Answer to Question #159968 in Management for Prince

Question #159968

Subject Business performance measurement

1.Illustrate with examples, how benchmarking and environmental costs helps in enhancing corporate performance?(please give at least 6 to 7 points for importance )

2.discuss in detail the importance of product costing in price estimation and profit management?(please give at least 8 points for importance)

3."Long-term investment decisions cannot be based on return on investment since maximizing rate of return does not matter when aim is to maximize return to shareholders ." Comment ? ( please answer in 200 to 250 words)

4.Discuss in detail ( please answer in 200 to 250 words)

a)Strategic profitability analysis

b)Components of strategic profitability analysis

Expert's answer

1.      Benchmarking and environmental costs are crucial in enhancing the performance of a corporate because:

·        They encourage management support for the success of a corporate

·        It champions for departmental programs that are also crucial in the success

·        It also encourages a high code of ethics since employees would learn from other corporate

·        It enables measurement of corporate performance across board.

·        Environmental costs and benchmarking are the cheapest means of increasing productivity

·        They encourage the use of new technology in the corporation.

·        Help in the evaluation of opportunities.

2.      Product costing is crucial in price estimation and profit management as illustrated in the points below:

a)     Analysis of product costing increases accuracy in variable costing

b)     It enables easy tracking of different projects of the organization.

c)      Product costing is also important in making decisions that are related return on investments and the profit that the organization may gain when it participates in a given action.

d)     It is also crucial in creation of new products.

e)     It is also important in marketing various products of a corporation

f)      It makes inventory process easier

g)     It can increase the demand of a given product when it is done appropriately.

h)     Finally it save the organization money that could have been otherwise used in conducting a lot off research.  

3.      Decisions on long-term investment is not always based on return on investment because to maximize rate of return is  not an issue when the aim is to increase return  to the shareholders. This  because it takes into consideration a number of things, some of which include paying less taxes, commissions becoming afterthoughts among other issues. Also, emotions are taken out of equation so as not to interfere with the decisions. It involves the use of data hence the organization shall almost always be right in their undertakings. It thus makes it easier for the organization to correct on various mistakes.  

4.      A. Strategic profitability analysis involves the description of ways in which an organization does the matches of its capabilities and the opportunities that a given market offer to a given business organization. In this process, the business does a number of studies to establish whether the marketplace offers the right opportunities to the business that could match the objectives to be achieved.  In the analysis, the business should consider many factors, some of which include potential entrants and competitors in the market.

            B. The components of strategic profitability analysis include the calculation of the profit margin and the profit that is shared per customers. In doing this one should take the paid sum of the customer and subtracting amortized fixed costs that involve taxes office, lease amongst others      


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