what may cause a firm's profits growth to decline?

Answer 1

Capitalism (Market Forces)

IF there are Profits to be made THEN other Companies will enter the Market in order to obtain a share of these Profits (example :- Air Travel, Asprin, Virgin Cola)

This leads to Compitition for the (limited number of) Customers and thus to Price Reduction.

The Companies that can produce at the lowest cost (i.e the most efficient) will offer the lowest Price (and those that can't will go bankrupt).

THUS, many (if not all) Products will eventually be sold at marginal profit ..

Answer 2

I would disagee with peter h answer. If they make a lower profit on an item or service/service but sell more of the item/service they could end up with a higher profit.
Also exernal factors could affect profits. If there was an interest rate rise and they had to pay back more money on loans or if there was a recession in the economy would effect profits. Another possibility would be a loss of consumer confidence in the manufacturer of a product.

Answer 3

Rising production costs/cost of sales
Rising overheads
Not monitoring return on marketing spend
Not increasing prices to compensate for increased costs
Or not examining closely where cuts in overheads and direct costs can be made

All these apply if you mean profit growth as opposed to turnover/sales. There's a host of other factors that impact on decline in sales such as:
Not reacting to product life-cycle
Being undercut by a competitor

Answer 4

If they sell a product or service for a cheaper value than before. Therefore, a decline in profits.

Answer 5

Lower sales
Higher operating costs
Shrinkage