Name: Umer Hashmi

Arid: 20-arid-730
Assignment: 01
Date: 3/27/2021
ASSIGNMENT
You are a manager of an organization, what steps you would take to maximize
the profit of the organization? Discuss in detail?
Answer:
The steps would take to maximize the profit of the organization are as follow:

1. Learn to Read Financial Statements

The first step is to familiarize yourself with three key financial statements:
the balance sheet, income statement, and cash flow statement. Here are several
resources to get started:

 The Beginner’s Guide to Reading & Understanding Financial

Statements
 Balance Sheets 101: What Goes on a Balance Sheet?
 How to Read & Understand a Balance Sheet
 How to Read & Understand an Income Statement
 How to Read & Understand a Cash Flow Statement
Determine which pieces of these statements you can control as a manager. A
baseline understanding of the balance sheet, income statement, and cash flow
statement can give you a clearer picture of what your business is spending and
earning, and lead to productive conversations with other decision-makers about
budgeting and efficiencies.

2. Calculate the Profitability of Future Projects

One way to gauge the impact you can have on your company’s financial
health is to calculate projects’ predicted profitability. There are three metrics to
consider when doing so: net present value, internal rate of return, and payback
period.
The net present value (NPV) is the amount of money a particular investment is
worth to your organization today. This calculation takes both the time value of
money—the concept that your money is worth more now than the same amount
is in the future—and the inherent risk of investment into consideration. If a
project’s NPV is a positive number, the project is expected to be profitable.

The internal rate of return (IRR) is the discount rate that sets the NPV equal to
zero. In other words, when using the IRR, your project would neither be profitable
nor losing money. Your project’s discount rate must be lower than its IRR to be
profitable.

For instance, if you were to find that the IRR for a project is three percent, but the
project’s discount rate is five percent.

3. Find Efficiencies in Your Processes

Analyze your company’s income statement and notice the expenses. Are there
any items that can be eliminated by streamlining processes? Which line items do
you have control over, and can any be reduced or eliminated? Conducting an
audit of your expenses and pruning away process inefficiencies are necessary
steps toward improving your company’s profitability.

4. Create Budgets and Stick to Them

Knowing how to create a budget is an essential skill for managers. Familiarize

yourself with your firm’s budgeting timeline, procedures, and financial statements
so you can create a budget that equips your team to complete projects that drive
profitability and performance.

Track each action item your team completes so you can compare your actual
spending against projected costs. This can allow you to learn from mistakes
and make better financial decisions moving forward.

5. Conduct Market Research

Conducting market research can help you learn about your current and potential
customers’ mindsets. Options for undergoing market research range from
inexpensive (for example, a free online survey) to expensive (for instance,
bringing in an outside vendor to conduct in-person focus groups). No matter
which option you choose, having these insights can be invaluable.

Perhaps your potential customers would be willing to pay $100 more for your
product if it had a certain feature, or maybe your current customers would be
more likely to buy from you again if they received a discount the second time.
These insights could improve your organization’s profitability, but you won’t know
until you ask.

6. Offer Bundled Products

If your company offers a variety of products, it could be in your best interest to

offer two or more together for a lower price than if they were each purchased
separately.

"Bundling is pervasive in several markets, and it works in many cases," says

Vineet Kumar, an assistant professor in the Marketing Unit at Harvard Business
School, in Working Knowledge.

Kumar cautions, however, that if bundling is the only option, it could impact sales
negatively.

“It’s crucial to allow that kind of flexibility to the consumer,” Kumar says.

Per his research, consider pitching the idea of offering a bundled option

alongside your individual product offerings—a tactic called mixed bundling.
Kumar and his co-author, Timothy Dendinger, found that a pure bundling
solution, in which no individual products are available, caused a 20 percent
reduction in sales, and that a mixed bundling solution yielded higher revenue
increases than both pure bundling and individual product sales.

7. Dedicate Time to Training New Hires

A recent survey found that 40 percent of employees who receive poor training
leave their jobs within the first year. Considering the cost of replacing an
employee can range from one-half to two times the employee’s salary, it’s in the
best interest of your organization to train new hires thoroughly and effectively.
Doing so can not only lead to a greater sense of self-efficacy and aid in
employee retention, but also help mitigate costly mistakes down the line.

8. Foster Engagement in Your Employees

The employee engagement rate in the US is at an all-time high: 38 percent. The
downside is that 13 percent of workers report feeling actively disengaged, leaving
49 percent somewhere in between.
To engage your employees, consider a few of the strategies below.

 Solicit feedback from your team and act on the results

 Communicate transparently across teams and business levels
 Provide constructive feedback based on observations
 Recognize your employees for their work and opinions
 Support your employees’ learning and development
 Delegate tasks to your employees to demonstrate your trust in their
abilities
If managers and human resource professionals work to better engage their
“actively disengaged” and “in-between” employees, an increase in productivity
and decrease in turnover rate could follow, which would positively impact
profitability.