Increasing Profit Margins

Increasing Profit Margins Proposal for Artemis Sportswear

Profit Margin is a ratio that is calculated by dividing net profits of a company by its sales. This ratio measures how much of every dollar generated by sales is retained in company's earnings. Generally speaking, a higher profit margin indicates that a company is more profitable and has better control of its operational expenses. Gross profit margin can also be used to set and monitor sales goals for your company. Because the costs of raw materials and labor all play a major part in gross profit margin it is imperative to revisit the bottom line in comparison to operational expenses. A change in suppliers, materials used, pricing structure labor and productivity are all factors that could change the profit margin ratio.

When cutting costs, there is almost always a tradeoff between achieving lower actual expenses and sacrificing something of value -- time, operational efficiency or staff energy, for example. It's important to analyze the total effect of cost cutting, examining the ripple effect throughout the organization for each cost reduction in terms of what is given up. To improve profit margins we need to understand two things, If everyone offers the same product customers will choose on price If what we offer appears to be the same as everyone else's offering, what can we do to differentiate it? As products reach maturity and more competitors come into the market prices fall. Unfortunately many sports and retailing products and services fall into this category. If we don't adapt or differentiate our offering, then we too will slip down the commodity slide to enter a commodity market, where goods and services really are bought on price. Retailers at the bottom of the slide can still survive but they have to reinvent their offering by getting closer to the end users and finding a new way of meeting their needs. Often this involves a broader offering and a new distribution channel that is shorter. Or maybe they decide to sell the basic core product at the lowest price. At this competitive end of the market there is only room for one large player. Unfortunately, many companies in the sport retail industry haven't yet understood this which is why they are still complaining about low prices and margins. It is all in their hands!

There are many negative effects on personnel such as cutting overtime, cutting non monetary rewards, and in some cases drastic changes to insurance. Most people have begun to become accustom to working long hours and getting rewarded by doing so. Now a lot of companies are trying to save their bottom lines by cutting and getting away from monetary rewards. This is on the other hand having a negative effect on the workforce. Workers are not in high sprits anymore, they are not coming to work very enthused. In some other cases companies are taking away some of the health benefits from what they would call overpaid white-collar workers. In one such case Chrysler has delayed merit pay raises, reduced health care benefits, limited overtime pay, and canceled new assembly plants that were scheduled to open in Ontario. Ford, GM and some other big name car companies are taking the same path. GM are cutting jobs and doing early buyouts for its tenured employees. This saves them from paying for healthcare cost of the retried employees. With healthcare cost rising everyday companies are taking all kinds of steps to save money. When taking away monetary and non monetary rewards from workers you put them in a mind frame of not wanting to come in and take on more responsibility, knowing that they are not going to be rewarded for it. This puts a big strain on employee moral and that in turns brings down productivity and also brings down the bottom-line. As a employee you want to come to work and have a goal to work toward, this makes what you do that much more pleasing to do

Productivity is one big advantage a company looks upon with their employers due to the competition they are facing. A sportswear company has a variety of companies seeking to make it big from the consumers. There are so many other companies that are copy-cats, not offering the same quality for consumers. Most companies that are profitable offer more advantages and incentives to their employers. Benefits are affordable and are what employees' are seeking due to the rising cost of healthcare. Like some of the competitive companies, they do not have to worry about healthcare; the jobs are shifted out of the country for cheaper labor and some poor quality jobs and their employees does not worry about healthcare.

Training is an effective tool, when new employees come aboard. Professional trained personnel will lead an employee to great standards on the job. Let them be solely responsible for the area that is required of them. Good quality products will stand openly for consumers that will help make added job task for a good employee.

Leadership plays a major role in companies' effects on productivity. When a company has a successful leader and is committed to their employers, during difficult time they tend to watch for the unexpected they may face, employees understands and don't get themselves worked up on time they may loose do to lack of work make sure all employees understand what's expected of them. What is needed if you don't already have it--is a long-term expense management goal. It all starts with an annual expense ratio target. People

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