– The Effectiveness of Profit Planning in Nigerian Organization –
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INTRODUCTION
Background of the Study
In modern economies, prices are generally expressed in units of some form of currency. Although, prices could be quoted as quantities of other goods and services (BARTER SYSTEM).
Prices are sometimes quoted in terms of vouchers such as . Price sometimes refers to the quantity of payment requested by a seller of goods or services rather than the actual payment amount.
One of the most crucial operating decisions management must make is establishing a setting price for its products but this is quiet unfortunately that many firms are still causing lots of money and anticipated profit to be unexplored and wasted. In many financial transactions, it is customary to quote prices in other ways.
The requested amount is sometimes called the asking or selling price, while actual payment may be called the transaction or traded price.
However in explaining the , Egbunike (2007:83) sustained that setting the price for an organizations product or service is one of the most difficult, due to some number of variety of factors that must be considered.
The primary decision arises in virtually all types of organization, just to mention but a few of them such as manufacturers set prices for their products, they manufacture, merchandising companies set prices for their goods, service firms set prices for such services as insurance policies, bank loans etc.
A company’s survival and profitability depends upon its pricing decisions, thus price is the only element in the marketing mix that produce s revenue and thus ensures profit ability (kotler and keller 2006:475).
Price adopted by firms must be able to cover all cost in the long run as well as to leave a profit margin to reward management.
STATEMENT OF THE PROBLEM
Hilton (1991:201) observed that both the market forces of demand and supply and the cost of production have a Significant bearing on determining prices.
Equally he explained that there are other variables that according to him, this includes: Manufacturer’s pricing objective, economic situation, level of competition, and availability of close substitute.
For pricing to be effective, firms must incorporate all these factors in selecting the most advantageous price for its product.
At times, firms are not in the habit of considering these factors and this has led to the shutting down of many factories, and in most cases, winding up of firm’s (Hilton, 1991:201).
Profit plan are made in form of budget and they help firms to forecast the level of profit, cost and revenue, they intend to generate in order to gain competitive advantage.
Unfortunately many firms still do not prepare these plans, thus, this has led firms undertaking unplanned ventures resulting in escalation and inability of firms to foresee shortage in resources or finance or personnel needed in the future operation of the firm.
BIBLIOGRAPHY
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