Allocation of Net Revenue
For any particular business organization, appropriate allocation of revenues plays a significant role in determining the performance of the organization both in the short term and in the long term. Smiles for Miles Company plans to allocate its revenues in a manner that will ensure the company maintains sustainability, stability, and competitiveness both the short-run and in the long-run (Wheelen & Hunger, 2004). The company intends to allocate its resources as explained in the following sections.
Company Debts
The company understands the significant role that creditors play in ensuring that it can sustain its operations. Smiles for Miles will, therefore, allocate a proportion of the net revenues earned to reduce its debts. Reducing debt levels is important in minimizing debt risks and improving the cash flows of the company (Wheelen & Hunger, 2004). Smiles for Miles Company will allocate 20,000,000 SAR to reduce the amount of bank loan that we owe our creditor
Reserves
Maintaining reserves is very important for the company. Reserves are very vital in meeting future contingencies that the company may encounter. Lack of reserves is likely to push the company into risky debts when it faces emergency situations in future (Wheelen & Hunger, 2004). Therefore, to maintain a significant reserve, the company will set aside 5,000,000 SAR of the net revenue as reserves.
Innovation or Expansion into New Products or Services
Smiles for Miles Company has an ambition of developing into one of the leading companies in its industry. The company understands the challenges involved in growing for a business that operates on the online platform. Advancement in technology requires the company to be creative and inventive to remain competitive. 2,000,000 SAR will, therefore, be allocated for research and development to ensure that the company is involved in setting the trends in the industry.
Charity
As a business that operates within communities, we intend to be sensitive to the plight of the community (Wheelen & Hunger, 2004). The company will, therefore, be taking part in corporate social responsibility initiatives mainly in the health and education sectors. We will work to support schools with few resources in the construction of classes and delivery of important stationery. In the health sector, we will offer prenatal support to expectant mothers. Smiles for Miles Company plans to set aside 1,000,000 SAR of the net revenues for these initiatives.
Salary Increase and Bonuses
Smiles for Miles Company appreciates the significant role of its employees in attaining success. The company understands the need to keep the employees motivated and feel appreciated (Wheelen & Hunger, 2004). 2,200,000 SAR will be set aside from the net income to cater for salary increments to all employees and bonuses for top performing employees.
Investments
The company's vision and mission are to expand its reach and attain a significant market share. To make progress towards this goal, investment in personnel and equipment will be necessary. 10,000,000 SAR out of the net revenue will help the company to start moving towards the desired direction.
References
Wheelen, T., & Hunger, J. (2004). Strategic management and business policy. Upper Saddle River, NJ: Pearson Prentice Hall.
