Question

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In regard to this week’s forum post and the information presented this week, General Motors better known as GM is a corporation that has been around for years. In order to be successful like GM, they have established a foot hold in over 26 countries selling its product in over 150 different countries. This will allow them to maximize profits. The term profit maximization refers to an organizations ability to sell products, services, and or goods so they can achieve a marginal revenue that is equal to the marginal cost when the value of that marginal cost increases. Corporations are in the business of making as much profit as possible, this can be achieved by two different concepts of profit maximization and revenue maximization (Cromwell, 2019).

            As for General Motors, a company that understands profit and revenue, in order to maximize its profits, they have to understand how to utilize the Profit Maximization Rule. This rule states that GM needs to designate a specific level of output where the Marginal Cost (MC) is equal to the Marginal Revenue (MR). From there the marginal cost curve will begin to rise, the most important detail of this procedure is that the marginal cost, it must be equal to the marginal revenue to see the curve elevate. Marginal cost can be defined as the increase in cost by which one or more items are produced. Marginal revenue is the change in total revenue, this is dictated by the change in rate of sales the company has. In order for GM to maximize their profit they will have to take the total revenue minus the total cost to achieve their total profit. Future more the profit maximization will occur at the period of time when the total cost and the total revenue is at the largest point away from each other (Agarwal, 2019).

            For example, if GM laid out one specific item on a spreadsheet, where the company labels their output (0-5), then variable cost, fixed cost, total cost, and marginal cost. In order to see a profit, they might have to reach output number 5 in order to see a profit. In fact when they bring in to account the other outlaying factors of their item, they might be making a profit at output number 2 or 3 because at output 5 this is where they were maximizing profit knowing at Output 2 and 3 the profit was minimal but not maximin (Clifford, 2014). For as long as GM has been around, it’s important for them to be able to increase their output. With increased output they will see an increase in their revenue over the cost associated with production (Principles of Management Economics, n.d.). It’s also important for GM to keep in mind the importance of quality of their product and services, if their product and service quality diminish then their profit will be affected in a negative way affecting the maximization profit curve.

Answer 1

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Operational management is mandatory for organizations to manage their daily activities smoothly. With its help, an organization can make good use of its resources such as work, raw materials, money and other resources. Operational management is important to improve overall productivity. In this general discussion, they talk about General Motors Corporation that the organization has been in the market for years. If you want to be as successful as the general motors, you definitely need to follow the organization's work process. How they make maximum profit and you should implement their strategies to be as successful as GM.

GM’s strategies are to understand profits and turnover to maximize its profits. According to them, marginal cost should be equal to marginal revenue. Because the marginal cost can be defined as the increase in the cost at which items are produced. And the marginal turnover is the change in the degree of business turnover it has. GM also focuses on the quality of their products and services. As quality falls, their profits will have a negative impact. It is a strategy to earn maximum profit and maintain a balance between cost and income because it affects profitability. So if any business wants to be successful, they should definitely follow these strategies. It is part of business management.