Profit Sharing Schemes And Company Performance Essay

Introduction:

This study investigates empirically the relationship between the uses of profit sharing schemes to increase company performance. It uses the control factors that affects company performance to do the analysis. The study analyses by using the dependent variables; profit margin against the dependent variables, Firm size, ownership concentration, age of the firm, the growth of sales, and the scheme. The study establishes that there is a little effect of the size of the firm to the performance of the firm and as this is affected by the life cycles of the products of the firm. Ownership concentration of the firm on the other hand affects the performance to the extent of the voting rights. The study further establishes that age of the

It’s size and its inclusion of the economies of scale concept may occur for various reasons, such as organizational reason (specialization and division of labor); financial reason (a large firm can get a better interest rate and also a better discount rate due to a large quantity that it buys); technical reason (division of high fixed costs across large number of units) and many more. In line with this concept then it is evident that a positive relationship between the profitability and the firm size is expected. Carl Ericson (2011) of Atomic Object in his research on profit margins and the influence of Firm size on software development firms concluded that the bigger the business is, the lower it's profit margin. Sagework’s Mary Ellen Biery (2012) in her report ‘Does size matter? Sales growth, margins by company size’ emphasizes that the “smaller is higher rule” only works when a small firm is growing but only up to a point from which the profit margin stabilizes regardless of the business growth

Theoretically, the business pays no marketing cost for the returning customers, the Therefore very little expense is spent on attracting new customers. As the business ages and some marketing cost decreases such as advertising, promotions and coupons then the profit margin is expected to rise (Ashe-Edmunds, 2012). Sumit K.Majumdar (1997) suggests that in India older firms are found to be more productive and less profitable whereas the larger firms are conversely found to be more profitable and less productive. These disparities, he says can be attributed to rising restrictions on industrial policies that have been followed in most countries over the last