PERFECT COMPETITION, PROFIT MAXIMIZATION:

A perfectly competitive firm is presumed to produce the quantity of output that maximizes economic profit--the difference between total revenue and total cost. This production decision can be analyzed directly with economic profit, by identifying the greatest difference between total revenue and total cost, or by the equality between marginal revenue and marginal cost.

Profit Maximization Profit Curve
Total Curves
Marginal Curves

The profit-maximizing level of output is a production level that achieves the greatest level of economic profit given existing market conditions and production cost. For a perfectly competitive firm, this entails adjusting the production level in response to the going market price.

Three Views

Profit-maximizing output can be identified in one of three ways--directly with economic profit, with a comparison of total revenue and total cost, and with a comparison of marginal revenue and marginal cost.This exhibit illustrates how it can be identified for a perfectly competitive firm, such as that operated by Phil the zucchini growing gardener. Phil sells zucchinis in a market with gadzillions of other zucchini growers and thus faces a going market price of $4 for each pound of zucchinis sold.
The top panel presents the profit curve. The middle panel presents total revenue and total cost curves. The bottom panel presents marginal revenue and marginal cost curves. In all three panels, Phil maximizes when producing 7 pounds of zucchinis.

Profit: First, profit maximization can be illustrated with a direct evaluation of profit. If the profit curve is at its peak, then profit is maximized. In the top panel, the profit curve achieves its highest level at 7 pounds of zucchinis. At other output levels, profit is less.

Total Revenue and Total Cost: Second, profit maximization can be identified by a comparison of total revenue and total cost. The quantity of output that achieves the greatest difference of total revenue over total cost is profit maximization. In the middle panel, the vertical gap between the total revenue and total cost curves is the greatest at 7 pounds of zucchinis. For smaller or larger output levels, the gap is either less or the total cost curve lies above the total revenue curve.

Marginal Revenue and Marginal Cost: Third, profit maximization can be identified by a comparison of marginal revenue and marginal cost. If marginal revenue is equal to marginal cost, then profit cannot be increased by changing the level of production. Increasing production adds more to cost than revenue, meaning profit declines. Decreasing production subtracts more from revenue than from cost, meaning profit also declines. In the bottom panel, the marginal revenue and marginal cost curves intersect at 7 pounds of zucchinis. At larger or smaller output levels, marginal cost exceeds marginal revenue or marginal revenue exceeds marginal cost.

More on the Marginal View

Further analysis of the marginal approach to analyzing profit maximization provides further insight into the short-run production decision of a perfectly competitive firm.First, consider the logic behind using marginals to identify profit maximization.

1. Marginal revenue indicates how much total revenue changes by producing one more or one less unit of output.


2. Marginal cost indicates how much total cost changes by producing one more or one less unit of output.


3. Profit increases if marginal revenue is greater than marginal cost and profit decreases if marginal revenue is less than marginal cost.


4. Profit neither increases nor decreases if marginal revenue is equal to marginal cost.


5. As such, the production level that equates marginal revenue and marginal cost is profit maximization.

Profit Maximization, The Marginal View

With this in mind, now consider this exhibit to the right, which will eventually contain the marginal revenue and marginal cost curves for Phil's zucchini production.

• Marginal Revenue: Because Phil is a price taker, his marginal revenue curve is a horizontal line. Click the [Marginal Revenue] button to reveal this curve. It is perfectly elastic at the going market price of $4 per pound of zucchinis.


• Marginal Cost: The marginal cost curve is U-shaped, reflecting the principles of short-run production. Click the [Marginal Cost] button to add this curve to the diagram. It has a negative slope for small amounts of output, then the slope is positive for larger quantities due to the law of diminishing marginal returns.


• Profit Maximization: Profit is maximized at the quantity of output found at the intersection of the marginal revenue and marginal cost curves, which is 7 pounds of zucchinis. Click the [Profit Max] button to highlight this production level. This is the same profit-maximizing level identified using the total revenue and total cost curves and the profit curve.

