I’m working on a management discussion question and need an explanation to help me study.
Write a reply minimum of 150 words for each discussion1 and discussion 2
Primarily, there is a need for discontinuation of any products that generate loss to an organization. The most crucial objective of every business organization is to make profits. With the generation of profits in an organization, it is realized that the organization offers goods and services that are satisfying to the customers. Satisfied customers give the organization a maximimiyed competitive advantage; thus, the company needs to continue offering the products and services in the market (Crowley, 2017). Organization products which rarely make profits but instead generate losses are not worthy of remaining in the market. The products should be discontinued to avoid further loss generation.
Products that generate losses should be discontinued because continuous loss-making reduces operations of a business establishment. For example, companies that make losses are subjected to a minimized market share. This means that consumer demands will also be reduced significantly (Crowley, 2017). With these minimizations, it would not be easy to maintain the staff and employees. Thus, it will be crucial to discontinue the entire products that generate loss instead of profits.
Additionally, discontinuation of products that generate loss is crucial in that it will prevent the organization that offers the product from falling into bankruptcy. For example, organizations that still struggle to continue with product production even though it is generating losses will finally have no option rather than being bankrupt. This is because they are spending more resources on products that are not offering any benefits to the organization (Crowley, 2017). To avoid this, the company’s production has to be discontinued before the firm is bankrupt. A firm that is declared bankrupt will find itself in a long and arduous survival; thus, it should discontinue producing products that generate losses instead of profits, which is the intended objective of product production.
Crowley, F. (2017). Product and service innovation and discontinuation in manufacturing and service firms in Europe. European Journal of Innovation Management.
As a designer, I believe before making that important decision, let’s consider our package design and optimization have an effect on all the aspects of the supply chain. An optimized package helps in reducing the constraints of packing, package construction, transportation and storing. Reduction in the packaging’s carbon footprint through recycled and energy-efficient materials helps in reducing the energy consumption and materials costs and all the overall expenses.
An optimized package helps in the effective use of cargo units and leads to easier distribution to both the stores and consumers. At the end of the supply chain, an optimized package provides information and value to the consumer, improves the brand recognition and also encourages the future purchases. This also makes me think of the economic rent which is any payment to owner or factor of production for using the resources by reducing its cost .for example land is main example of factor of production because supply of labor is fixed and it is completely inelastiv.As we have seen land is free gift of nature hence it can’t be produced more of this cannot be increased when its demand or prices rises.
McKenzie, Richard B., and Dwight R. Lee. In Defense of Monopoly: How Market Power Fosters Creative Production. University of Michigan Press, 2008.
Ingram, Robert W., et al. Managerial Accounting: Information for Decisions. South-Western College Pub., 2003.