They help to raise profit margins at a given market price 3. Market power motive: a. Firms may wish to increase market dominance giving them increased pricing power b. This market power can be used as a barrier to the entry of new businesses in the long run c. Larger businesses can build and take advantage of buying power (monopsony power) 4. Risk motive: a.
However, the company must be careful because a too big of a ratio can eventually lead to bankruptcy (Investopedia). The inventory turnover ratio for Nestlé is lower than Hershey’s because Nestlé either has lower sales or excess inventory. The total asset turnover for Hershey’s is also higher; this means that it is more efficient in using its assets in generating sales. As a result of a higher total asset turnover, the gross profit margin is lower than Nestlé’s (Investopedia). The return on assets and return on equity ratios are also better for Hershey’s because the company is making more money on less investment then Nestlé.
In success, economic environment such as the increase in the rate of employment has led to maximise the amount of revenue by a company. The higher rate of employment lead to the more money business sector can make, as, people who is employed have more money to spend rather than unemployed people who do not have money to spend. This lead to higher buying power that would increase the economic status of a business. For example, John wants to buy a can of Nescafe but , he do not have money as he is currently dismissed from his job . John situation to the company which is producing Nescafe going through a small loses because of John unemployment.
Economies and diseconomies of scale Economies of scale are advantages that arise for a firm because of its larger size, or scale of operation. These advantages translate into lower unit costs (or improved (productive efficiency), although some economies of scale are not so easy to quantify. The main kinds of Economies of Scale are: Bulk- Wholesale is selling goods in tremendous quantities at a low unit price to retail merchants. The wholesaler will accept a slightly lower sales price for each unit, if the retailer will agree to purchase a much greater quantity of units, so the wholesaler can maximize his profit. A wholesaler usually represents a factory where goods are produced.
Step 2 Set a better overall price for the products to increase demand, which in turn boosts sales and inventory turnover. Either establish a temporary discount or set a more permanent lower price for slow-selling merchandise. Step 3 Call distributors to seek a better price for the products or materials you buy, to reduce your inventory investment. Step 4 Focus on buying only products that sell consistently. Sometimes a few products take a long time to sell, while others fly off the shelves; the slow movers drag down your overall inventory turnover rate.
3) Unemployment can help the company to hire more workers offering low wages due to the competition for the occupations offered . Therefore the company can maintain its strategy and continue its expansion. Improving of an education facilities resulting in increasing literacy and more skilled and adaptable work forces. Which would lead to non-expansion due to the fact that the company would have to pay more for an educated, qualified workforces. The massive riots in Chengdu, against the government which will cause social instability.
He was of the opinion that he worked longer hours and was more productive than Norzi. Therefore, he may reduce his working hours or work slower as he deems that he is only paid to accomplish so much with regard to his lower salary. He will also hold back in engaging with company’s activities or meetings, trying not to give helpful suggestions to the company. Secondly, Jeffery may ask for a pay raise in order to increase his outcomes. He can speak to his superior to discuss his dissatisfaction, or he may also try to use his company resources to make up for his lower pay.
Low purchasing power will directly affect the aggregate production, with fewer resources are used, unemployment rate rise, there is less pressure on price, and therefore reducing the inflation rate as the supply is greater than demand. An increase in interest rate will have multiple effects. Firstly it stops firms from expanding, when the purchasing power has reduced, firms sell less and make less profit. Firms will cut the production and size of their workforces to reduce their costs; unemployment rate rise and people are less likely to spend. Secondly, the saving ratio will increase; less money is in the circulation.
• A mature industry infrastructure and distribution line makes it ‘easier to attach established firms that occupy particular strategic niches’. • The impact of exchange rate movements on cost advantage and the ‘emergence of low-cost overseas competitors’. Mintzberg et al (1998) also look at some of the probable tendencies for change and, although following a similar argument as Grant, go further in their explanation for change. Their identified tendencies are: • Slowing growth means more competition for market share. • Firms in the industry increasingly are selling to experienced buyers.
Time is a very important factor in today’s working environment. Testing can reduce the time spent on applicants whose characteristics, skills and abilities do not match what is needed. The process can help reduce a multiple candidate list to a shorter more manageable and suitable candidate file. Research has shown that through testing, businesses have been able to improve the quality and duration of employment for new hires. With this as the case, there is an improvement in the desired business outcomes: lower turnover, increased sales and profitability, higher customer satisfaction and higher productivity.