Consider what results if marginal revenue is not equal to marginal cost:

• If marginal revenue is greater than marginal cost, as is the case for small quantities of output, then the firm can increase profit by increasing production. Extra production adds more to revenue than to cost, so profit increases.


• If marginal revenue is less than marginal cost, as is the case for large quantities of output, then the firm can increase profit by decreasing production. Reducing production reduces revenue less than to it reduces cost, so profit increases.


• If marginal revenue is equal to marginal cost, then the firm cannot increase profit by producing more or less output. Profit is maximized.

How to Sustain Growth and Profitability in Business

For several hours, many participants at the lecture on “Driving Sustainable Business Growth” on September 30, 2007, in Lagos struggled with suggestions and ideas on how to sustain growth and profitability in business. The struggle was not restricted to a particular type of business, size of company, position in the company or even ownership.

One thing that cuts across all the participants was the determination to see their line of businesses succeed, and was open to suggestions. The lecture was not the typical recipe or knowledge hand down, but an interactive one, where the participants made their own contributions, including contradicting the lecturer, Professor Bala Chakravarthy, a renowned international management consultant. Judging from the lecture and discussions that ensued, it was evident that making a success of any type of business does not depend on theories or what had worked for others in the past, but on current realities based on the prevailing conditions for that line of business and/or operating environment.   ers tend to get carried away by their “profitability” and forget about putting in place machinery to sustain the growth. According to him, sustaining profitable growth can be achieved by measuring performance over a period. To measure this successfully, citing examples of big establishments in the United States, he said one could assess performance like within a five year period based on “the average for the industry sub-sector and return on invested capital.” While the big organisations often make such assessments in their statement of accounts, which are issued quarterly, half-yearly and annually, it is not so easy for the one-man businesses, which base their assessments mainly on the profits from particular items. But such assessments, is the difference between the rise and fall of businesses. While acknowledging the truth of Chakravarthy, many of the participants pointed out the peculiarity of the Nigerian environment, which is not particularly business-friendly. For instance, one of the participants said his company in the financial services sector, spent about N24m per annum on diesel alone to run generating sets, which could otherwise had increased returns on shareholders investments. This is compounded by poor infrastructure.  Some of the participants noted that growing businesses in Nigeria, especially in the more structured organisations were not very easy because of the constant tension between the owners and the managers. While smaller business could easily take split-second decisions, thus, gaining ample time, the bigger ones often go through debates, sometimes, shareholders approval before taking a major decision. This often acts as set backs, in view of the time lost. The answer to such challenges, according to Chakravarthy is that business managers “must have the courage to re-vision, pursue continuous renewal, look to mergers and acquisitions and alliances, not as strategies but as means to execute the strategies, personally sponsor growth projects and provide a supporting process.” Sometimes, also, he said some business managers rushed into some of these strategies, like in mergers and acquisition, which ended up crumbling rather than growing the businesses because the strategies by the partners were not properly aligned. Although he said the matter remained inconclusive, he stated, “The predominant finding is that mergers and acquisitions do not create value for the acquiring company’s shareholders in over two-thirds of the cases.  “An example is a study done by the consulting firm KPMG International. It surveyed the 700 most expensive international merger and acquisition deals from 1996 to 1998; and concluded that only 17 per cent of these deals had added value to the combined company, while 30 per cent had had no impact whatsoever and as many as 53 per cent had actually destroyed value.” On the other hand, he noted that some have made a success of mergers and acquisitions, saying, “A recent study by the Boston Consulting Group analysed the long-term stock market performance of more than 700 large publicly held US companies over a 10-year period ending in 2002. It divided the sample firms into three clusters depending on their level of M&A activity. “It found that the highly acquisitive group of companies had the highest median total shareholder return –more than a full percentage point per year higher than the median TSR of companies that made few or no acquisitions.” As willing as some managers are to bring healthy ideas, management expert, Professor Pat Utomi, however, noted that the real challenge was not the lack of initiative to do as advised, but the fact that business owners resisted change. According to him, “Some egos depend on the status quo, they would not want to let go.” Putting the varied views in perspective, Chakravarthy advised that whatever strategy to be adopted to balance growth and profitability, targets must be set and such targets must be integrated progressively to exploit all potential synergies. Nnamdi Armstrong Sloane International Investments ltd +23407041797

