Breakeven Analysis

It is very easy and basic concept of business world. When I started with1st semester of my business education without having any prior knowledge or background of business studies, it took me time to digest this and its graphs. But now it seems just like a piece of cake thing and very basic.

It simply says the point of sales when there is no profit no loss situation. It’s a simple relationship between costs, sales and profit. When sales are covering the costs incurred. Neither you are earning any profit nor bearing any loss but the revenue is covering all the costs.

Now let’s have a look at its formula:

To calculate breakeven point (where sales are covering costs), you need to know the unit price of the product being sold, lets denote it with P, variable cost per that is VC and total fixed cost lets say it TFC. So we can say:

                                    BE = TFC/P-VC

For more understanding lets figure this formula out using some hypothetical numbers, suppose we are producing pens. Per unit cost is $ 7 and variable cost per unit is $4. Now by subtracting P-VC ($7-$4) we get $3 in this case. Say annual TFC is $300 then breakeven point can be computed as $300/$7-$4= 100 units. $100X$7=$700 that is revenue. And $400+$300=$700 that is total cost. So 100 units of pen will be enough to cover all costs.

So this way you can easily calculate how much volume you should produce, to what amount it should be increased or decreased.

What is GMAT

GMAT stands for Graduate Management Admission Test it is administrated under Graduate Management Admission Council (GMAC). GMAT is required to most of the international MBA programs including America, Canada and European countries. But now in Pakistan also, GMAT is becoming one of the basic requirements of admission in top MBA programs in institutes like LUMS, IBA, and LSE etc. Although these institutes conduct their own admission tests but those tests are also based on GMAT format (which I’ll describe later) but they do accept GMAT score as well. (GMAT is not a pass/fail test; it gives the result in form of score)

GMAT is now named as GMAT CAT, CAT stands for Computer Adaptive Test. This change of name occurs simply because GMAT is now conducted with the help of computers :).

Now let’s come to the format of GMAT which is consists of three parts

1. Analytical Writing Assessment – two 30 minutes essay writing, one analysis of an argument and one analysis of an issue
2. Quantitative Ability – 75 minutes session of multiple questions of problem solving and dada sufficiency
3. Verbal Ability – 75 minute session of multiple questions of Critical reasoning, Sentence Correction and Reading Comprehension

GMAT announces result of these three sections separately but score of quantitative and verbal abilities are also announced together. Maximum score of GMAT is 800 and most institutes in Pakistan accept above 550 or 600 but that is not a hard and fast rule

Some Important Points about GMAT CAT:

• Maximum Time 3 hours and 45 minutes
• Maximum score is 800
• International test fee is $250
• Additional fee for Test score reporting $28
• National Passport is essential for GMAT.

Advice:

Most students in Pakistan (including me) rely on different academies for GMAT preparation but I learned that attending academies is just a waste of time and money as well. So if you are looking forward to give GMAT or any other local GMAT format test then my advice is that, buy a GMAT book and start practicing it right now!

How to Attempt Paper Effectively

Have you ever found yourself in a position when you thought that you did a great job in exam but on result day your marks wasn’t matched with your expectations. Well that happened basically when you don’t attempt you paper effectively. So I decided to put together some guidelines to be followed when attempting a paper.

I am not going to give you any supersonic thing that can help you get 90% marks when your preparation is for 70% but one thing I guarantee that if you follow these points you will get the marks according to your expectations and preparations. These guidelines will specially help students studying in annual system but some institutes do have subjective type of questions in semester system even so it’s also better for those who are studying under semester system to have some fair bit of knowledge about how to attempt paper effectively. So here we go…

Study Well:    Yes to attempt a paper you should study the books first, point to be noted is that I am not saying to attempt a paper effectively I am saying to attempt you need to study your books well. While studying always give more time to major concepts but never left minor topics totally, at least read them once. This practice will help you if got something called “out of course” or “upset paper”.

Start with Your Strong Point:                      Always start with a question about which you are damn sure that you can give 100% what is demanded by paper setter. Because its all about making positive perception of you in the mind of paper checker. So if you hit him hard with your strong concept then he’ll of perception that he checking a paper of some genius. So never show your weak point at start.

Complete All Answers:          Make sure that you complete all your answers whether you know them or not. Well if you are thinking that how is it possible to complete something which you don’t know, well in that case pretend as you know and conclude your answer. Basically the point is that you don’t need to left an answer thinking that “I’ll come back to it afterwards” believe me most of the times that afterwards never comes.

Attempt All Questions Required:     Never left a single question because it’s just like surrendering your right for some certain marks. So make sure that you attempt all questions required for 100% marks, remember I told you to read all topics at least once that will help you here.

Keep Your Paper Clean:        As all of you know better that it’s better to have your answer sheet neat and clean and avoid any unnecessary cuttings or overwriting. Paper checker love those papers that are neat and make it easy for checker to check paper.

So these were the things which I thought are important to attempt paper effectively.

How You Can Prepare Yourself for Interview

Many of you are about to finish your studies and start looking for jobs, and if you are really about to do this then my advice is not to wait for your studies to be completed and start dropping your C.Vs now. Yes now because there are very little chances say 10% out of 100 applications you drop to companies that you get a interview call. And if you are lucky enough to have an interview call I am sure this piece of information will help you a lot and increase your chances to be successful atleast in the interview. Being an HR major I have developed some points on how you can prepare yourself for interview, here they are:

Step 1, Find Out The Type of Interview:       Here is the very first step to prepare yourself for an interview. Find for what type of interview you are going, remember there are three types of interviews (1) Screening Interview (2) Decision Interview (3) Data Gathering Interview. Your level of preparation depends alot on the fact that what type of interview you are going to. Because the screening and data gathering interviews are just not enough important to do "ALOT" for them, main thing is decision interview where you make into the job.

Step 2, Prepare To Be Asked:        This is the key point, when you are going for an interview you should know about the organization you are going in, you should have fair amount of information about the JOB you are applying for. Search and look what type of questions an interviewer could ask and rehearsal there answers. If you could manage to know a little bit about the interviewer before the interview that would be a big plus.

Step 3, Prepare To Ask:      Always remember that interviewers like the candidates who come with preparation and can convey their thoughts well. So never get hesitated or feel shy of asking something from interviewer but make sure you don't ask something silly. Ask what you really wanna ask and that make the sense in that environment.

Step 4, Dress Yourself :      Hey get a suit and start wearing it so make your body feel comfortable in it, I know students don't like formal dresses in their student life but believe me when you are at interview a smart suit makes the difference. Navy blue is recommended color for your suit but you can also pick black or dark brown. Spend some money on your dressing and it will give you a big "competitive edge".

Step 5, Get Rid of Anxiety:     Research proved that many of candidates score low on interviews because of their anxiety. Get Rid of it Man, researchers found that anxiety can be significantly reduced if you have a realistic understanding of the context of the interview and go into interview with an open mind. So if you are fairly prepared for interviewer's question then you would feel confident.

Step 6, Get A Commitment:     This is not the part of preparation but it is important that when you are finish with the interview get something called commitment. Like "When I'll be informed?" or "When are you planning to finalize you hiring decision?". This practice will help you in managing you time schedule for other interviews.

I tried my little best to give you some quick tips about interviewing, let me know if you need something more on this thing.

Corporate Portfolio Analysis

When companies are having more then one business unit, they need to know the performance of their each business unit. To manage and maintain each business unit, managers make portfolio of businesses using corporate portfolio matrix.

The first and most commonly used and known portfolio matrix is BCG matrix- developed by Boston consulting. In this idea businesses could be evaluated using 2x2 matrix where we can identify that which business is offering high opportunities and which one is going in loss. This way you can best analyze your businesses and make decision in which business to invest, where to cut the costs, which needs more attention etc.

In the diagram above, the horizontal axis represents market share, which has two values either low or high; and the vertical axis indicates anticipated market growth, which also has two values either high or low.

There are four categories in which businesses are placed in order to evaluate each of them:

Cash Cows: This category business is having high market share but there growth rate is quite low. So due to high market share these are highly profit generating for you organization but there future prospects are no certain and are limited.

Managers should milk cash cows as much as they can and stop making new investments in these businesses.

Stars: these businesses have both high growth and high market share. So along with generating high amounts of profits for your organization, these also hold a dominant share of market. There growth rate is very fast and have future certainty.

Managers should invest heavily in stars to get more benefit out of these businesses. This way growth will keep on increasing and high market share will be maintained giving huge amounts of cash to organization. Eventually stars will turn into cash cows, when they will reach the stage of maturity and growth will slow down.

Question marks: these businesses have high growth but there market share is not strong. These are attractive opportunities but due to small market share they are not profit generating.

Managers should make new investments in question marks as they have growth potential. So they should invest to get the market share and enjoy high profits by holding strong market share as well. And when they will achieve the market share along with high growth, these will turn into stars and ultimately cash cows. Some of these may be sold out if managers are not willing or having heavy investments.

Dogs:Business in this category are both with low growth and low market share. These neither produce nor consume much of organizational resources.

Since these businesses are giving nothing to organization, so these should be either sold off or liquidated.