Profitability and Unprofitability

Inteligencia emocional

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Profitability and unprofitability

Profitability is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue.

Reasons (why we keep a product even though we lose money because of it)

Attract people to buy other profitable products ;

To use up the stock inventory ;

Being afraid to lose the reputation within the market ;

The unprofitable product depends on the profitability of the existence of auxiliary products.

Brand equity

7 factors to make the product successful

Quality : Satisfy the needs of the segment

customers are looking for a good product, so when we provide a product of good quality, they want the product and that’s what makes the product successful.

Positioning : obsession by the brad (place in mind )

how we can build ? quality + being pioneer + packaging + brand name + Grnt

Repositioning : Reset the position

Sometimes the company has to reposition itself because of a change in one of its aspects

or a crisis or because of an innovation in the market.

Communications : Advertise the product + brand loyalty + brand familiarity

First mover advantage : market domination /high sales

Long term perspective : keep the profitability

Internal marketing : services for hotel and restaurants

International Marketing

Indirect export: The target area is unknown => appoint agents to promote/market the product.

Direct export: appoint one manager to substitute the agents. The manager contacts the

clients and orders the company.

Licensing agreement: Sell the right to produce the company’s product while keeping the original name.

Joint-venture agreement: Business activity between 2 companies to produce the good together, the owner of the product gets 51% of the net profit. They also have the right to cancel the agreement when it ends.

Direct investment: Target market is clear, the company builds its own factory.

Companies and measuring performance

Financial statement: formal reporting about a company’s financial situation.

Balance sheet: Assets(what belongs to the company) vs Liabilities(the money owed by a business to another business) of the company.

assets value = assets + share capital

operating capital = loan capital + assets value

ownership equity = assets value - liabilities

Statement of changes in equity: reports on the fluctuation of the company’s capital.

Profit and loss account.

Company structure & Corporate governance

Company structure

Organization: