Analysis of Economic Factors in a Business

Analysis of Economic Factors in a Business returns Sharing, Revenue Sharing, Piece Rate, cartridge clip Clocks and smudge ChecksSubmitted by Group 6-Neethi Nair-one hundred forty20541031Neha Paswan-14020541032Nilesh Tayade-14020541033Nishant Thool-14020541034Nishith Mohanty-14020541035Nitish Vats 14020541036Akanksha Chaudhary 14020541065Profit Sharing-Profit sh be be the commission pictures to introduced by course upstandings that provides direct or collateral w boards to the employees that is dependent on the smart dance bands advant bestride earned, in addition to the employees regular salary and bonuses.In public companies, these be the gainfulness assigned to the employee as the equity sections.Profit sharing plans argon in the main based upon the predetermined economic sharing regulations that define how much(prenominal)(prenominal) should be split in the midst of the familiarity as a nous and the employee as an agent.The double-decker keep use this to enh ance proletarians efforts making the takeers hire dependent on the underlying profitability of the firm. Offering workers compensation that is bind to underlying profitability provides an incentive for workers to put onward more than effort.The company can also earn profit from this, by sharing the profit with the employees retreat benefit account, which leave behind be non-taxable for the company.Profit sharing is a type of variable present, which is dependent on the profit gained by the company. rise up Fargo Company is an American multinational swearing and pecuniary helpings holding company which is headquartered in San Francisco, California, with hub-quarters throughout the country. It is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization.Its profit sharing is as follows-(https//www.wellsfargo.com/biz/retirement/profit-sharing-plans/)For companies, size really doesnt matter to offer profit sharing. Employee eligibility is set while joining.Employer Up to 25% of compensation or $52,000 in 2014. Profit sharing plans allow the company to vary both year fit to the profit.The contributions ar deducted from the taxable income.The withdrawn contribution and earnings are taxed as ordinary income.Stocks, bonds, mutual funds and Advisory Products available through a Wells Fargo Advisors brokerage account.There pull up stakes be a 10% IRS early withdrawal penalty if the profit is withdrawn before age 59 unless valid exception.ExceptionsNormal retirement ageSeparation of service after five years and reaching age 55 remnantDisabilitySubstantial equal periodic payments everywhere life apprehensionQualified military reservistRequired withdrawals essential begin at age 70Deadline to set up and FundMust be formal by the last day of the stock fiscal yearContributions whitethorn be made up through the business tax file date (plus extensions)REVENUE SHARING Revenue sharing is a business arrangement that makes it possible for two or more parties to share in the profits and losses realized by a business operation. The study structure of the gross sharing st considergy varies based on governmental regulations that are applied in the jurisdiction in which the business is located, and the price and aliment found in the contract that establishes the working relationship between the concerned parties. This approach may be used to compensate employees of the firm above and beyond the usual salary or wages, or be used to provide compensation to affiliate partners in an online business venture. deep polish a business scene, revenue sharing may take gear up as part of a limited partnership arrangement. Here, the partners agree to share in the profits and losses sustained by the operation, with specific provisions on how those profits and losses are shared each method acting of accounting period. Essentially, the general partner has the responsibility of reporting the level of profit or loss i ncurred to the limited partners, then compensating them according to the basis found in the partnership agreement.USER ROLESManagers result setup available business warnings and part of them are the revenue share presentService provider get out setup revenue share model associated to Applications and run, and they capture to be mingy in the Revenue Settlement Sharing SystemDevelopers have to fill in nigh the revenues of their applications and serveInvolved service/applications providers have to know about the revenues of their applications and servicesThe following figure shows a conceptual architecture of a system for settling and sharing revenues. There are a recite of different sources of revenues for a given service that will be combine and processed according to the business model of each service and the revenue sharing policies specified for each partner. The final revenues balance will be transferred to a payment broker to deliver the payments to each provider/ developer quad peril/Reward Revenue-Sharing model Case StudyRaising the except in Smart PricingSmart Pricing has received a lot of attention in the Information Communication Technology (ICT) pains over the last 12 months. IT service providers are touting it as a key differentiator in a very competitive post-crisis environment, and organizations are demanding for more risk/reward and usage-based set so that their ICT partners have more accountability in each engagement and these ICT engagements are more line up to business priorities. International Data Corporation (IDC) is predicting that Smart Pricing will account for close to 50% of all ICT services transactions by 2015. multitudinous, an Indian IT services and software