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Define these terms and provide an example for each term to demonstrate your understanding - VCE - SSCE Business Management - Question 1 - 2003 - Paper 1
Question 1
Define these terms and provide an example for each term to demonstrate your understanding. a. profitability b. strategic direction
Worked Solution & Example Answer:Define these terms and provide an example for each term to demonstrate your understanding - VCE - SSCE Business Management - Question 1 - 2003 - Paper 1
Step 1
profitability
Answer
Profitability is an indicator of a firm's success or measure of business performance. It is usually expressed as a percentage figure over time. For example, if a firm increased its profitability by 10% in a financial year, this reflects its efficiency in generating profit relative to its revenue and expenses. An example of this could be a company that reported revenues of 900,000, resulting in a profitability of 10%.
Step 2
strategic direction
Answer
Strategic direction refers to long-term planning by the business, typically established by senior management over approximately 3-5 years. This planning sets forth the path for the business's future and aligns with its overarching goals and objectives. For example, a company may decide to enter a new market or diversify its product offerings as part of its strategic direction, guiding operational decisions and resource allocation for sustained growth.