2. how to improve profit
Transcript of 2. how to improve profit
How to improve profit
Specification detail• Cutting costs and increasing revenues, and
the impact of price changes on profit
Managing tough times• John Lewis: Here
Momma Cherri’s Soul Food Snack
How to improve profit•1.Reduce Costs•2. Increase revenue•3. By expansion
Reducing Costs• If costs reduce, then profits should increase?• You could• Reduce your workforce by • Losing workers• Reducing managers or highly skilled individuals who get paid
the most• Automate some jobs
• Contract out the work to others• Cut wages• Buy cheaper stock• Order in bulk
What else could be done?
Increasing Revenue• To increase profit you could :• raise prices• Increase sales (increasing the volume of sales)• Advertising• Sales promotions• Attracting new markets• Reducing Prices
• Introduce new products
What else could be done?
By expanding• Profits could increase by expanding your firms ability to
make more revenue (p313 – read)
• Internal expansionopening a new location to do the same as you do.
• External expansionTaking over another firm combining businesses.
TASK: what ways could profit be increased for these business owners?• Toni has a fruit and veg shop, he wants to
increase profits over the next 10 years so that he can eventually help his daughter pay for university.
• Sam owns a hairdressing saloon but wants to sell his business to buy and sell real estate. He wants to make as much money as he can in 6 months before he decides to sell the business.
How would decisions for improving profit vary for Toni and Sam?