Business Ethics and Social Responsibility

About Ethics, Principles and Moral Values

Simply put, ethics involves learning what is right or wrong, and then doing the right thing -- but "the right thing" is not nearly as straightforward as conveyed in a great deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of "Should Bob steal from Jack?" or "Should Jack lie to his boss?"
(Many ethicists assert there's always a right thing to do based on moral principle, and others believe the right thing to do depends on the situation -- ultimately it's up to the individual.) Many philosophers consider ethics to be the "science of conduct." Twin Cities consultants Doug Wallace and John Pekel (of the Twin Cities-based Fulcrum Group; 651-714-9033; e-mail at jonpekel@atti.com) explain that ethics includes the fundamental ground rules by which we live our lives. Philosophers have been discussing ethics for at least 2500 years, since the time of Socrates and Plato. Many ethicists consider emerging ethical beliefs to be "state of the art" legal matters, i.e., what becomes an ethical guideline today is often translated to a law, regulation or rule tomorrow. Values which guide how we ought to behave are considered moral values, e.g., values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes called moral or ethical principles.

What is Business Ethics?

The concept has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders. Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofit or for-profit. In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits, as well (these benefits are listed later in this document).
Note that many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and so these people don't take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace.
What is Business Ethics?
Values and Morals, Guidelines for Living
Ethics at a Cross Roads
Retaliation Soars When Managers Don't Do the Right Thing
Ethics is More Than Compliance
Taking the Ethical High Road Is Good for Business
Ethics and Intentions
3 Sources of Moral Obligation
The Best Ways to Discuss Ethics
Students Teach Business Ethics
It’s Profitable to be Ethical
Transparency is a key to performance

Managing Ethics in the Workplace

Managing Ethics Programs in the Workplace

Organizations can manage ethics in their workplaces by establishing an ethics management program. Brian Schrag, Executive Secretary of the Association for Practical and Professional Ethics, clarifies. "Typically, ethics programs convey corporate values, often using codes and policies to guide decisions and behavior, and can include extensive training and evaluating, depending on the organization. They provide guidance in ethical dilemmas." Rarely are two programs alike.
"All organizations have ethics programs, but most do not know that they do," wrote business ethics professor Stephen Brenner in the Journal of Business Ethics (1992, V11, pp. 391-399). "A corporate ethics program is made up of values, policies and activities which impact the propriety of organization behaviors."
Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, adds: "Balancing competing values and reconciling them is a basic purpose of an ethics management program. Business people need more practical tools and information to understand their values and how to manage them.
Ethics Management Programs: An Overview
Is It Time for a Unified Approach to Business Ethics?
10 Benefits of Managing Ethics in the Workplace
8 Guidelines for Managing Ethics in the Workplace
6 Key Roles and Responsibilities in Ethics Management
12 Ethical Principles for Business Executives
Responsibilities in the Employer-Employee Relationship
Why Should Business Executives Be Concerned With Ethics?
Organizational Character and Leadership Development
Ten Steps to Designing a Comprehensive Ethics Program

Developing Codes of Ethics

According to Wallace, "A credo generally describes the highest values to which the company aspires to operate. It contains the `thou shalts.' A code of ethics specifies the ethical rules of operation. It's the `thou shalt nots." In the latter 1980s, The Conference Board, a leading business membership organization, found that 76% of corporations surveyed had codes of ethics.
Some business ethicists disagree that codes have any value. Usually they explain that too much focus is put on the codes themselves, and that codes themselves are not influential in managing ethics in the workplace. Many ethicists note that it's the developing and continuing dialogue around the code's values that is most important.

Developing Codes of Conduct

If your organization is quite large, e.g., includes several large programs or departments, you may want to develop an overall corporate code of ethics and then a separate code to guide each of your programs or departments. Codes should not be developed out of the Human Resource or Legal departments alone, as is too often done. Codes are insufficient if intended only to ensure that policies are legal. All staff must see the ethics program being driven by top management.

