Business and Cost Strategy Implemented for Time Warp 2

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Introduction The strategy that was to be implemented for Time Warp 2 is as follows: 2012 2013 2014 2015 X5 $265/ 0% $265/0% $250/0% Discontinued X6 $440/50% $440/50% $440/50% $420/0% X7 $150/50% $150/50% $150/50% $150/100% This strategy was based on the CVP analysis that indicated that the company needs to discontinue the X5 for the 2015 year, and needs to lower the price on the X7. The decision to raise the price for the X6 is based on the understanding the for this premium product, the market can probably support a higher price. Results The results for this strategy are as follows: 2012 2013 2014 2015 X5 Profit 151,182,710 83,101,400 1,822,181 0 X5 Saturation 54% 80% 95% 100% 2012 2013 2014 2015 X6 Profit 240,511,901 307,464,930 137,132,198 103,417,497 X6 Saturation 37% 63% 92% 100% 2012 2013 2014 2015 X7 Profit -10,469,487 23,914,012 90,925,056 204,946,249 X7 Saturation 3% 5% 10% 19% 2012 2013 2014 2015 Cumulative Profit 672,800,006 1,087,280,348 1,317,160,503 1,625,524,248 These results show an improvement over the previous strategy. This improvement comes from a few different places. With respect to the X5, the company clearly benefitted from the CVP analysis, because this product was cut from the lineup, avoiding steep losses. The potential sales in 2015 were below the breakeven point, so this product had to be removed from the lineup. As no changes were made to the price point of this product,

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