Profitability of Corporations - an overview
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Profitability of Corporations - an overview
The main parameters in the profitability of corporations are:
1. Private and public corporations are in general more profitable. In addition, such corporations are much more beneficial for the countries where they reside. Private and public corporations pay a percentage of their gross revenue to the country. Countries receive much more money from any type of private and public corporation under any conditions than from their own state owned corporations.
2. Corporations must produce at 100% or close to it. Profitability will decline quickly if production is much lower. The reason is mainly because some of the corporate cost is fixed and does not depend on the production level. If production is lower, these fixed costs may quickly surmount to a substantial portion of the total revenue
3. Market price is essential. If there are surpluses on the market, the price will decline and it will have a major influence on the profitability.
4. Quality is an important factor as the price you get on the market may be much higher if quality is high. Quality has its limits because the price will be obtained only if there is a buyer for the products at the offered quality level.
5. The type of product matters. Some products are designed to have a higher profitability. These products include high tech products and at a lesser level weapons and ammunition. The difference between the most profitable and least profitable products is not more than 15%.
6. Salary levels are important as with high salaries, productivity will increase and the corporation will make more products. This has its limits as the production levels do not grow at the same percentage as the increase in salaries and at some point, there is a break even that depends on all other parameters.
7. Upgrading the efficiency level of corporations has a very limited influence on their profitability. The main advantage is a decrease in the total number of workers. This will allow countries to set up more corporations with the same number of total population.
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