January 10th, 2018
Alternative strategy to help maintain the competitiveness the business
To maintain his entity’s competitiveness in the market the manager should evaluate ways of minimizing costs so as to provide the products to the end consumer at lower prices without affecting the profit margin. Cost reduction may be done through such approaches as adopting processes that improve production efficiency, outsourcing activities to providers who can deliver quality services at lower costs than in-house operations, employing cheaper methods of marketing such as network marketing, and reducing the number of players between the entity and the ultimate consumer in the distributorship channel.
Through such cost savings, the entity can offer its products at a lower price level to its competitors thus not only protecting its profit margin but also its customer base. Cost reduction would thus raise the margin where the price reduction is not in equal magnitude. By reduced price levels in the market more customers could purchase the product thus increasing the revenues relative to the entity’s assets and thus resulting into a high turnover. Both high profit margin and turnover increases the entity’s ROI.