List and describe 5 things that management of a company can do to increase their profit...

List and describe 5 things that management of a company can do to increase their profit margin?

Expert Solution

Listed below are 5 things the management of a company can do to increase their profit margin -

1. Increase/Analyse gross profit margin - The gross profit margin for each product and/or service should be analysed and steps should be taken to increase the gross margin for the products/services having a low gross margin.

2. Increase the prices - The management should analyse the products/services where they can increase the sale price while still ensuring that their prices are competitive. This would result in better profit margin for the company.

3. Less discounts - The management of the company should try to lessen the discounts being given to customers wherever feasible as this would help improve the profitability to a great extent.

4. Avail discount from suppliers - The management should try to avail maximum discounts from its suppliers. This could be in the nature of volume/trade discounts or cash/early payment discounts. This would help improve profit margins of the company as the cost would come down.

5. Reduce overhead costs - The management should analyse if any overhead cost is avoidable. For example, if a big place has been taken on rent whereas the company requires a comparatively smaller place, it should take a smaller place on rent with a lesser rent. This would help improve the overall profit margins of the company.

ekkarill92 answered 2 years ago

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