for-profit

Examples of for-profit in the following topics:

• Management in Different Types of Business: For-Profit, Non-Profit, and Mutual-Benefit

  • In contrast, a non-profit organization is legally prohibited from making a profit for owners.
  • One component of nonprofit management that contrasts with the for-profit model is the existence of volunteer workers.
  • A mutual-benefit non-profit corporation can be non-profit or for profit.
  • For example, a manager of a for-profit company may be able to motivate employees through bonuses for sales targets or profit sharing.
  • This strategy cannot work for a non-profit or mutual-benefit corporation.

• Types of Organizations

  • There are a variety of types of organizations, including for-profits, non-profits, volunteer associations, and corporations.
  • They can be either for-profit or non-profit.
  • But regardless of whether a for-profit business uses formal or informal communication strategies, they all share the same goal of making a profit.
  • In contrast, a non-profit organization (NPO) is legally prohibited from making a profit for its owners.
  • Associations may take the form of a non-profit organization or a not-for-profit corporation, so communication structures and strategies for small and large non-profit and for-profit organizations may apply.

• Differences in Messaging in For-Profit vs. Non-Profit Organizations

  • For-profit and non-profit organizations have different primary objectives and marketing strategies.
  • The difference between a for-profit's messaging strategy and a non-profit's messaging strategy is related to the primary objectives of each type of organization.
  • For-profit marketers measure success in terms of a company's sales and profit; a for-profit's continued existence is contingent upon its profits.
  • For-profit businesses are engaged in the trade of goods, services, or both to customers.
  • Fundraising is a significant way in which non-profit organizations can obtain the money for their operations.

• Working with Management

  • In for-profit organizations, management's primary function is to satisfy the stakeholders.
  • This typically involves making a profit (for the shareholders), creating valued products at a reasonable cost (for customers), and providing rewarding employment opportunities (for employees).
  • In most models of management and governance, shareholders vote for the board of directors, and the board then hires senior management.
  • However, management is responsible for implementing new ideas and is required to focus on improving the profitability of the business as a whole.
  • It is important for employees to build a relationship with their managers over time.

• Porter's Five Forces

  • Attractiveness refers to the overall industry profitability.
  • In this state, available profits for all firms are driven to normal profit rates.
  • This results in many new competitors and eventually decreases profitability for all firms in the industry.
  • Airlines have extremely high rivalry, for example.
  • Suppliers can refuse to work with the firm or charge excessively high prices for unique resources.

• Break-Even Analysis

  • As long as a business can cover its minimum costs, it is "breaking even" and can remain in business even if it is not turning a profit.
  • For example: a business selling tables has a BEP of 200 tables per month.
  • If the company sells fewer than 200 tables each month, it loses money; if it sells more, it makes a profit.
  • Typically, companies want to produce above BEP in order to make a profit and will adjust their output level to surpass the break-even point.
  • BEP, in this sense, is a feasibility model for either continuing an existing operation or opening a new one.

• Speed of Innovation

  • For example, an idea for a new product might start out as a crude model built from polystyrene, foam, or cardboard that will evolve quickly into a more professional prototype.
  • Robert Reich observes that profits in the old economy came from economies of scale, i.e., long runs of almost identical products.
  • Today, profits come from speed of innovation and the ability to attract and keep customers.
  • Speed of innovation poses a major challenge for organizations responding to external change.
  • These are key challenges for organizations, as the profit generation of new ideas must fit into a slimmer chronological window—thus underlining the great value of being a first-mover.

• Ratio Analysis

  • Ratio analysis is a useful tool for benchmarking the financial and operational efficiency of a project compared with other projects.
  • These can include profitability ratios, efficiency ratios, activity ratios, and debt ratios.
  • Operating margin and total margin calculate the revenue a project is producing over expenses (a profitable output ratio).
  • The goal of process control is increased efficiency; ratio analysis uses a wide variety of point in similar projects as benchmarks to denote where efficiency can be enhanced, and underlines differences in profitability and efficiency that may sway resource allocation for the organization in the future.
  • The goal of any organization is profits, and ratio analysis allows organizations to see where dollars are being invested and the results on that investment in terms of profitability percentage.

• Financial Rewards for Managers

  • Pay-for-performance programs are quite common in a number of industries, most notably sales.
  • Other types of pay-for-performance jobs are found in the manufacturing, restaurant, and financial industries.
  • The basic premise is simple: the more sales or profits generated by the individual, the larger the share of the organization's profit that individual will receive in return.
  • Like other pay-for-performance programs, the incentive programs for managers are designed to increase their performance as well as the overall performance of the company.
  • CEO pay growth compared to employee salaries, U.S. gross domestic product, and overall U.S. corporate profits

• The Importance of Productivity

  • For businesses, productivity growth is important because providing more goods and services to consumers translates to higher profits.
  • Controllers in an organization are responsible for understanding each of these elements.
  • For example, Starbucks must regularly buy a huge volume of coffee beans.
  • Profitability is both a result and a criterion of business success.
  • Profitability of production is the share of the real process result that the owner has been able to retain in the income distribution process (profits earned).