Effects of decreased sales volume, number of customers and profit margin in an organization

Effects of decreased sales volume, number of customers and profit margin in an organization – A system thinking perspective

Following are some typical consequences when sales volume, number of customers, or profit margin is decreased in an organization.

a) Decrease in capacity of the organization to invest in new technology

Decreased capacity of the organization to invest in new technology due to reduced profit margin leads to the decreased capacity of the organization to compete with others in the market resulting decreased market share. Reduced market share results less revenue which in turn decreases profit margin.

b) Decrease in capacity to invest in human resource development and quality improvement

This leads to reduction in quality of product and/or service resulting decreased customer satisfaction which ultimately reduces market share and profit margin.

c) Decreased capacity to stock goods

Decreased capacity to stock goods reduces the capacity of the organization to compete in the market which eventually reduces the market share thus reducing the profit further.

d) Decreased capacity to give incentives to the employees

This leads to decreased staff morale resulting decrease in staff efficiency. Decreased efficiency of the staff may result in reduced quality of products and/or service which ultimately results customer dissatisfaction leading to reduced market share and profit margin.

e) Decreased capacity to purchase high quality inputs

Quality of input obviously affects the quality of products and/or service which ultimately affects market share and profit.

f) Inability to repay debt

This leads to bad reputation with bank or financing institutions which prevent from getting capital in time of investment which consequently reduces competing capacity, market share and profit.

Relationship among above mentioned variables is depicted in following causal loop diagram (CLD).

Figure: Causal loop diagram showing consequences of decrease in profit margin in a organization

Comments

Basic Concepts of Food Security: Definition, Dimensions and Integrated Phase Classification

by Yadav Sharma Bajagai "Food Security" is one of major elements of development and poverty alleviation and has been the goal of many international and national public organizations. The issue is so important that according to the state of food insecurity in the world 2012 published by FAO around 870 million people (out of which 852 million from developing countries) are estimated to have been undernourished in the period 2010-12. Although the phrase "Food Security" is being used widely, the definition and concept of food security is elusive and being evolved and expanded over time.

Agriculture and Food Security Project (AFSP) Nepal: An Initiative to Fight Against Hunger

Background Household food deficiency due to low agricultural productivity, limited livelihood opportunities, inefficient food distribution system, weak market linkage, poor infrastructure and lack of awareness among general public about healthy food habit are some of the development challenges in Nepal. Within the country western Nepal suffer more from poverty and hunger with 37% of the people living below the poverty line compared to the national average of 25.16%. Similarly, productivity of major crops is significantly lower than the national average which is already among the lowest in South Asia. Per capita consumption of animal products (32 litres of milk, 7.5 kg of meat and 6.4 eggs per capita per annum) is among the lowest in the region hunger indices pointing to an extremely alarming situation. Household food balance (result of food inflow, household production, household consumption and outflow) is negative almost throughout the year in the region. Government of

Competition between sheep and kangaroos in Australia

by Yadav Sharma Bajagai Summery Millions of sheep and kangaroos share the same habitat in the sheep rangelands of southern Australia and dietary competition between these two species has been a matter of concern to pastoralists, conservation ecologists and animal scientists for long time. This issue has been tried to be addressed in this article. It is found that sheep and kangaroos both positively select grass and forb resulting considerable overlapping in their diet during flush season. But when grasses are in short supply during drought, sheep are forced to eat more of less preferred vegetation (chenopods). Sheep are more flexible than kangaroos to shift into chenopods and other shrubs decreasing the overlap in diet during dry season. Dietary competition is not significant when pasture biomass production is high (>30 g DM/m 2 ) but it requires due attention when there is low biomass production during drought. Issue has been discussed and recommendation has been d

Food and Environment

Search This Blog