A disadvantage of the boom stage for Eddie Stobart is that they would have to decrease their prices to follow suit with their competitors. They would have to do this because in the boom stage because of the fact people have more money. However, Eddie Stobart will also have to be prepared for when the boom ends. They will then need to work out how much they predict that they are going to earn in the future. This can either give the business confidence as they could be doing better than they thought they were, or it could encourage them to take action in order to improve the position of their business in the economy.
Also, the company will lose competitive edge and this will eventually has a massive impact on the profitability of the company when the company has fewer customers. Hence, a static credit policy is not suitable for every company especially companies that are still relatively small. In a nutshell, the credit policies in many ways can help the company to increase its performance. When the performance is enhanced, automatically it will help the company to increase their profitability through increased sales, reduced the amount of bad debt and many more.
First, lower stock prices, especially induced by profit warnings, increase shareholder pressure on managers to cut costs by laying off workers and scaling back investment. Second, the recent correction has put many stock options underwater, and it is unclear to what extent workers will bargain for more cash in place of options and how this might affect payroll costs and inflation. Third, the factors dragging down stock prices typically spur investors to demand higher risk premiums, which boosts the cost of financing business investment. This takes the form of increased spreads of corporate bond and commercial paper interest rates relative to Treasury yields and lower prices for any new stock that any firm dares to offer. Aside from raising the going price of new finance, the increased uncertainty associated with lower stock prices can spook investors so much, that the availability of finance is reduced.
Shareholders want their wealth to be maximized by the corporation in the future as well as the present. Poor strategic planning will result in investors driving the stock prices of a company down. When companies release their quarterly or annual forecast for profits investors use this information as a tool to invest. Relying on the company to meet their projected forecast or better. When profit warnings are issued at the end of the period investors become nervous and trade their stocks to reduce their risk of loss.
3. In general, will help reduce the risk of getting into legal problems. As mentioned earlier, Andrews will be facing a profitability concern in the market. Competition is on a rise and the only way Andrews can compete in the market besides developing a competitive advantage in business ethics, would be to reduce costs. However, if Andrews continued its business operations with the previous supplier, there will definitely be more risk of legal issues as that supplier has a bad track
Our government is forced to spend more on services like pensions and health care while their income decreases because of decreased tax revenue. Businesses must increases wages to incentivize people to enter the workforce, causing inflation. These problems can be reduced by the participation of older workers in the labor force, removing disincentives to work, providing access to education and training, removing incentives to retire, health care reforms, and changing business practices. Population ageing does raise daunting challenges but they are not insurmountable –the key is to practice changes along with the ever changing population.
1) Cost of raw material 2) Sales will go down 3) Further consequences:- * Reduce costs, * Lower wages, * Dismiss some staff, * Eventually bankrupt Interest rates (increase) Interest rates can have a affect on a company too. That shows anything can small can have a big effect on a business. That why it is hard to have your own business. Below I have listed different types of interest rates:- * Firms cost of borrowing will increase also that means less likely to invest in new equipment. * Consumers will spend less.
New companies entering the market may be affected by the threat of entry. Consumers are always to get the best deal and save, there when a firm decides to drop their prices to attract consumers and have an advantage it may in return over the profit of the industry. Rothaermal (2017), points out that when new business ventures off they become the competition that may cause a threat to established businesses because established business need to decrease pricing to be competitive causing a decrease in the business profit growth. The power of supplies can cause a threat to the cost of the firm’s production cost which affects the quality of product. There is the potential for a lower profit for the industry when the power of suppliers is present.
The company, in the long run, can expect sales increase if their prices (McGuigan, Moyer & Harris, 2014, p.352). If a company should decide to discontinue operations, one factor could be reasons the inability to competing with competitors with prices and inadequate funding. Another factor could possibility be a lack of consumer preference, supplies, lack of competition, and lack of capital. However, if a company wants to stay in business and profitable, they must know the competitors’ products and prices. If a company was to do the proper research analysis on their competitors which is essential to remain profitable to ensure that the company has more than one supplier, just in case one goes out of business the company has a backup provider for their needs.
In fact it is one of the main concern but the other aspect of outsourcing like to expedite the service delivery and to enable the company to deliver its services to a much larger market are other major incentives that oblige companies to sublet their operations partially. However, the misconception among the employees of an organization must be removed that the outsourcing would affect their economic benefits and they must realize that only those operations are logically ousourced that cost more without giving comparable productivity. In that sense, outsourcing is a way to cut the fats from the operation of the company and make it more sustainable in the competitive business world today.