A business entity incurred a loss of Rs 3650 Crores in a year. With an average of this amount, loss per day was to Rs 10 Crores. But, in reality the loss did not occur at Rs 10 crores per day during the year. One day the loss might have occurred for Rs 15 Crores and the other day loss might have occurred for Rs 5 Crores and in this way average loss per day was Rs 10 Crores and total loss during the year was Rs 3650 crores.
If we can identify the reasons for loss on a day for Rs 5 Crores and another day for Rs 15 crores and gradually the loss on a day of Rs 15 crores is brought down to 10 crores and the loss on the day of Rs 5 Crores to ‘Nil’ loss, the position of the business entity improves. This process is to be continued till the time the loss making entity becomes profit – making entity.
The question is the procedure by which this reduction of losses can be achieved.
Before that it is to be examined how the business works or what is the business process. In a typical business entity the business process is as below: