IB Business Management HL 3.5.2 Improving Profitability Ratios Questions

Generic strategies include:
- reducing direct costs;
- reducing overhead costs. Checking on the indirect costs to see where unnecessary expenses may be avoided;
- increasing price;
- adopting more aggressive promotional strategies that will persuade the customers to buy its products.

For the application mark, the only applicable strategy seems to be increasing price as C I M is price competitive and can afford to increase its selling price. Reducing direct cost or overheads seems unlikely as CIM is a small start-up and their bargaining power or purchasing economies of scale are probably low to reduce unit cost. Overheads costs are already at a minimum level. Adopting more aggressive promotion may be costly unless an inexpensive below the line (BTL) strategy is used.