BUS630 WK1D1 - (Exercise 1-9 Zoya Arbiser regional manager...

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(Exercise 1-9) Zoya Arbiser, regional manager of Gold Medal Sports Shops, is reviewing the results of 15 stores in her region. Store managers are moved annually. Each store manager's income is very dependent on the direct contribution margin of that store. For the past year, Store 9 has been managed by a person who has operated several other profitable stores in recent years and is about to be promoted to a larger store. Zoya notices several items that bother her. Based on the information provided, it seems as though store 9’s current manager is only concerned with his success and not the overall success of the company. As stated, managers are rotated annually and their income is dependent upon the direct contribution margin of that store. “Operating margin represents the contribution to net profit from the business, after all direct operating expenses and overheads are deducted from the gross margin” (Johnson, 2006, para. 2). If I am correct and Store 9’s manager is only looking out for him/her self, it is possible that this manager is trying to reduce the amount of variable costs in an attempt to increase the store’s operating margin. However, it is possible that the alternative is true and the manager is working to increase the overall profit of the company as a whole.

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