For example, supermarket channel is fragmented and thus didn’t have much of a bargaining power. On the other hand, mass merchandisers like Target and Wal-Mart had some bargaining power due to the huge quantities they buy. Moreover, there was no threat of backward integration as retail channels can’t go into the bottling business or concentrate producing business. Bargaining power of suppliers is low as the raw material can be purchased from many suppliers. Packaging manufacturers had little power as CPs negotiated contracts for bottlers and exerted some power due to their size and brand name.
ETO’s existing cost system contains only one cost center (the entire facility). All overhead is collected into a single cost pool, and the total overhead cost is divided by the total number of direct labor dollars consumed to give a single direct labor dollar burden rate. The major flaw in ETO’s existing system is that it assumes that all products consume direct labor and overhead in the same proportion. However, some products are produced on simple labor intensive equipment while others require very expensive automated equipment. Therefore, it is extremely unlikely that all products consume direct labor and overhead in the same proportion.
Once the predicted demand is frozen, L.L. Bean uses its historical demand and forecast data to analyze the forecasting errors. The forecast errors are calculated for each individual item and a frequency distribution of these is made, which is further used as a probability distribution for future errors. Thus, if 50% of the errors were within 0.7 and 1.6, the forecast for this year would be adjusted accordingly. Next, each item commitment quantity was calculated using its contribution margin and its total contribution in dollar to the revenue of the company.
Another method is first-in first out (FIFO). This method for valuing inventory is based on the order that merchandise comes in. The first goods in are the first is out for sale first and everything else afterwards must wait until product one is out of stock. Finally, last-in first out (LIFO) refers to the merchandise that is produced most recently/last is recorded as sold first. Last-in first out is usually known as inventory profit, and when prices are decreasing in the market the situation is reversed.
Wal-Mart is basically a store where someone can buy everything unlike K-Mart. Second, the affordability and quality of goods at each store are different. At Wal-Mart items can be found for a lesser price than K-Mart. Wal-Mart will match the price if an item is found for less at another store, but K-Mart does not do this. Usually items at K-Mart are usually a couple of dollars higher than Wal-Mart.
Accrual and Cash Accounting The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recognized. The cash method is most used by small businesses and for personal finances. The cash method accounts for revenue only when the money is received and for expenses only when the money is paid out. On the other hand, the accrual method accounts for revenue when it is earned and expenses goods and services when they are incurred. The revenue is recorded even if cash has not been received or if expenses have been incurred but no cash has been paid.
In order to be competitive and also profitable, companies need to find ways to reduce or eliminate costs associated with routine and repetitive business transactions. Those transactions often fall in the areas of purchasing, billing, accounts receivable, and accounts payable. It is in these areas that the confusion caused by translating part numbers is most noticeable. Time spent translating one part number to another part number for the same item adds very little, if any, value to the transaction. The errors that result from errors in translation are the cause of many problems in invoicing and making payments.
A highly diversified firm that has no relationship between its businesses follows an unrelated diversification strategy. * Moderate to high levels of diversification: related constrained: less than 70% of revenue comes from the domain business, and all business share product, technological, and distribution linkages. Related linked (mixed related and unrelated): less than70% of revenue comes from the dominant business and there are only limited links between business. Very high levels of diversification: Unrelated: Less than 70% of revenue comes from the dominant business, and there are no common links between businesses.
The two main method of recording accounting transaction are cash basis and accrual basis accounting. Cash basis and accrual basis have their advantages and disadvantages, but only one method is approved by Generally Accepted Accounting Principles (GAAP).The difference between accrual and cash basis accounting has to do with the time frame in which revenues and expenses are recorded and reported. Accrual basis accounting matches revenues to the time period in which they are earned and matches expenses to the time period in which they are incurred. The accrual basis allows the business to track receivables (amounts due from customers on credit sales) and payables (amounts due to vendors on credit purchases). Accrual basis on accounting is the method of accounting that most business and professionals are required to use by law because of its matching principles.
Improper maintenance of stock and stacking below the eye-level on store shelves make the products – Livon, Set Wet and Zatak – less visible than their ‘rivals’ in the respective product segments. Proposed solutions for the distributor include a segregation of areas based on Income Density and use of statistical analysis to determine patterns based on historic data. At the level of the retailer, steps are needed to increase visibility of the concerned products by better