provider, has been one of the most aggressive services providers in this game changing market dynamic whereby approximately 30% of its total revenue is derived from risk/reward pricing models. Its intellectual airplane propellerbased revenue sharing model is certainly setting the railyard in the industry where many ICT service providers are still struggle to come up with the right formula. sempiternal is non only setting the pace in Smart Pricing models in the ICT industry, it has clearly raised(a) the bar for the rest of the field.Organization OverviewInfinite Computer Solutions is an India-headquartered global services provider of infrastructure management services, intellectual property (IP)-leveraged solutions, and IT services. The company focuses on the telecom, media, technology, manufacturing, power, and healthcare industries. Presently, telecom is its principal vertical and this includes telecom service providers as well as networking equipment vendors. Its services portfolios span application management outsourcing, packaged application services, independent validation and verification, increasedevelopment and support, and higher value-added offerings including managed plan and outturn engineering services.It curren tly has 3,668 employees and has a global footprint of 16 offices across the globe including Singapore, the U.S., the U.K., India, Malaysia, and China. RD sites are concent computed in Indian cities equal Bangalore, Chennai, Hyderabad and Gurgaon. The company is listed on the NSE and BSE and its FY10 revenue was approximately US$140 million. Infinite has a healthy mix of customers from the list of Fortune atomic number 6 companies including IBM, Alcatel Lucent, and Motorola across several verticals, but its strengths pass to be in the telecom and healthcare sectors.Challenges Solutions Mature products are physical objects Currently, Infinite plant life with organizations, examines their or their clients product portfolios, and identifies products or solutions that are mature and have a significant installed base. The products continue to be essential to many buyers, have a proven revenue generating record, and can be better streamlined via an off shoring model to India.The whi rligig potential must be significant Infinite will have to execute careful due diligence before truly making any large-scale investment funds. One of the guiding principles is that the product or solution must be able to deliver 20%50% harvest-tide over the next few years with further investments.Risk/reward pricing models vary Infinite has made significant come up in raising the share of its revenue that is derived from risk/reward pricing models. It currently stands at close to 30%, one of the highest if not the highest in the industry. Revenue derived or splits between Infinite and client varies from swap to deal but it is dependent on several factors. For every There are usually tierce sets of revenue streams to propose growth. Additional vernal gross revenue of the product, services revenue, and annual maintenance are the three sets of revenue streams to drive growth. The combination of these three must be able to deliver an upside that ranges 25%50% of growth. The propo rtion of revenue that is attributed to the customer will generally be lower if the revenue upside potential is less, accounting for new investments that could refresh the product.How often to invest in the new product? Infinite would also need to do its due diligence as to what and how much investment it needs to put into these products to gene post the type of growth that it is looking at for. Aware that some of these products have great fluctuations in revenue, which may be difficult to forecast, the company has to factor this into its planning.ResultsAccording to IDC this unique engagement model and smart pricing will eventually define the ICT industry over the next few years. Clearly one of the trendsetters, Infinite is setting an stirred up pace in Smart Pricing that many of its competitors will have to play catch-up.Infinites unique smart pricing model has achieved sustainable returns. In todays economic environment, organizations are looking for flexibility and agility an d as a result of this relationship, many of its existing clients are now able to aline their resources by channeling them into strategic areas of growth.Increase in the value of offerings as RD investment in core products as well as additional Infinite capital ploughed in will have the overall jounce of enhancing the total solution or product portfolio.The company posts 20%50% revenue growth, usually depending on a number of factors including how speculative the product or solution is. Infinite is clearly on a growth trajectory and thus, its IP-based risk/reward model has found a loosen up reception among some organizations.Piece-rate pay-Piece-rate pay gives a payment for each item produced and is therefore the easiest way for a business to ensure that employees are paid for the amount of work they do. Piece-rate pay is also somemagazines referred to as a payment by results system, slice work or performance related pay. The oldest type of performance pay, maculation rate is wh en an employee is paid a fixed rate for each unit of production. In other words, he or she is paid by results.For example, a mill worker may be paid per item he or she makes on a production line.In the United Kingdom and in various other countries with minimum wage laws, pay rate must be used in unification with minimum wage laws for employees. For example, an employee who works at a $0.1 per-piece rate and completeds 70 pieces in an hour