CASE APPLICHEM HBR

A five forces analysis of the Private Equity Industry reveals that Warburg is shifting its fee structure to take advantage of limited customer bargaining power from its customers while trying to finance its access to increasingly scarce investment opportunities and deny it to its rivals through a price-war.

• This cost method does not provide the best system for JDCW’s cost allocation. By using only three overhead rates the present system grossly undermines the true production costs since other activities of the production process are not acknowledged.

Along with the Benefit Measurement Method, Constrained optimization method can also be used which involves mathematical approach. Since this method involves the mathematical approach, several calculations are performed in order to take a decision to accept or reject the project. “Mathematical models, also known as Constrained Optimization Methods, are a category of project selection methods, which is a tool and technique of the Develop Project Charter process” (PMP, 2008). Cost-benefit analysis is one of the methods which fall into this category. All the positives and negatives of the project are taken into consideration and then the negatives are carefully excluded from the benefits. Different results are produced for the different projects. The most worthy and financially rewarding option are selected from these results. When employing this method, there are many things that are to be considered such as the impact of the decision on the development of the organization in the future, the length of time the equipment lasts and whether it is possible to do the cost control during the project.

H.E.B, the 11th largest grocery chain in United States, started 30 years ago. When the company was started, it was a predominantly private label company. Recognizing the customer drawing power of national brands, H.E.B took crucial steps to build a strong national brand presence. HEB was known for its superior quality products, its customer service and a broad assortment of merchandise. Additionally the company’s focus on delivering on its promise of everyday low prices, especially to the low income households that it catered to, was amongst its most critical success factors.

Excel OM/QM Learning Curve tool was used to complete this analysis. This tool was selected because of the strategic importance of the learning curve. The learning curve is applied to aid in the formulation of strategic decisions about employment levels, capacity, costs, and pricing. This tool showed that with the learning curve applied how production hours would be affected if the batches increased. This allows the company to understand what their costs associated to labor is and also if they will be able to meet

In our analysis we determined the equations for total cost and marginal cost using the average cost obtained from the regression model provided, and the fixed costs estimates in the collected data calculated by a previous resource endorsed by the company. Once we have determined the marginal cost equation, we calculated the output for perfect competition profit maximizing criteria P

Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.

For Manufacturing, production facilities were situated near Tokyo due to government perquisites offered. The company chose a facility that supported the production of 50 units per day, or 3,250 per quarter, at a cost of $22,000 per unit, inclusive of fixed and variable costs. Since no production began, choosing this plant size was purely anticipatory, not based on actual generated data. Facility adjustments may be made in subsequent quarters to accommodate higher-than-normal or lower-than-expected demand.

Mueller-Lehmkuhl (ML) was a German producer of apparel fasteners. Apparel fasteners are used in the garment industry. ML had been producing apparel fasteners since the late 19th century. In recent years, they had achieved technological superiority which resulted in high margins for their products. ML valued reliability of their products and fast service to their customers. However, competition and domestic market saturation in the 1980s led ML to a crossroads in which they needed to decide how they would maintain domestic market leadership and while expanding to new markets.

Andres was forced to import product from French division as he ran out of capacity several times due to new machines performing inadequately. This added an overhead expense of approximately 2147 (Additional maintenance costs + Transfer costs)

1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing

There are many reasons that might cause this inefficiency coming from the production manager or the purchase manager, such as bad quality of the raw materials bought (which were cheaper after all), or waste of these during the production process.

This method did not account for any specific cost arising from the complexity, diversity or other production related specifics of the product line. In contrary, the time-driven ABC approach does account for all the nuances of each product line. From the table can also be inferred that the practical capacity is not totally used since at the end there is a total of $28,288 of unused resources. Table 3 summarizes the capacity utilization of various resources.

found out that despite this cost reduction in material cost, the costs of producing the low -end units for

Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.