An entrepreneur setup a business with different objectives like Profitability, Productivity, Customer Satisfaction, Business Expansion etc. Objectives represent the purpose for which an organisation has been started. Objectives guide and govern the actions and behaviour of businessmen. According to William F. Glueck, “Objectives are those ends which the organisation seeks to achieve through its existence and operations”. And to fulfil such objectives entrepreneurs invest different types of resources such as finance & capital, human resource, educational resource, technology etc. Each resource plays different role to fulfil the requirements of business operations. But out of the list of the objectives “Profitability” is the most important objective of any business. Profit maximization is the main aim of any business. Profit helps business to grow and expand. No business can survive in absence or profit.
To operate profitable business, entrepreneurs constantly evaluate the productivity gains from all applied resources. They ensure to satisfy customer needs by providing right quality products or services. It is essential for them to increase sales and cover more market-share which in turn can increase their revenue and helps them to achieve profitability targets. An entrepreneur employ advance marketing techniques to increase sales and always tries to optimize pricing strategy which appeals more attraction. But even with the great efforts in all directions most business fails to achieve their profitability targets. They fail to qualify their short-term or long-term goals. Their un-achieved profitability targets create shortage of financial resources. It restricts future investment plans and stops expansion of business organisation. And poor profitability may raise questions on survival of business.
Entrepreneurs need to analyse why most of the times they fails to achieve profitability targets? Why their hard efforts are also not enough to fulfil primary objective? What factors actually disturbs their profitability?
Quality:
A great thought shared by the legend “Henry Ford” is
“Quality means doing it right when no one is looking”.
Quality is the most crucial factor to be managed and controlled at any manufacturing unit. Passionate manufacturers invest various alternatives to improve and upgrade quality of their products. They setup Quality Assurance and Quality Control departments to ensure right quality raw-material inputs and to obtain best quality final products. Because they believe that best quality products fulfil requirements and expectations of customers. Best Quality products help to increase customer satisfaction index and adds leverage to increase reputation of product and company both. It influences customers to spread positive reviews which in turn may increase demand of their product.
But if manufacturer fails in providing best quality, how it effects on the business? What kind of problems manufacturer may face?
- Does it decrease customer satisfaction index…?
- Does it decrease demand of products…?
- Does it loose trust of customers over the products…??
- Does it loose market share…??
- Does it loose customer’s loyalty…??
- Does it decrease sales…??
- Does it loose reputation…??
- Does it increase number of complaints…??
- Does it spoil trade relationship…??
- Does it loose brand recognition…?
- Does it effect on revenue…??
- Does it effects on turnover…??
- Does it effects on financial stability…??
- And ultimately it disturbs overall profitability.
Serving sub-standard quality products will ultimately disturbs the most important objective of the business “Profitability”. It may restrict the possibilities of expansion and business growth. It disqualifies business strategies in achieving long-term goals. It builds enough space for rivals to acquire maximum market share.
Each manufacturer invests solid alternatives to achieve the standards of quality. They constantly re-work on their quality improvement strategy and try to implement advance solutions to develop standard quality products. But very few manufacturers can successfully produce best quality products and they lead the market. They acquire maximum market share. The win trust and confidence of customers. They earn brand recognition. Their business organisation achieves strong financial stability with increased turnover and enhanced profits.
Cost:
Some golden words need to remember
“The secret of success lies in the hidden shells of Cost”.
Cost is the most important factor which needs effective control. Cost includes operational expenses, fixed expenses and cost of production. Poor control on costing will increase the cost of production and it decrease overall productivity. It ask manufacturer to increase price of products to cover the cost of production. If manufacturer charge less price he may not earn enough profit or he may lose more money because of high production cost. That’s why most manufacturers try to find better solutions for cost effective production. They re-work on the methods of production, types of raw-materials and consumables, purchasing habits, cycle of production, machines & technologies, quality of products etc. to optimize their cost. Because, in today’s competitive world, many companies in marketplace are losing sales due to low price competitors. Such situation revokes them to re-structure their costing strategy.
