OPERATIONAL LEVERAGE AND ITS INFLUENCE ON THE FORMATION OF THE PRICE POLICY OF THE ENTERPRISE
Journal: International scientific journal "Internauka." Series: "Economic Sciences" (Vol.1, No. 62)Publication Date: 2022-06-30
Authors : Zaichenko Kateryna; Sulym Iryna;
Page : 96-101
Keywords : operating leverage; price; pricing policy; enterprise; efficiency;
Abstract
The article examines the impact of operational leverage on the process of forming the pricing policy of the enterprise. Approaches to the interpretation of the concept of «operational leverage» of domestic and foreign scientists are analyzed, their comparative characteristics are given. The key aspects of operational leverage are highlighted, including: impact; control mechanism; the relationship between profit and output; the relationship between cost structure and operating profit; share of fixed costs; assessment of pricing policy; pricing. It is determined that foreign scientists consider operational leverage in accordance with its impact on pricing and pricing policy. While domestic scientists examine from the standpoint of its impact on key indicators of financial and economic activities, including sales, sales revenue and operating profit. It is determined that due to the use of operational leverage the company is able to monitor the cost structure and make management decisions about the optimal price level of its products. A study of the main stages of pricing policy development identify six ones: the choice of target policy, demand assessment, cost analysis, analysis of competitors' prices, choice of pricing method, pricing, evaluation of the effectiveness of pricing policy. It is determined that the calculation of operating leverage should be carried out at the stage of cost analysis in order to determine their optimal structure in accordance with the resources, capabilities and potential of the enterprise. It was found that the level of operating leverage, which characterizes the ratio of fixed and variable costs in their structure, can reflect the optimal price and ability of the company to cover them and, if necessary, influence management decisions on sales and cost structure.
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