Business Portfolio

Importance of Business Decision Making

Decision-making is a vital part of the business world. Even a low-level supervisor makes several decisions in a work day, and with some companies, decision-making is encouraged among workers on the line. Unlike CEOs and managers of large companies, the small business owner is largely responsible for the ultimate outcome of all decisions with regard to her company.

Workforce Decisions
For a small business owner, each individual decision regarding the workforce will have much more impact than on a large company. Long-term strategic decisions, like increasing or cutting back the company's workforce, can make or break the company. In a small business even individual hires can have an impact, as a good employee can increase productivity and be good for staff chemistry, while a poor employee can do real damage.

Employee Input
Modern small businesses can benefit from the input of their employees in decision making. Especially in small companies, input on decisions can improve morale. However, someone along the chain of command must make the final decisions, whether by herself or by committee. Having a process in place for making the final decision once all input is collected is imperative.

Decisiveness Leads to Good Morale
Employees notice whether a boss makes tentative decisions. If a supervisor is decisive about making her decisions, chances are she's decisive about her whole approach to management, and the employees will respect that. Even a wrong decision, made with conviction, often gets high marks from employees. Customers and stockholders also notice how a manager makes decisions.

Decisions That Take Time
Some questions require more time for a decision. Generally, the decisions that can't be undone without great cost -- in money or time -- need to be approached slowly. A decision on whether to expand requires much research and consideration of alternatives, and a later change of direction can be expensive.

Quick Decisions
Some decisions should be made quickly. Unfortunately, those are the ones that some business owners may agonize over for days or weeks. If a decision can be changed or undone without great cost, then it can be made quickly. The company can go broke while top management oscillates between using one office supply company over another.

Profit Margin Ratio

The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability ratio that measures the amount of net income earned with each dollar of sales generated by comparing the net income and net sales of a company. In other words, the profit margin ratio shows what percentage of sales are left over after all expenses are paid by the business.

Creditors and investors use this ratio to measure how effectively a company can convert sales into net income. Investors want to make sure profits are high enough to distribute dividends while creditors want to make sure the company has enough profits to pay back its loans. In other words, outside users want to know that the company is running efficiently. An extremely low profit margin formula would indicate the expenses are too high and the management needs to budget and cut expenses.

The return on sales ratio is often used by internal management to set performance goals for the future.

Formula

The profit margin ratio formula can be calculated by dividing net income by net sales.

Net sales is calculated by subtracting any returns or refunds from gross sales. Net income equals total revenues minus total expenses and is usually the last number reported on the income statement.

Analysis

The profit margin ratio directly measures what percentage of sales is made up of net income. In other words, it measures how much profits are produced at a certain level of sales.

This ratio also indirectly measures how well a company manages its expenses relative to its net sales. That is why companies strive to achieve higher ratios. They can do this by either generating more revenues why keeping expenses constant or keep revenues constant and lower expenses.

Since most of the time generating additional revenues is much more difficult than cutting expenses, managers generally tend to reduce spending budgets to improve their profit ratio.

Like most profitability ratios, this ratio is best used to compare like sized companies in the same industry. This ratio is also effective for measuring past performance of a company.

Promotion

There is much more to promotion than advertising. Businesses use various methods to gain publicity.
Customer awareness

Promotion refers to the methods used by a business to make customers aware of its product. Advertising is just one of the means a business can use to create publicity. Businesses create an overall promotional mix by putting together a combination of the following strategies:
Busy Shanghai street with advertisements along the walls of the buildings. The most prominent advert is a large lit-up Coca-cola bottle on the corner of a building.
Promotional material on a high street in Shanghai
Advertising, where a business pays for messages about itself in mass media such as television or newspapers. Advertising is non-personal and is also called above-the-line promotion.
Sales promotions, which encourage customers to buy now rather than later. For example, point of sale displays, 2-for-1 offers, free gifts, samples, coupons or competitions.
Personal selling using face-to-face communication, eg employing a sales person or agent to make direct contact with customers.
Direct marketing takes place when firms make contact with individual consumers using tactics such as ‘junk’ mail shots and weekly ‘special offer’ emails.
There is no one right promotional mix for all firms. The combination of promotional elements selected takes into account the size of the market and available resources. Large businesses have the resources to use national advertising. Small firms with limited resources and a local market may instead opt for leaflet drops to promote their activities.

Multinational Companies

Meaning and Definition;

Multinational companies are corporation which have their home in one country but operate and live in the different country. Due to the tremendous growth o transportation, communication and technology particularly during the last two decades,the world has now become a global village.The distance between has becomes as shorter as ever and the geographical barriers between them have virtually missing.As a result, the mutual dependence among the countries has increased. For example coco cola origins in the united state, but a workers drinks coke ‘made in Nepal’ to ques his thirst.similarly,Netscape coffee is originally produce in Switzerland , but an American family enjoys ‘Nescafe’ made in ‘USA’ every morning in the Chicago.There are several other example of products which are originally manufacture in one country,and are now being manufacture and consume din the other countries.This has been possibly due to the Multinational companies.

Multinational companies are also sometimes called global or transnational corporations. As their names suggest,they have their roots in their down country,but have branches in many other countries.For example:the Unilever Company has its branch in Britain,but it has its subsidiary in Nepal,India ,and other many counties.thus multinational companies refers to those business organization which have their main operation in a country and subsidence operation in many other countries.

Multinational companies are mega form of business organization.which carries out their production and distribution of goods and services in at least two countries.Their owner ship and management are scattered around the countries wherever they operate.They are incorporate in one country's parents company of multinational companies can viewed as holding company and the branch companies as its subsidiaries.

Generally the majority of the shares in subsidiary are held by the parent company and the rest by local people and institution.Similarly,the management and finance are under control of the parent company giving some autonomy to the subsidiaries.Multi national companies are engaged in the mass production and distribution of the goods and services around the world.IBM corporation, nestle company, ford motor corporation.coco-cola company,etc are the example of multinational companies.

Characteristics of Multinational companies:

The following are the characteristics of the multinational companies:

1. Large scale business:

The capital o multinational companies considerably large.its assets and volume of sales are also quite large.The sales turnover of some multinational companies are much more then the annual budget of many developing countries.

2. Productive Organization:

Multinational companies are involved in the production distribution of goods and services at the international companies and level.They produce goods and sales them in one brand name of trademark allover the world.

3.Global operation:

Multinational companies operate globally.the parent company manufacture an sells its products and services through its subsidiaries established in other countries.Hence,they perform their business scale at the global scales.