Most manufacturers re-work on their purchasing strategies to find cheap price raw-materials and low price consumables. They start purchasing cheap price raw-materials and low price consumables. For eg – If we talk about Stainless Steel utensils manufactures, they need steel plates as a raw-material for making utensils, they need buffing wheels and stainless steel polishing compounds as consumables for buffing process. Buffing wheels and buffing compounds actually works to enhance the looks of the stainless steel utensils. It produce smooth surface and generate shine and glossy finish on utensils. It means here in this case consumables add looks to the product, and, a product with improved looks can attracts more customers. But it’s a general dilemma that using of cheap or low price consumables will decrease overall costing. And on this dilemma most entrepreneurs follow the practice of purchasing and using low or cheap price consumables. But actually this practice never helps them to optimise their cost. Because they overall consider the price of products purchased. But on the contrary they forget to calculate the total consumption of consumables in against of total production and rejections. This practice raises rejection issues of 11% to 17% of their daily production. And the rejected pieces need to get polish again which again incurred same cost of buffing & polishing and consumes extra time. Such practice of production never allows them to reduce their cost and rejection issues. Apart from this manufacturers must need to consider the major 4 cost of buffing to optimise their overall production cost
(1) Consumption of buffing and polishing compound
(2) Consumption of buffing wheel
(3) Overall daily productivity against wages paid to workers
(4) Consumption of electricity
- It the consumption of buffing compound will get reduces with considerable percentage… then will it save the cost of production…???
- It the overall consumption of buffing wheels will get reduces… then will it save the cost…???
- It the overall daily production will increase by 12% to 17%… then will it reduce their production cost…???
- It the consumption of electricity will reduce by 9% to 11%… then will it help to manufacturers to optimise their overall production cost…???
If a manufacturer get a solution to optimise their overall cost of production with desired quality…then what benefits he can earn for his business….???
- Decreased rejection issues.
- Decreased production cost.
- Increased production.
- Increased sales.
- Increased revenue.
- Increased turnover.
- Increased margin ratio.
- Increased overall profitability.
- Open new doors for business expansion.
Any passionate entrepreneur would like to avail such benefits from business.
Competition:
Again the legend businessman Henry Ford says “Competition is the keen cutting edge of business, always shaving away at costs”.
Any organisation, business group or an entrepreneur face largest difficulty in present arena is competition. Competition has severely affected the world of business. Large number of entrepreneurs has entered in the same industry and products create cut-throat competition. All entrepreneurs are willing to become one of the largest company and looking forward to maximize their profitability. But competition restricts them to achieve such goals. Competition provides one or the other option of products and prices which attracts customers in different direction. Competition creates tuff situations which effects on survival of business. It asks entrepreneurs to lower the product price to achieve periodic sales targets.
How competition effects on business….???
- Loose customers loyalty.
- Increase sales and marketing cost.
- Decrease overall sales.
- Decrease revenue.
- Decrease turnover.
- Decrease profitability.
- Market saturation.
- Eliminates the chances of business growth.
- Closed doors of expansion.
Why competition occurs… Which major factors create competition…???
- Too many manufacturers in same industry.
- Price wars.
- Quality of products.
- Designs and versatility of products.
Most manufacturers fail in differentiating their products from competition. It provides space to competitors to cover more market with any smart strategy. It asks manufacturer to survive with pros n’ proms in the competitive market. This may lead to loose success ratio which ultimately effects on profitability.
But if an entrepreneur find’s the correct solution to enhance the looks of his product with lower cost……What benefits he can earn from the business….???
- Decreased cost of production.
- Enhanced quality of products.
- Lower selling price.
- Attracts more customers.
- Cover more market share.
- Higher sales.
- Increased turnover.
- Increased Profitability.
Would you like to enhance quality, productivity, saleability leading to increased profitability…??
“CROWN BRAND” can provide complete solution.
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