Federated Industries (1984) Thomas Connors will bid for Southern Valley Authority to sell capacitor. The market of it is already matured and price has been eroded (Margin of the price that won the last bid is only $0.02). 85% of customer in the market is price oriented, SVA as well. The product is hard to differentiate. The goals Connors was given from the manager are... 1. higher margin 2. recover share from 36% -> 50% 3. price stability How much should he bid? (It's an option as well to withdrow from the market) (July 1984) Industry capacity utilization is 40%, price is new low Federated Industries group 3 divisions (Sales) Transformer (75.7M), Capacitar(8.4M), Switchgear(31.2M) 50 sales force, 10 geographic districts, Customer …show more content…
(In 1983, sales was 8400, VC was 5600 and contribution margin was 2800) If withdrawing the market, group's overhead reduces by 2000. So, as long as contribution margin is above 2000, it can be continued. For getting back profitability, there is no innovation and recover of profitability. The market has been fully matured; price continues decreasing and, as a result, industry revenues also continues decreasing even though volume of shipments increases. It is very difficult, generally, to increase price once it decreased. If there were innovation and Federated could appeal other additional value to customer, it could win both share and profitability again. However it cannot be expected. firstly because this product is too simple to innovate, and secondly the company doesn't have competency in R&D. 6 If Federated stays, what action should it take on the SVA bid due August 6? If it stayed and wanted to win the bid, put 2.50 because Federated need to push price down if going low bid price. (1.98 is also reasonable select. Since there is no brand image or loyal customer, it's not big problem to price very low as long as defend VC. Profit is only $4000, but as long as the business continues it's better than nothing.) Nos KVAR Total KVAR Total KVAR/stage Federated bid Winnig bid stage1 2 12000 24000 10 100 1000 25000 stage2 24 12000 288000 100
• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
In year 17 we totally changed our strategy. This time we were targeting an entirely different market. We brought down our models offered from 200 to 150, furthermore we raised our average S/Q rating by almost 40%. To increase the S/Q rating we had to dramatically invest in TQM and enhanced features. This did slightly did improve over market share but at the same time brought our net revenue down and we found ourselves struggling with cash towards the year end.
Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.
Since the early 1990s, the players in the market have copied each other's innovations and this has led to very little differentiation of products in the market. Customers in this industry are very price sensitive and little differentiation allows them to shop around for the best deal. In businesses, there was also a trend towards contracts with multiple suppliers and this further increased customer power. These factors combined have led to lower industry attractiveness since 1990.
The documentary Food inc. by Robert Kenner is a documentary about the food industry and some of the issues that have emerged with the modernization of said food industry. Robert Kenner presents his arguments in sorts of subtitle such as “The dollar menu”, and “The cornucopia” to help identify his main points. Robert Kenner also brings in some experts such as Michael Pollen and Barbara Kowalcyk, into his documentary to bring some credibility to his argument, as well as adding specific music at particular times to tug at the emotions of the viewers. In this documentary Robert Kenner not only shows what happens to those who eat the products produced by the corporate food industry but also those who help in the production.
After reading this report you will discover the Current Market Conditions Competitive Analysis for Sodexo. The reader will discover the history of Sodexo, Affect Demand, Supply, and Prices in the Market in which the Competitor Operates. The reader will understand the Market Product, Including Analysis Competitors, Issues or Opportunities that Affects Competitiveness and Long-term Profitability, Factors affecting Variable Costs, Including Productivity, Factors affecting fixed
Want to know how to fix your shrinking profit margins? Continue reading for a clearer picture of why your
Question 1) Should Dannon proactively communicate its CSR activities to the public? Discuss pros and cons of your decision.
Although the result for round one was disappointed, but round two was the main reason that put us even further from our original objective. We make the wrong strategic move by thinking that lowering the price on all products would give us a better chance of making a comeback. However, it was the opposite. Not realizing that we have other variables that need to be considered before making such a dramatic price adjustment. The first disadvantage for us was the fact that our products’ position was not align with customer expectation, to catch up with the competitors we had to invest on R&D (Reposition) and automation at the same time. This is a substantial capital expenditure
Hence, we should pay a price below $5.51mn. As per informal inquiries made by us, the studios would be tempted to accept the price of $2mn or more and would not even consider a price below $1mn.
The recent decline in share price reflects that the market recognizes the declining profitability of the industry.
However we feel that this strategy also has several weaknesses. Compared to the first option presented by the VP of Advertising, we would still need to advertise that our product is coming down in price. If we don’t advertise, the consumer is still going to be drawn to our competitors because they will remain unaware of the new parity in pricing. Also, if we
They expect to see increased profits from our market shift efforts by the end of Year 2. Over the next three years they expect lower profits and make inroads into this tough market. We estimate that they will be able to reduce marginal costs and increase overall profitability by Year 3 or Year 4 as we grow and take advantages of economies of scale
The accompanying are reasonable effectiveness focuses on that the Panel accepts are achievable by the new local trader: In the initial ten years after consolidation, $1.7 billion in expenses at net present quality can be expelled from the power, the appropriation sector. 69 After taking into consideration $500 million in exchange and move costs, it is normal that cost funds of $1.2 billion at the net present worth would be attained to over the division over the initial ten years for the profit of clients and shareholders. This would be comparable to roughly $70 every year for each power client before the end of the tenth
After analyzing the results from the previous quarter, it was determined that the prices set for each segment were not sufficient. Product sales priority were also not properly adjusted. With the R&D investments, sales priorities needed to be changed for the main focus to become the most profitable market segments. Prices were not competitive which in turned decreased revenue, market share, and profitability. To become more competitive we altered the prices in each market segment. The Workhorse product was the first to change, the price was lowered to $2500 in an attempt to increase sales; at this price Team 4 was still making a profit on this product, as well as making the price much more competitive. The Workhorse sales priority was also lowered to 3rd in Americas and 4th in APAC and EMEA. This product was not selling as well as we had hoped, and was no longer as profitable as it once was which led to this decision. Next, the Innovator product’s price was adjusted; this involved a price increase to $4100. This price was adjusted to include the new