would not receive $7.00 but would receive his states minimum wage, which business leader be, for example, $7.25 an hour. However if he is able to work fast enough to complete 90 pieces in an hour he can earn $9.00 per hour. So, per-piece rate pay can act as an incentive for employees.Incentive contracts such as piece grade and profit sharing are designed to solve principalagent problems when effort is not observable. The benefits of the piece rate system is that it motivates employees financially to complete as much work as they can, and conse quently they can increase their monetary reward by maximising their output.A potential problem with paying workers based on a piece rate is that effort must be expended in forest control otherwise, workers may attempt to produce quantity at the disbursal of quality. Therefore, piece-rate pay encourages effort, but, it is reasoned, often at the expense of quality.From the employees perspective, there can be certain problems which might imprint the production and eventually tint their pay. The problems which can possibly hamper the production may include sectionalisation of the production machinery or delay in the delivery of the raw materials which slows down the production. These factors are outside of the employees control but could potentially affect their pay.The solution to these problems is that piece-rate pay systems tend, to have two divisionsA basic pay element which is a fixed meter- based elementAn output-related element- Generally the piece-rate element is only e licited by the business exceeding a target output in a specific defined period of timePiece-rate systems are broadly classified into three categoriesi. Straight Piece-rateii. Piece-rate with Guaranteed time evaluateiii. Differential Piece-ratesStraight Piece-rate method payment is made on the ass of affixed amount per units produced without regard to the time taken. Thus the earnings could be calculated as followsEarnings= Number of units x rate per unit.The fixations of piece rate generally depend uponThe comparable time rate for the corresponding class of workersThe expected output in given timeIn Guaranteed time rates system payment is at time rates but adjusted to the cost of living. The employer balances the high labor cost by increasing the price of the products. The merit awards for skills, personal qualities, ability, punctuality etc. are also considered in this system.Differential Piece-rate system is a wage plan based on a standard task time wherein the worker receives increased or decreased piece rates as his production varies from that expected for the standard time. This is also known as an accelerating incentive.Comparison of three price rate systemsWages during Differential Piece rate limit Straight Piece rateGuaranteed Base wageStraight piece rate withminimum guaranteed wageStandard outputOutput in pieces producedTime clocks and spot checks -Few methods of encouraging workers to put forth their best efforts are piecework, time clocks, and spot checks.Time clock is comparatively simple and inexpensive technique to introduce into a place of business however the flaws in it is that the information received from time clock is relatively useless in determining employees working habits. A time clock can only inform a manager of how considerable an employee spends in the workplace, but not how much time the employee is actually consumption working i.e. how efficiently is he working. There could be a conjecture that the employee is evidently so cializing most of the day or just doing the unlike tasks and the time clock would make no determination between employee with such behavior and the employee who works diligently throughout the workday. So, we can say that Time clocks dont monitor efforts made by the employee rather, simply measures his presence at the workplace from beginning to the end of workday. Thus it acts as an inferior method to monitor manager-worker problems.A more efficient method than Time clock that not just measures the time spent by employee at workplace ,but also measures his/her performance, is spot check. In this case the manager gives time to time visit at workplace to monitor its employees. The purpose of these spot checks and inspections is to counter irregularities committed against the Community budget.The spot checks may concern, in particularBusiness books and documents such as invoices, pay slips, bank statements, lists of terms and conditions, statements of materials used and work done, a nd Computer dataPackaging, Production and dispatching systems and methodsPhysical checks as to the nature and quantity of goods or completed operationsThe collection and checking of samplesThe move on of works and investments for which financing has been provided, and the how it has been usedAccounting and budgetary documentsThe technical and financial implementation of subsidized projectsThe advantages of spot checks are as followsIt reduces the cost of observe workersThe managers need not to be available at different places at identical timeIt also increases employee efficiency. With workers not knowing if the manager will show up or not, they put more effort at work, as suddenly getting caught goofing off may lead to expelling or a reduction in payAs everything has its pros and cons, same is the case with Spot checking. Some of disadvantages of spot checks are as follows denounce spot checks, however, are costly and reduce the firms profitabilitySpot checks work, in effect, t hrough threatThese can have negative impact on employees moral he/she cant work freely at workplace due to threat of being watched every moment.