Management Accounting Essay Example | Topics and Well Written Essays - 1750 words - 1

Management Accounting - Essay Example The ability of an organization to identify these competitive forces and understand their nature helps them in developing a differentiation strategy to survive in the market (Fleisher & Bensoussan, 2007) Therefore, it is crucial to identify the competitive forces to which H is subject to. H is experiencing competition in acquiring hauling contracts. Since hauling is the main business that the organization depends on, the organization is under a big threat. One of the reasons why the organization is experiencing competition is due to the existence of many contractors and subcontractors. Resultantly, the organization is experiencing shortage of contracts in the market. In a business environment, when customers reduce, the organization is expected to face profit reduction in the long run. In the recent past, J contractor has lost about a third of its contract since the J Company changed its management. This competition has affected the organization in terms of profit margins. Contracting companies in this market operate at very low profit margins as part of their pricing strategies. The price competition is giving pressure to H Company to reduce its prices to win tenders in the business environment. Usually, when there are many investors in the business environment, the customers gain a higher market bargaining power, and the investors lose their bargaining power. This market pressure forces the organization to lower their prices and consequently reduce their prices. Another problem in this market environment is the seasonal nature of labour. This implies that the organization will have no work to do during the low seasons. This is a big threat to the organization’s survival. Given that the organization has permanent workers that need to be paid during this period of time, it is a big threat to the survival of the organization. In addition, the organization has