expenses through the PAR system, many franchises are ensuring their viability and competitively during these difficult macroeconomic circumstances.….....

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