Final answer:
Standard costing and variance analysis are essential for organizations like Just Eat to set benchmarks and evaluate performance. Issues in standard setting can affect operational efficiency and management decisions. Just Eat must align standards with market and internal operations to maintain its standard of living for stakeholders.
Step-by-step explanation:
Standard costing and variance analysis are critical aspects in managing and evaluating organizational performance. Specifically, for a company like Just Eat, which specializes in online food order and delivery, setting realistic and achievable standards is key to maintaining operational efficiency and assessing management performance. Standard costing involves the creation of estimated costs for the production and delivery of services, serving as benchmarks against which actual costs are measured.
The impact of standard setting on Just Eat may revolve around the challenges of specialization. Just Eat operates in a competitive market where splitting up the value chain is common, involving various parties such as restaurants, delivery partners, and the platform itself. Misalignment in standards across these parties can lead to inefficiencies and complicate variance analysis, which is the process of comparing actual performance against standards to identify deviations or variances.
Effective standard setting and variance analysis help management in identifying areas of underperformance, initiating corrective measures, and making strategic decisions. However, if standards are set without proper market and internal analysis, it can lead to management facing issues with resource allocation, misunderstanding market dynamics, and potentially impacting the standard of living for stakeholders due to financial underperformance. Therefore, it is crucial for Just Eat to constantly review and adjust its standard costing models to stay relevant and efficient in a dynamic market environment.