IGCSE, A Level Business Student Forum

Q14 Analyse one benefit to a private limited company of introducing a profit-sharing system for the workforce. [5]

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Possible Structure
[KN]
[AN]
[AN+]
[AN+]
[AN+]

kn: increased motivation
an: when employees have a share in the company's profits, they will be more motivated towards increasing profits so that they earn a larger amount, increasing productivity.
an+: An increase in productivity may lead to improved quality, giving the business a competitive edge.
an+: this will lead to a wider consumer base, and therefore, a higher market share.
an+: furthermore, this may result in higher profits.

[KN] Greater commitment from workforce. [AN] This means that introducing profit-sharing system may encourage managers of the private limited company to feel dedicated towards making business profitable as they receive a proportion of it. [AN+] Moreover, the managers in company may provide suggestions for cost cutting to increase profits, hence wastage of human and capital resources may be reduced. [AN+] Furthermore, managers may also put effort into ways of increasing sales, they may do this through branding and marketing methods. This may provide the opportunity to make the goods and services of company known to customers in order to expand customer base. [AN+] As a result, the cost cutting methods and marketing strategies to increase sales may lead the business to gain a greater market share along with expansion of customer base due to being well known and profitable, all because managers may feel encouraged to work hard due to receiving a share of company profits.

Kn: additional income for employees influences the employees to achieve their goals
An: profit sharing system stimulates the workers into doing their job more focused and productively
An+Motivated employees are better at adapting to change and collaborating with their fellow workers
An+ Having a team of highly motivated employees can also reduce turnover and absenteeism
An+ this improves the position of the business and ensures future organization success

KN: Through profit sharing employees get more satisfied with their jobs and hence get encouraged to create better working environment for th employees
AN: employees will benefit from improved work environment and better relations with managers
AN+: Employee productivity levels will increase
AN+: Productive employees will become the intellectual capital of the company
AN+: These employees will turn into intraprenuers and benefit the business

FIRST OF ALL SIR BY "WORKFORCE" DO YOU MEAN EMPLOYEES OR JUST MANAGERS?

KN: Managers have beliefs that putting efforst will actually lead in increasing performance which will help them in getting what they desire/ Get nore satisfied with their bosses and jobs.
AN: Get more engaged in their work and stay more focused
AN+: Helps in increasing productivity and doing less errors
AN+: This contributes to business which makes the managers/employees feel important in the organization
AN+: When they feel important there will be less chances of them leaving the business thus less labour turnover.

IS ADDING AN EXPECTANCY POINTS OKAY IN THE KNOWLEDGE POINT FROM VROOMS THEORY?

[KN]it will motivate the employee to work harder
[AN]which will improve the productivity of the business
[AN+]this will help increase market share of the business
[AN+]which will increase the number of customer
[AN+]thus increasing the profit of the business

[KN]: improve the managers' interest in the business and its tasks
[AN]: thus it would increase their dedication in the profit earning as they receive a part of it
[AN+]: they would think of new ideas of reducing the cost of production
[AN+]: leading to increase in the profits earned by the business
[AN+]: it would increase consumer base and market share of the business

[KN]This will inspire the employee to exert additional effort in their work.
[AN]This improvement in employee motivation and effort will lead to enhanced business productivity.
[AN+]In turn, this can contribute to the business expanding its market share.
[AN+]This expansion of market share is likely to attract more customers to the business.
[AN+]As a result, the increased customer base is likely to lead to higher profits for the business.

(Kn) employees would work harder to gain more share of profit.
(An) workers would increase their productivity and efficiency because the more they will contribute to business profits the more they gain from profit-sharing.
(An+) as profit-sharing would increase workforce gains in terms of money hence, less people would leave the business resulting in lower employee turnover.
(An+) this scheme would motivate workers to work harder which would increase ovreall efficiency or workers and business productivity.
(An+) to earn more returns employees would come with new ideas to reduce business costs hence would increase business profit margins.

(KN) Profit profit-sharing system encourages teamwork among employees.
(AN) As individuals know that their earnings are connected to their overall performance they are more likely to work together towards a common goal.
(AN+) unity among employees.
(AN+) IMPROVED communication.
(AN+) Better problem-solving techniques.

[KN]By introducing a profit-sharing system, the performance and motivation of the employees are improved.
[AN]It also fosters a sense of ownership within the employees.
[AN+]Which boosts their commitment and dedication to the company.
[AN+]As the employees are motivated, they exert extra effort into their tasks which improves the efficiency of the business.
[AN+]As a result this can expand the market share of the business.

(Kn) Greater employee involvement
(An) Profit sharing would mean employees would keep a percentage of profits. This would encourage employees to maximise profits in order to gain a greater income.
(An+) The company would thus benefit from greater profits which could then be used to expand the company even further

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@zainabsahar : 5 Markers need 2 more points.
[AN+] Since employees have greater potential to earn from business, it would motivate them & there would be less employee turnover.
[AN+] Expansion may lead towards more standardization & better facilities for the employees to further encourage them to perform better. (larger scale firms tries to improve brand image)

(kn) company owners should motivate employees through multiple ways.
(An)this would build loyalty in employees.
(An+)this will increase employment
(An+)this will increase motivation in employees and so they will do hardwork.
(An+) employees will help the business in achieving it own objectives.
(An+)Therefore it will decrease absenteeism and also create a secure sorrounding between employees.

[Kn] Sense of belonging
[An] A business may share profit with its top-tier management on the basis of their effective decision-making
[An+] This will result in managers making more efforts to lead the success of the business.
[An+] Effective decision-making of the managers will help the business have a competitive advantage over its competitors and help gain a higher market share
[An+] the business will become a market leader and expand its consumer base. this will generate higher sales and higher profit, leading to expansion