• A differentiator gains a competitive advantage because it has the ability to satisfy customers’ needs in a way that its competitors cannot, which allows it to charge a premium price for its product. • Premium prices → increased revenue → superior profitability • A differentiator invests its resources to gain a competitive advantage from superior innovation, excellent quality, and responsiveness to customer needs • A product’s appeal to customers’ psychological desires is a source of differentiation. ▫ Example? 13 Differentiation • Generally, a differentiator chooses to divide its market into many segments and offer different products in each segment • A differentiated company concentrates on developing distinctive competencies in the functions that provide competitive advantage ▫ These are still expensive! • A differentiator must control its cost structure to ensure the price of its products does not exceed the price customers are willing to pay for them • When differentiation stems from the design or physical features of the product, differentiators are at great risk of being imitated ▫ Example?
Chapter 2 1. Free cash flow and financial statements. The primary objective of the corporate management team is to maximize shareholder weath. The company’s board of directors and the shareholders evaluate and review managerial actions based on the growth in the value of the firm. A firm’s value depends on the positive net income generated in the past.
As it determines the price of the product, and the price based on absorption costing does ensure that all costs are covered. Absorption can provide management with accurate information concerning product cost. The variable method is beneficial by providing an output that is closer to the cash flow of the company that may be short on cash flow. Variable costing aids in the analysis of cost-volume – profit by separating the variable and fixed in the income statement is another benefit. Which method would lead to the best decision when a competitor is submitting a lower bid for your product?
So to be able to have a productive and successful business, business owners may want to look into maximizing their profits by way of the profit maximization concept. Profit maximization is when a company comes to a conclusion on the price and output level that will turn the maximum profit by using this particular process (Wikipedia). Granted there are many different approaches to this problem; however in this essay we will be considering the TR to TC method and the MR MC method. Tiffany C Wright expressed that the total revenue to total cost method is dependent on the fact that profit equals revenue minus cost. Total revenue equals price time’s quantity.
Company G has prided itself on cultivating relationships with it's suppliers built on honesty, confidence, and allegiance in order to facilitate profits for both parties. However, as popularity may grow for the product so too may the market and suppliers might consider increasing costs, in which case a fixed contract would be discussed. Threat from Substitutes – If the Little Wonder does prosper their may be threats from substitutes from larger companies that are able to produce a similar product on an increased scale thereby reducing it's price and making it difficult for Company G to compete. SWOT Analysis A SWOT analysis has been done for Company G and the outcome is clearly positive. The details of that evaluation: STRENGTHS Dedication from management, employees, and suppliers 1.
Rational people think in the margins is simply means the purchase of a good is based on the marginal benefit the purchase will have for the person. A marginal increase in a person’s water supply rarely comes at a significant cost to the person, however, a marginal increase in diamonds is extremely valuable(Gregory, 2008). People respond to incentives. This is when consumer’s decision is based on what the seller is offering as an incentive to buy their products. Incentives can come in the form of rebates, coupons, or lower interest rates.
Evaluate the influence different stakeholders exert in Sainsbury’s D1 I am going to evaluate the influence that stakeholders exert on Sainsbury’s. I will be evaluating the following stakeholders: customers, suppliers, owners, trade unions, employer associations, local community, national communities and the government. Customers The first stakeholder I am going to evaluate is customers who are also known as external stakeholders, customers influence Sainsbury’s as their main base of the business, they contribute to profit levels through buying products. Customers are influential to Sainsbury’s as they are able to influence the business in many ways such as their aims and objectives and how they run the business, customers are the base of any business therefore they are one of the most important stakeholders that a business can have. One action that the customers can take to influence Sainsbury’s is their customer service as it has a big impact as if the staff of Sainsbury’s were to be rude and obnoxious to the customer then this will result in a bad feedback with leads to a bad reputation for Sainsbury’s as one of Sainsbury’s aims is to be there for the customer and have their colleagues making the difference which is to give a good customer service.
The gross profit margin was 82.08%, partially imparted by the Hive Dance Club’s ability to manage the reduction of costs. The pro forma provides a significant benefit to any business owner because it supports the growth of the business as well as enhances the ability for the entrepreneur to make the correct decisions for the business. Regarding the raising of capital, the most significant sources are personal funding, private investors, and friends and family. The pro forma also reduces the stress that investors place on the entrepreneur and is something that small business owners should not neglect to develop. The pro forma can help the company to remain viable as well as ensure it with thrive and achieve future
They could use cost-plus pricing, promotional pricing, penetration pricing and price skimming. Cost-plus pricing is when the cost to produce the product is used to give a guideline on what price the product needs to be sold at. AAB could use this pricing strategy to ensure that they would make a profit on the new product; an example of this would be if it cost £50 to produce the product they could price it at a 100% mark-up which would result in the product costing £100. An advantage of using cost-plus pricing is that if enough products are sold you are guaranteed a profit as it is normally a percentage mark-up that has been added to the cost of the product. Another advantage to AAB is that it is easily implemented and changed as the cost to produce the product increases; this will benefit AAB as it will take less time to adjust the prices and save time, in the business to make sure all the other products are doing well.
Employee benefits are better when the company is netting positive amounts. Investors benefit by seeing the statements because they can project profit and loss trends. Investors do not want to ever lose money. Creditors or suppliers make their assessment of how much credit they are willing to extend. Retained earnings are “the net income retained in the corporation” (Kimmel, Weygandt, & Kieso, 2009, pg.