Q1. Which of the following types of firms do you expect to have particularly high or low asset turnover?
Supermarket – High asset turnover. Supermarkets tend to be high volume businesses. Many of the food products in supermarkets are perishable, and freshness is often used to differentiate products, forcing a certain amount of inventory turnover. The typical consumer buys groceries on a regular basis, guaranteeing grocery stores a certain level of overall business. Apart from inventories, supermarkets largest assets are its warehouses and stores, all constructed to be relatively inexpensive. Thus, high sales volumes generate a high measured level of asset turnover.
Pharmaceutical Company – High asset turnover. Drugs typically have a
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Moreover, steel-making equipment has a useful lifetime measured in decades. Relative to this enormous investment, a steel company’s sales will be low. Consequently, a steel company will typically have low asset turnover.
Q2. Which of the following types of firms do you expect to have high or low sales margins?
Supermarket – low margins. Competition in the supermarket industry is very intense. Different supermarkets carry most of the same brands of food so there is little differentiation of products. Consumers are sensitive to changes in the prices, and switching costs are very low, usually no more than the opportunity cost o going to another supermarket. Consequently, pricing is the major area of competition among supermarkets leading to extremely low margins.
Pharmaceutical company – high sales margins. Drugs manufactured by pharmaceutical companies are often protected from competition by patents, allowing them to charge monopoly prices. Even where drugs are not protected by patents, pharmaceutical companies invest considerable resources in differentiating their products along non-price dimensions such as efficacy and ease of use. Consequently, pharmaceutical companies typically boast very high sales margins. As an aside, drug companies argue that these high margins are necessary to support their ongoing and expensive research for new drugs, much of which never makes it to the market.
Jewellery retailer – high sales
“Shitty First Drafts” by Anne Lamott, is a hilarious must read for junior high school students and any other aspiring writers. Her essay inspires comfort and confidence in writing a first draft. It concretes that all writers experience the “shitty” first draft. Anne Lamott wrote this instructional information in 1995, but it is timeless information. She blows the idea of writing an immaculate first draft out of the water. Anne supports the idea that bad first drafts will almost always lead to better second, third and final drafts. She symbolizes the first draft to be like a child. Where you put all your thoughts and emotions out there in words on paper, you go all over the place, you say all kinds of ridiculous things, and all with the
A college education is valuable and its quality is of the highest importance to most Americans. In his essay, “On the Uses of a Liberal Education: As Lite Entertainment for Bored College Students,” Mark Edmundson utilizes ethos, pathos, and logos to effectively deliver his argument that the current educational system, especially in college, revolves around consumerism which in turn has negatively impacted students, teachers, and universities in general. However, although Edmundson presents an overall logically sound argument, there are few instances throughout the article that may hinder the reliability of his claims to the audience.
Cleaning up down South: supermarkets, ethical trade and African horticulture is a piece by Susanne Freidberg published in Social and Cultural Geography journal in 2003 (Freidberg, 2003). Susanne Friedberg holds PhD from UC Berkely and is a Professor of Geography in Darmouth College, New Hampshire (“Susanne Freidberg,” n.d.). In the article the author argues that the ethical standards have become fetishised. The UK supermarkets compliance with such standards edges on paranoia. It does not mean that the supermarkets care about these standards from moral point of view but that the compliance is driven by fear of bad
The grocery industry has a relatively high market commonality; a lot of grocery stores are somewhat related in terms of technologies used, labor force and the products or services offered in the stores. Differentiation with other competitors is key for survival in this highly competitive industry.
1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive
Operating on very thin profit margins, players in the supermarket industry traditionally either focus on a premium segment or follow a discounter strategy at the low end. Premium players address educated and more price elastic consumers who value healthy, natural and organic food; the share of perishable items for these players is normally distinctly higher. Players that focus on a discounter strategy offer a higher share of simple necessity items and value price competitiveness over premium features like healthiness or organic origin. Independently of the focused customer group it is imperative for players in the supermarket industry to be cost efficient and optimize operations
In the essay, “What You Eat is Your Business”, Radley Balko writes to tell his audience about how the government is trying to control people’s health and eating habits by restricting food, taxing high calorie food, and considering menu labeling. Balko includes in his essay that government restricting diets and having socialist insurance is not helping the obesity problem, but it is only making it worse because it not allowing people to take their health in to their own hands so they have no drive to lose weight or eat healthy. In his essay, Balko is targeting society, including those who may be obese, he is trying to show them that the laws our
Many people in today’s society tend to believe that a good education is the fastest way to move up the ladder in their chosen. People believe that those who seek further education at a college or university are more intelligent. Indeed, a college education is a basic requirement for many white collar, and some blue collar, jobs. In an effort to persuade his audience that intelligence cannot be measured by the amount of education a person has Mike Rose wrote an article entitled “Blue Collar Brilliance”. The article that appeared in the American Scholar, a quarterly literary magazine of the Phi Beta Kappa Society, established in 1932. The American Scholar audience includes, Company’s , Employees,
In ‘Here’s Why Legalizing Marijuana Makes Sense’, Alex Newhouse, a lawyer who resides in the area of Sunnyside, Washington addresses the controversial issue of the legalization of cannabis. The sole purpose of Newhouse’s article is to persuade readers and voters that marijuana should be legalized. Throughout his article, Newhouse focuses on the use of ethos and logos, while also slightly focusing on the use of pathos, to help persuade his audience. The incorporation of such rhetoric strategies allows Newhouse to change the opinions of individuals with views opposing the opinions he, himself, holds.
Asset turnover depicts investment efficiency, because it shows how many sales dollars are generated for every dollar invested in the company’s assets. Lowe’s had relatively lower asset turnover ratios than Home Depot because their recent investment in PP&E.
Logos: It is an appeal to the mind with the use of logic, rationality and critical reasoning to persuade the audience. The author uses logos in his article to make a logical connection with the topic. For example, the author uses the explanation of ideas in the article and employs lots of diagrams in each parts of the topic to show the visualization to support his evidence which is very informative because the visuals give lots of information about what the article is about and that to get attention of the audience.
6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the Customer Buying Criteria, how would you increase margins for a Low End product? How would you increase margins for a High End product? Hint: The criteria can be found in the Capstone Courier Market Segment Analyses.
Location- Another very important aspect of a successful supermarket, location is important. You must be in an area with the correct demographic of people to have success. Most people will not be willing to drive an hour to go grocery shopping.
2. What do the results say about how firms in this industry can deliver strong financial returns in different ways?
Grocery industry is a highly competitive market with thin profit margins. Super markets are dominant players in the grocery industry. They use grocery offerings to drive traffic to their higher profit margin retail items. With its operations efficiency, Walmart, the largest grocery retailer has been able to offer significant price drops. This also forces other grocery stores to drop prices which keeps the profit margin thin. Even with all the advantages of operational efficiency and economies of scale, Walmart’s share in grocery sales was down at 51% in 2011.