The strategic profit model (SPM) was further used to
determine the impact of the choice of transport mode on the
firm’s financial position and to determine the inventory level
for the company resulting from not using road transport.
The SPM is a methodology that can be used to determine
the profitability impact of a firm’s decisions. The SPM
makes use of data reflected on a firm’s income statement
and balance sheet to determine, amongst other things, the
firm’s profitability. The SPM enables a firm to determine how
inventories, investments in fixed assets, operating expenses,
changing transportation costs and so on, affect the firm’s
net income, its capital employed and the return on capital
employed (Langley et al. 2008).