How to increase efficiency

The concept of efficiency, being a parameter of absolutely any activity, is extremely specific for its differences from other evaluation criteria. Firstly, efficiency is relative and cannot be calculated in absolute numbers, such as revenue. Secondly, it does not have growth limits, such as profitability. Thirdly, the effectiveness measures the success of achieving business goals and objectives, while the same company can have completely different efficiency in different areas of activity.

Instruction manual

1

However, most often, when they talk about business performance, they imply its profitable component. Indeed, in fact, the initial goal of any business is to make a profit. For a clear understanding of how to increase efficiency, some experts suggest the following approach. Objectively, the company's profit is determined by the product of three categories: • market capacity, i.e. the amount of money buyers spend on goods in this market (E);

• the share held by the company in the market, calculated as the ratio of the company's sales to total market capacity (D);

• profitability of the company, i.e. the ratio of profit to sales of the company (P).

Thus, the profit formula is reduced to the product: P = E * D * R.

Therefore, to increase the efficiency of the company, it is necessary to solve the problem of increasing each component of profit.

2

The increase in market capacity is carried out through the following activities:

• Political and economic lobbying for conditions favorable to the industry and its development;

• Advocacy and mass advertising of the consumption of goods of the target market.

• Protection of the market from imports and substitute products;

3

An increase in the company's market share is carried out by means of a marketing complex: • Sales price management;

• Product offer management;

• Promotion management.

• distribution management;

4

The task of increasing the profitability of the business is solved through: • Optimization of costs when purchasing resources

• Reduced cost in resource management.