Note that codes of ethics and codes of conduct may be the same in some organizations, depending on the organization's culture and operations and on the ultimate level of specificity in the code(s).
Effective Methods of Employee Code of Conduct Training
Rethinking Codes of Conduct
Establishing a Code of Business Ethics
Codes of Conduct in Light of Sarbanes-Oxley
7 Rules for Avoiding Conflicts of Interest in a Family Business

Resolving Ethical Dilemmas and Making Ethical Decisions

Perhaps too often, business ethics is portrayed as a matter of resolving conflicts in which one option appears to be the clear choice. For example, case studies are often presented in which an employee is faced with whether or not to lie, steal, cheat, abuse another, break terms of a contract, etc. However, ethical dilemmas faced by managers are often more real-to-life and highly complex with no clear guidelines, whether in law or often in religion.

As noted earlier in this document, Doug Wallace, Twin Cities-based consultant, explains that one knows when they have a significant ethical conflict when there is presence of a) significant value conflicts among differing interests, b) real alternatives that are equality justifiable, and c) significant consequences on "stakeholders" in the situation. An ethical dilemma exists when one is faced with having to make a choice among these alternatives.



Nnamdi Armstrong
Sloane Business Management Consultants
CEO
info_sloanebizconsultants@yahoo.com
+23407026341797

Online Marketing Checklist

In some ways, a company’s website functions as an extension of the outlet also functioning as an additional location. Whatever the purpose and objective, the website only becomes an effective tool depending upon the effort dedicated towards it. The content needs to be constantly updated, any inquiries need to be responded quickly and most importantly, for the website to be successful, it needs to be marketed to the customers and potential customers

To help you make your website a success, the list below outlines some of the best marketing practices. Review the list and check all that apply to your operations. Work toward implementing each idea that’s relevant to your situation.

• The Company’s URL (website address) appears on the front door and/or front window.
• The Company’s URL appears on the cash register receipt.
• The Company’s URL appears on bags.
• The Company’s URL appears on bookmarks.
• The Company’s URL appears on your printed and/or electronic newsletter.
• The Company’s URL appears on gift cards and/or gift card backers.
• The Company’s URL appears on store letterhead, business cards, and in your email signature.
• The Company’s voice mail/answering machine promotes the website, telling customers you are open 24-hours a day at  www.yourwebaddress.com
• Staff meetings to review the website are periodically held.
• Each member of the staff is familiar with the website content; you have asked for their feedback.
• Customer email addresses are collected in-store and online, and you expressly ask for your customers’ permission to communicate with them.
• An email newsletter, including links to your website, is periodically distributed to your customers.
• The store and the website are cross-promoted, with in-store displays of online promotions.
• Website sales and buyer reports are routinely reviewed and analyzed.
• Website traffic reports are routinely reviewed and analyzed.      

 Nnamdi Armstrong
Sloane Business Management Consultants
CEO
info_sloanebizconsultants@yahoo.com
+23407026341797

Tips for marketing your home-based business

A good marketing plan is vital to the success of your business. When you're running your business from home, it's often overlooked or you just don't know how to go about doing it. Marketing your home-based business is not as hard or as scary as it sounds.
Marketing is often the last thing on most entrepreneurs' minds when they are strategising for the success of their business. It is, however, one of the most important components of a good business plan, and could mean the difference between an okay and a great bottom line.
When you're working from home, your may think you just don't have the budget, the resources or the know-how to do a marketing drive. But the following tips will prove that it's not only easier than you think, but it doesn't have to break the bank either.

• Word of mouth can be your biggest deal-spinner. Make sure that every client walks away happy. There's nothing better than a satisfied client who refers their colleagues, friends or family to you.
• Keep a database of all your clients, so you can e-mail them seasonal greetings, special offers and anything else that will keep you top-of-mind, without becoming a nuisance.
• Network online: Online networking groups aren't just a social thing. Look at groups like facebook, Twitter or LinkedIn and establish a profile where appropriate. Search for websites relevant to you area of business or customer base. Many of these have free business directories where you can list your business
• Be visible in the community: Are there charities or organisations in your community you can provide services for free? You'd be amazed how many contacts you can make this way and you'll have the added warm and fuzzy feelings of doing some good
• Special offers: Depending on your type of business, think about having season specials, group discounts or something extra for new customers. Something like this might just put you one step ahead of your competitors.
• Advertise: It may sound like you're headed into expensive territory, go small, like classified ads in your local newspaper, community notice-board, pamphlets in post-boxes and so on.

A little planning and creativity can make for a successful marketing drive that brings customers to your door. And remember, this shouldn't just be a once-off event when you open the business or when times are tough. Marketing should be part of your quarterly/annual business planning. 

 Nnamdi Armstrong
Sloane Business Management Consultants
CEO
info_sloanebizconsultants@yahoo.com

My Dream For Your Business

You're a small business owner and entrepreneur; hence you'll face the same challenges and "government red tape" that every business faces. You have to navigate the same hurdles but on different terms. Basically, you're handicapped and your chances of survival are slim!.
So how are you to champion your ideas and build a thriving business? By knowing that champions aren't made in gyms. Champions are made of something they have deep inside them, a desire, a dream, a vision. They have to have the skill and the will. But the will must be stronger than the skill.
We get a thrill helping small business owners like you to overcome daily challenges and an even deeper thrill when you assail the dizzy heights to medium size status and beyond.

Whether its business coaching, developing a business idea, crafting a winning business plan, securing finance or just being available to bounce ideas off, you can rely on our professional approach

A major breakthrough in Small Business Ideas and Small Business Financing

According to Sloane Business Management Consultants(SBMC) survey, 90% of all small business failures can be traced to, poor management, lack of planning and under capitalization.

How can your business survive when the failure rate counts against you?

You'll need solutions and support in the following areas because our survey of small business reveals that these are your main concerns:

• Cash-flow - to meet liabilities as they are due
• Funding - for working capital and expansion
• Profitability - to remain viable and secure capital
• Marketing - to increase sales of existing and new products and services
• Legislation - to meet legal duties and responsibilities
• Loneliness - being able to bounce ideas off a business professional and talk to someone who understands your concerns
• Lack of time - you cannot hire professional staff so you are juggling with many tasks
• Lack of personal exit strategy - you've been too busy focusing on short term survival and not planning ahead
• Lack of original vision for your business - you've run out of ideas or you've lost your vision and passion for the business
• Lack of up-to-date information - you're just too busy being busy

Breakthrough! As Director, I have being searching for a way to deliver on all your concerns, so I have joined forces with other Business Professionals' and Entrepreneurs, to provide an international network of seasoned professionals who can solve 99% of business problems, and being business owners, they can relate to your concerns.

Enyinnaya Nnamdi
Sloane Business Management Consultants
C.E.O
info_sloanebizconsultants@yahoo.com
+23407026341797

Business Information to help Small Business Owners and Entrepreneurs

Whether you're starting a business, looking for business ideas or if you're already running a profitable business - you can benefit from having access to valuable and current information. That's why we are taking the time to build this free resource So you can find reference information that will help you. You'll find information on many important topics including:

• "small business ideas"
• business name ideas
• VAT registration number
• calculating VAT
• power point presentations
• discretionary trusts, tax evasion, inheritance tax
• small business grant
• SWOT analysis and SWOT matrix
• Internet marketing...
• Newsletter - covering small business ideas, small business financing strategic marketing, internet marketing, business plan, ISO900, TS16949 and many topics that affects small business owners and entrepreneurs.

Guarantee

You can rely on the fact that our value added business services are guaranteed to add at least 300% to your bottom line profits, and the promise of - 100% no question ask refund if you are not 100% satisfied. So whatever your needs you can be certain that we have the resources and desire to help you build a profitable business. All you have to do is contact us  below and let us know how we may help you attain financial independence.


Enyinnaya Nnamdi
Sloane Business management Consultants
CEO
info_sloanebizconsultants@yahoo.com
+23407026341797