How Companies Maximize Profits - 1591 Words

Every company aims at maximizing its profit. This can be achieved by maintaining quality of services and goods, providing appropriate supply, and analysing consumers’ demands. However, there are number of economic factors that hinder this operation. These factors are government regulations, rate of interest, exchange rate, trade cycles, general price level, employment and income, economic growth, and supply and demand. Economics consists of macroeconomics and microeconomics. The former analyses national economy and offers knowledge about the business environment (Samuelson Nordhaus 2010, p.5). Macroeconomics centres on the overall economy rather than the fine specifics (Arnold 2011, p.). Here, there are a number of models that explain the relationship between international finance, international trade, investment, savings, inflation, unemployment, consumption, output, and national income. Trade cycles cause fluctuations in costs of services or goods. These cycles include recovery, depression, recession, and prosperity. The managing director will have to consider aspects such as deflation and inflation and macroeconomic policy (fiscal and monetary) to run the company efficiently. For instance, banking facilitates fiscal and monetary policies that affect consumers and businesses as well; that is, the policies influence inflation and economic activities (Arnold 2011, p.252). The latter examines the market behavior of firms and individual consumers in order to understand theShow MoreRelatedDifferentiating Between Market Structures Essay1077 Words   |  5 Pagesinterdependence among firms in determining pricing and output to maximize profits. The author of this paper will cover: the advantages and limitation of supply and demand identified in the simulation, the effectiveness of the organization in which the author knows, and how the organizations in each market structure maximizes profits. The simulation looks at all four types of market structure within the East-West Transportation Company. The four divisions operate within each of the four market structuresRead MoreAirline Pricing And The Game Of Yield Management1107 Words   |  5 Pagesdecades, the airlines are looking for the possibility to improve their yield management to maximize their profit. In order to achieve it, they have started to develop the yield management analysis, to understand the best time to sell the flight tickets with higher or lower prices, so, helping them to decide properly. How can airline companies improve their yield management in order to increase their profit without demand analysis? According to the OpenStax College, economists have defined the termRead MoreManagerial Economics : Assignment Questions1409 Words   |  6 PagesThe Honest Company, with Christopher Gavigan. Alba and Gavigan set up their site so families can choose what kinds of non-toxic, all-natural products they d like to use and get them in a bundle. Families can choose all kinds of products from food to hygiene necessities and cleaning supplies. Suppose they are thinking of expanding their business into five domestic markets: Phoenix, Dallas, Chicago, New York, and Atlanta. Assume their primary goal of business is to maximize economic profits, althoughRead MoreShareholder Theory Vs. The Competing Ideas Of Stakeholders Theories946 Words   |  4 Pagesthe sole responsibility and how these action may affect business as a whole. Finally I will take time to examine each and conclude with a personal justification to each. To make a profit, that s what most would say is the end goal in every business for the most part. Shareholder theory also related with stockholder theory providing a main emphasis on maximizing profit. Maximize profit within the corporation with the the help of the appointed executives within the company. This theory avoid the aspectRead MoreTootsie Roll Loan1548 Words   |  7 Pagesbe preparing a loan package to maintain ultimate company performance, maximize the company’s profits, and increase the shareholder’s value. Tootsie Roll Industry Inc. will be applying for a loan that will increase the company’s total liability by $17,449.50. A perfect loan package includes a concise executive summary that focuses primarily on the ratio analysis of the financial statement, justification for the loan, and explanation of how the company intends to use loan. The corresponding ratio calculationsRead MoreMaximizing the Corporate Objective with the Stakeholder Theory103 9 Words   |  4 Pagesdecisions so as to take account of the interests of all stakeholders in a firm, including not only financial claimants, but also employees, customers, communities, and governmental officials. Because the advocates of stakeholder theory refuse to specify how to make the necessary tradeoffs among these competing interests, they leave managers with a theory that makes it impossible for them to make purposeful decisions. With no clear way to keep score, stakeholder theory effectively makes managers unaccountableRead MoreDividend Decision : Profit Decision1035 Words   |  5 Pagespolicy that the company plans in regard to earnings for distribution as dividends to shareholders. Dividend decision determines the ratio of earnings between shareholders and retained earnings. †¢ The dividend decision is a decision about the amount and timing of any cash payments made to the company’s shareholders made by the directors of a company. The dividend decision is very important for the present day business world. †¢ The dividend decision play an important role in the company because it mayRead MoreBranding, Pricing, and Distribution1528 Words   |  7 Pagescompleted marketing strategy. The ultimate goal is to reach a successful culmination of all three tiers that will have a successful impact in introducing the brand, pricing it correctly, and forming a distribution model that will maximize the competitive advantage to the company or service in question. This report will outline the steps in developing a local branding outline as well as an international branding strategy .The idea behind branding is to differentiate your product, value, quality or serviceRead MoreThe Clash Between Management And Ownership1311 Words   |  6 Pagesdirectly, therefore a separation of ownership and control is needed. A managing team will run the corporation and this will easily lead to conflicts between the interest of the management and the shareholders. In this essay we will look at how the conflict s arise and how to mitigate these problems with different policies. The clash between management and ownership is called an agency problem. An agency problem can be defined as â€Å"when managers, despite being hired as the agents of shareholders, put theirRead MoreBusiness Strategy : Phillips Morris And R.j Essay1193 Words   |  5 PagesMorris and R.J. Reynolds are two of the most profitable businesses in the tobacco industry. Both companies have been established for many years and want to increase revenues. However, both have the same level of advantages and disadvantages, due the similarity in product being produced. As rivals, and competing for an increase in consumers, strategies are required to meet corporation goals. Both companies have a successful selling performance. But, marketing strategies can make the difference in increase