Essays on Financial_Management Assignment

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Amalgamation of fire departmentsWith finances being crunched at all government levels in the present economic climate, there is forced stretching of resources for many things ranging from crime and drugs, health and welfare, the environment, and infrastructure all competing with fire protection for limited financial resources. Worse still, even private organizations once funded privately now seek funding from the tax base. In fire departments, there is increasing demand for services at a steady rate especially as far as emergency medical services are concerned. As the population continues increasing, the trend is expected to continue into the next century despite the fact that taxpayers are not willing to pay more and hence a strategy must be established to ensure continued existence and efficiency of the fire departments.

As such, many fire departments are finding it worth to engage in a number of joint ventures to enable them provide the level of services expected by the community while conserving the scarce resources. The approaches range from informal sharing of personnel or equipment to formal amalgamation of different fire departments in an attempt to save on costs and increase on efficiency.

East Shire fire department has not been left behind in similar efforts and is considering an amalgamation with fire departments from the neighboring towns. This report explores the potential benefits that the fire department will obtain from the amalgamation. The report will also explore the potential risks that might accrue from the fire department’s amalgamation with other fire departments. As such, the report will inform the fire department’s decision on whether to merge or not. BenefitsThe fire department management boards of the three fire departments have suggested amalgamation of the fire departments as an avenue for providing better strategies for provision of the services that the community need and deserve.

As such, amalgamation is a viable option that should be found beneficial strategy for improving use of scarce resources, staff flexibility, saving on costs, strengthening internal programs as well as providing increased opportunities for expanding services and specialization. Furthermore, amalgamation goes beyond political boundaries ensuring that the closest department responds to emergencies closer to it in addition to creating more rational protection service areas and improvement on response time.

The benefits of amalgamation are analyzed in detail below. Operating economicsOperating economics here refer to the expenses associated with the fire service business and their allied activities. These are the expenses which are incurred in the day to day running of the fire service departments. The costs include both fixed and variable costs. Amalgamating the fire departments is expected to expand their operations. This expansion will help the departments use and manage economies of large scale operations. Thus, the merged fire departments will reduce many of their expenses (Stephanie, 2002).

As such, budgets of normal operation expenses will be trimmed while t the same time the resulting larger fire department will enjoy greater purchasing power and hence enjoy more discounts. This will lower cost of supplies and related necessities. In addition, some posts will have to be abolished since they will become redundant implying that the staff holding them will be laid off resulting in lower wage bill. The amalgamation will also mean that the fire departments will share office space which Eastshire fire department owns in all the three towns hence eliminating the rent that the other two departments have been paying.

This will be a huge cost saving for the amalgamated fire department. The amalgamation is expected to result in lowering of apparatus replacement requirements, lower the number of service equipment required while eliminating duplication of specialty equipment. This is expected to result in enormous cost savings. Additional cost savings are expected to result fro m increased volume purchasing hence resulting in huge discounts as well as equipment maintenance and planning. In fact, a similar case study from consolidation of fire departments in California suggest that we can expect the amalgamation to result to direct cost savings amounting to 10-15 million pounds annually while indirect cost savings resulting from the amalgamation as a result of increased efficiency are expected to amount to 20-30 million pounds annually.

In essence, the total cost savings resulting from the amalgamation is expected to be between 30-45 million pounds annually by the third year of amalgamation. Given the one time amalgamation costs of $50 million pounds, the amalgamation idea is definitely a viable idea for fire departments that are keen on offering high quality services at reduced costs.

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