Answer to Question #155654 in Management for Prabhdeep

Question

Discuss the working and significance of profitability management?(Please Answer in 200 to 250 Words )

Answer 1

Working Management is the administration of company’s working capital, and team with primary objective of balance between risk and return. Basically, work management applies to managing individual and team workflows and workload within the scope of a project or related to business activities both internal and external.

Profitability is the ability for a business to earn a profit. Profitability Management means knowing where you earn your money, and finding out how to improve your earning based on the investment.

Significance

-Enhancing service offerings while reducing operational costs. A company that manages its work and profit well is able to determine what is profitable and there enhance service delivery in that area while at the same time reducing cost of operation by manaing individual and team workflows.

-Ensures effective resource allocation thus reducing cost and improving profit; most firms always plan to allocate resources to profitable projects. Without profitability management, a company cannot identify such projects and may end up improperly allocating the resources. With proper management, profitable projects are identified, resources are allocated production is commenced with aim of making profit.

-Ensures optimization of prices: Optimizing your pricing to balance value with profit can have a huge effect on your company's success. Once a company can find the right price, everything becomes easier, from sales and marketing to growth and profitability. You can't afford to overlook optimizing your pricing.

-Ensures maximization of revenue opportunities with customers: selling at a price that achieves the highest sales revenue ensures that a company obtain high revenue which can be used for business expansion.