Training is a variable cost for the company. Variable costs of course are costs that can vary, or can be changed with changes in the external environment that is faced by the business. For example, at State Farm, the price of ingredients for a training seminar would be a variable, because the external market, however much State Farm is going to try to control the means of production and supply chain, is still going to show fluctuations in the price of raw materials used to make the training materials. And if there is a pandemic scare US, for example, the demand for insurance is going to go up regardless of whether the market shares are owned by State Farm or not, just because of general conditions of scarcity in the external business environment. Another variable cost for State Farm is how much it pays employees. For example, even though the insurance giant is very rich and powerful, it doesn’t have control over the external factors of inflation and federally mandated wages and benefits, so these costs vary flexibly.
Fixed costs are a different matter, because they are less a reflection of external variance and flexibility and more a reflection of the costs of investment goods that are used by State Farm. These investments are representative of a commitment made by the organization to long term growth over time using these goods, in a commitment that can be profitable for the company in response to how much it can use the investment goods to produce the product that it is selling. An example of a fixed cost for State Farm would be its maintenance of a marketing infrastructure.
In terms of performance, it is assumed in the current report that in terms of relationships between job satisfaction and performance, employees who are trained improperly at State Farm will treat clients differently in a state of burnout and they will have a reduced sense of accomplishment. This may affect the success of the ...
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