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profit planning

chapter 3 of budgeting book

kartikasuhanto
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profit planning

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  1. Profit Planning Targeting and ReachingAchievable Goals

  2. Profit planning involves setting realistic profit objectives and targets andaccomplishing them

  3. What factors will you consider when you make a profit planning?

  4. The plan must consider • the organization structure • productline (e.g., whether it is up-to-date or obsolete) • services rendered, • selling prices • sales volume • costs (manufacturing and operating expenses) • market share • territories • skill of the labor force • sourcesof supply • economic conditions • Politicalenvironment • Risk • sales force effectiveness, • financialhealth (e.g., cash flow tofund programs) • physical resources and condition, • productionschedules, • humanresources (e.g., number and quality of employees, training programs, relationshipwithunion) • distribution facilities • technologicalability • motivational aspects, and publicity.

  5. Why there are many batik SME in Banyumas regency? • Mengapa Jepang mengekspor mobil dan barang-barang elektronik? • Mengapa Switzerland mengekspor jam tangan dan perhiasan? • Mengapa Bangladesh mengekspor garmen?

  6. Heckscher–Ohlin Theory • Emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries and the proportions in which they are needed for production.

  7. GOAL CONGRUENCE the manager must consider general company goals and assumptionsas a background for all planning activity

  8. PROFIT TARGETS • The manager should track, on aregular basis, the progress in meeting the profit plan so any needed adjustmentsmay be made in selling effort or cost containment.

  9. OBJECTIVES IN THE PROFIT PLAN • The objective must be clear,quantifiable, compatible, practical, strong, realistic, and attainable. • The objective must be specific • Objectives should be established in priority order • Objectives should be ranked in terms of those having the highest return

  10. ROLE OF NONFINANCIAL MANAGERS • Marketing Manager • Research & Development Manager • Human Resources Manager • Purchasing Manager

  11. ASSUMPTIONS • Profit plans rely on assumptions and projections. • Nonfinancial managers willhave to make assumptions to predict the future.

  12. There are many implications for profit planning: • Value for customers can be restated to mobilize customers to takeadvantage and create value for themselves. • Companies do not compete with each other anymore. Rather, it is theofferings that compete for the customers’ money. • A result of a company’s strategic task is the reconfiguration of its relationshipsand business systems. • To win at this strategy, the key is to keep offerings competitive.

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