KNES 472 Lecture Notes - Lecture 6: Profit Maximization, Sports Equipment, Cash Flow
Document Summary
Setting price to maximise difference between revenue and expenses. Price should still not be set above perceived value of the product. Problem: it can encourage short-term thinking: (2) satisfactory profit, a reasonable or realistic profit, what is reasonable will vary for organizations, problem: requires research into market and competitors. Profit-based goals: (3) return on investment (roi): Considers the amount of money required to develop and introduce the product to the market, against the amount intended to be made in sales. Sport organizations who are not profit seeking may choose a sustainable rather than highly profitable ro. The percentage that one product or brand has made out of the total sales in the sector / industry. Can be calculated in terms of dollars, or units of product sold. A better measure for profit-oriented organizations (e. g. sporting goods) than competitions. A useful idea for sport participation organizations. Not good for profit-oriented sport organizations in the long-term goal.
