3. FINANCIAL RATIO ANALYSIS 3.1. PROFITABILITY (Ho, 2013) mentioned that the gross profit ratio assesses the gross profit generated per dollar sales. A drop in this ratio can signify more competition in the market, lowering selling prices or a higher cost of purchases. A rise in this ratio can signify that the firm has a competitive edge in the market and so it is able to charge higher prices for its products, or the firm is able to obtain its supplies at a lower cost.
It is evident, the profits of U.S.-based companies have increased due to globalization and majority of it come from their foreign counterparts. Moreover, globalization has lowered the cost of several goods and services here in the U.S. Likewise, globalization has made it easier to produce more goods and increase services in countries where the costs are lower. Flexible accumulation in the United States has allowed for companies to move their production facilities and activities around the world and even within a nation in search of cheaper labor, and lower taxes, to accumulate as much as profit as possible. This is all fine for the companies and organizations who are gaining money, but not so good for the workers who used to work at these companies before they were offshored and outsourced.
Additionally, efficient distribution channels, optimal outsourcing and vertical integration, bargaining power to negotiate the lowest price for production inputs as well as high buying capacity all participate in making cost leadership a go-to strategy for high return on investment and profitability. The possible downsides of this strategy can vary from low workers remunerations to exploitation of unskilled workers. The advantages of cost leadership are often threaten by external business environment threats such as higher minimum wages laws. Examples of successful cost leadership organisations: WAL-MART.INC (ASDA), Costco, MCDONALD 'S, IKEA. Cost advantages stem from the fact that a company can quickly reap higher profit margins despite selling products or services at competitors price due to lower production costs.
Question (1) Hon Hai is an additional business this has conveyed has allowed the company to accomplish economies of scale above those of its competitors. It has also extended into production more of the components that go into its products than its competitors. Maybe most knowingly, Hon Hai has relocated much of its manufacturing into China and other low-cost areas with plants in South-East Asia, Eastern Europe and Latin America. Refers to Hon Hai Company that needs to kept low costs it need to identify the cost leader ship and its components. That the cost leader ship is classified into internationalization cost, economic scale cost, and cost strategy.
Besides that, the degree of difference between the product compare with other company is small. The degree of the competition will be strong since there are few differences between the products, it will affect our industry rivalry. The cost of the industry may higher than other competitor, because they may use the good quality of the beans and the fresh food to make their product. Furthermore, in Kampar the growth rate of industry is fast-growth. As the industry is fast-growth industry, there will be weak than slow-growth industry because they want earn back their capital fast as possible and the profit or revenue as much as the industry can do it.
It is caused by the high price which in China is higher than in other countries - ranging from 20% to 100%. The higher price in China is reasonable. In production circuits, because the conventional planting mode of small-scale farmers cannot adapt to big-scale mechanized production and raise of labor cost, the product cost keeps increasing. Based on the market economy principle, as populations’ increases, the demand in importing agri-food has become inevitable tendency (Fred Gale et al. 2015).
The Make in India initiative is based on four pillars, which have been identified to give boost to entrepreneurship in India, not only in manufacturing sector but also other sector. India is a country rich in natural resources. Labour is aplenty and skilled labour is easily available given the high rates of unemployment among the educated class of the country. With Asia developing as the outsourcing hub of the world, India is soon becoming the preferred manufacturing destination of most investors across the globe. India ranks low on the "ease of doing business index".
1. Threat of Substitutes-Medium The Indian IT industry enjoys a high growth rate due to the following reasons: - Availability of highly skilled workforce - Availability of large English speaking workforce - Low cost of labor - Favorable policies by government for IT companies - Special economic zones which offer tax benefits to IT companies However, competition is very high as other countries like China, Philippines, and Eastern Europe are emerging and provide a threat to Indian IT industry. These countries also offer the same cost advantage as Indian companies. However, this advantage should only in medium to long term. Also, for the same quality of products, the price quoted for the project is a major differentiator among companies.
In line with the foregoing, Panitchpakdi (2006) viewed SMEs as a source of employment, competition, economic dynamism, innovation, which stimulate the entrepreneurial spirit and the diffusion of skills. Because they enjoy a wider geographical presence than big companies, SMEs also contribute to better income distribution. Thus, over the last few decades, the contribution of the SME sector in the development of the largest economies in the world has beamed the searchlight on their uniqueness; and this has succeeded in overruling previously held views that SMEs were only “miniature versions” of larger companies. Small and Medium Enterprises advocates, firstly; its endurance competition and entrepreneurship and hence have external benefits on
Moderate control is allotted due to the higher amount of resources invested. Environmental characteristics of China: China is a leader in manufacturing and technology allowing cheaper raw materials and labor which is high in availability to be capitalized on. Foreign production would enable wider distribution to match growing demand. Franchising aids in bridging the gap between China and Trinidad’s culture as the franchisee have better understanding of local tastes. Disadvantages of Franchising Organizational