Marketing Consultant Global Instrument Systems Inc. The situation in which the profits of the firm are falling even though the overall sales volumes have been increasing may be a signal of poor marketing policy and product strategy of the firm and must be taken care of as the increasing sales costs due to increased sales volumes will not be offset by the profit. In order to develop the strategy for profit maximization, a precise and detailed analysis of the available firm operational history must be implemented.

The first vital step would be to carry Cost Driver Analysis and Activity-Based Cost Accounting, which are "tools" for gathering data on your costs of doing business: costs to serve your customers, costs to purchase, carry, and sell your vendors' products and services, and your costs to engage in various "activities" (ordering products, receiving products, selling products,...

Fixed company costs may have increased during the last years and this has had negative influence on marginal profit received from selling extra unit and overall company profit. As the subject company is a manufacturing company, the costs for all the inputs must be taken into account as this will affect the end cost of the product produced. Ways to minimize the raw materials costs in terms of finding better suppliers or estimating the optimal purchasing volumes and discount rates that may be generating by doing so is another step in the cost driver analysis. The next perfection step is to improve delivery prices of raw materials to the company…