Answer to Question #152525 in Economics of Enterprise for Sirbuland

Question

Describe how a firm might achieve a rise in profit

Answer 1

Business exist mainly for profit among other reasons,once profit of a firm starts to decrease then the firm is at the verge falling. A firm therefore can increase it's profit by;

1.Managing costs

A firm can improve it's profit margin by cutting off the unnecessary costs. For example trying to renegotiate new cheaper deals with the suppliers,renting out firm premises that are not in use,reducing business waste and cutting of cost of materials.

2.Raising the prices of products

Most firms set the prices of goods during launching where they tend to set low prices firms can raise the price of the goods after their products gain fame thus increasing profits.

3.Remove Unprofitable Products and Services

Products and services that are not doing well in the market can be done away with so that resources and energy can be directed to those with higher profits or introduction of other products that can do well in the market.

4.Increasing turnover

A firm can increase sales by understanding the customer base, improving marketing techniques,providing incentives and eliminating competition by proving better quality of goods and services.

5.Increasing productivity

Productivity results to increase in sales. Productivity relates to workers of an organization. It therefore can be increased by providing positive reinforcement to workers, ensuring employees are happy, delegating tasks accordingly and improving work place conditions.

6.Increasing efficiency

Efficiency is achieved when a firm does things well without waste.

Efficiency can be improved by; incorporating technology into the business,facilitating innovation, providing information to customers anytime and anyplace,keeping goals clear and focused.