Chains of reasoning for bussiness

cutting prices

makes the p more affordable → if D is price elastic → increase in quantity demand → increase in revenue → increase in operating profit

scenario planning

identify risk → allows for planning → reduces effect of external shock → reduces disruption to operation + cf

Market segmentation

divides customers into district groups → having clear prefences → market message clearly tailored

Mission statement

it clarifies LT goals → gives e sense of direction which confesses job satisfaction → improves motivation → reduce abseentism → lower turnover

retained profit

increase availability of internal finance → aviod interest → improves net profit margins → reinvestment in capital euqpembt to increase productivity capacity through organic growth

lower fixed costs

this reduces real even level of output → reach break even piont → reduces chance of making a loss

Market Reaserch

provides specific data → improve DM accuracy → reduces failure of p launch → reduces wasted investment → improves cf stability

Clear objectives

gives e a sense of direction → improves coordination between departments → efficiency which reduces costs

better stock control

reduces excess inventory → lower storage + waste costs → cash isn't tied up in inventory → increasing working capital

trade credit

allows firms to delay payment to suppliers → cash is retained for improving day to day cf → stronger cf improves liquidity figures

Being more ethical

by having social objectives it increase public image → valuing socially responsible b → increase loyalty → less price sensative

producing more p lower risk of failure

producing closer to full capacity → spreads fixed costs → reduces break even level of output → improves b stability

Task culture

encourages team working + problem solving → shared ideas → spreads up improvements → quicker changes to dynamic markets