Shrinking Profit Margins Case Study

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or

Annual reoccurring losses due to small margins put pressure on the CFO and controller to divide the overall loss

The high and increasing Operating expenses are cutting into the Operating margins, which also cuts into the bottom line.

The gross profit margin for CC is right around the industry average. Although the numbers seems to be decent, the costs of goods sold are too high. Next, looking at the operating profit margin, the numbers don’t look as great as they should. The numbers are low compared to the industry average in years 2001, 2004, and 2005. This may indicate that CC should look into their prices and costs. In 2001 the net profit margin was very low compared to the industry average. I am assuming this is due to the major expansion. It is also important to look more deeply into the numbers though because the net profit margin is lower compared to the industry average in all of the years. Once again CC should look into their costs and how efficient they are converting sales into actual profit.

the company’s margins have shrunk by 10% in the past year due to rising costs and growing competition.

Customer service is the most important aspect of any business. Without an adequate relationship with its consumer base, a company is at an enormous disadvantage.

| Satisfaction is a primary factor in this sector, but not as concerned with excellence in customer service as the commercial sector. Rather than selling products to make profit they offer services to the community. The quality of and access to an organisation is usually guided by working to customer service charters. Making sure the services offered are satisfactory and beneficial to the community at the right price must be balanced.

Declining profits: Mark & Spencer’s profits are declining over the period. The company’s share price is almost at half of what it was few years ago.

DMC needs to identify their main business problems and develop a new strategy along with procedures to address it. Although DMC had grown into a multi-billion dollar company and regularly ranks in the top of the industry, gross margins have decreased steadily between 2010 and 2012. Depicted the Table 1 below, margins ranged from a net income loss of $2.6 billion in 2010, $1.7 billion in 2011, down to just $940 million.

In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).

So while the company increased its net income, it has done so with diminishing profit margins.

Although the company made strategy through original cost system, it is still unclear why the profit was declining. Might be some problem when the company was allocating the cost on both lines, and the methods to allocate will route a wrong strategy for the company.

During the period 2012 and 2013, the Operating profit margin decreased from 9.2% to 5.7%. This slight decline can be attributed to the decreased revenues and the increase in tax expenses.

Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor

Staffing has been an important aspect in all types of organizations’ development. More and more companies have noticed a good staffing plan could increase productivity and reduce operation costs in terms of lower turnover rate and transition costs. Good staffing could be able to minimize cost in order to maximize profit, because it could assist the company to stay more competitive within the industry. According to the definition by Dr. Green, “staff is the process of identifying work requirements within an organization; determining the number of people and the skills necessary to do the work; and recruiting, selecting and promoting the qualified candidates. It is the selection process of