The Healthy Potion Business Has Been Operating For 10 Years

2105 Words9 Pages
The Healthy Potion business has been operating for 10 years. The current owner generated $500,000 surplus funds and opened 5 additional stores in Australia Shopping Malls. Previously, they sold unique beverages containing Chinese herb. The business is built on health benefits. Even though sales revenue increased, the number of repeated customers dropped from 70% to 40%. The owner believes that adding the herb to fresh juices may be a new selling point, and she wants to expand the business in this way. I will use a rational approach in my report to advise her on strategies for growth. This consists of three stages: Analysis, Formulation, and Implementation. In the first stage, I will use SWOT analysis to examine internal…show more content…
A company reported that the cost of producing in China is nearly free due to the benefits they received. Another strength is HP takes advantage of economies of scale- decreasing cost over output. HP have 6 operating stores, (Good and Kahn n.d.) suggests firms that produce high levels of outputs will have low costs as there are less fixed costs per unit. HP further benefits from purchasing economies of scale is where they are buying big bulks of supply and receives discounts which lower their cost of production than smaller firms. Offshoring business in China can also create a major weakness due the loose laws and regulations. Looking at the case of Apple, who outsources its business to Foxconn. Apple gives frequent pressure Foxconn to lower profit margins while demanding for the high workload. Foxconn response by reducing labour expenditures, by cutting wages and benefits. Due to a compulsory national minimum wage, wages are cut by forcing workers to work overtime. (Interview 2011 cited in Chan, Pun and Selden 2013, pp. 104-110). Chan, Pun and Selden (2013) suggest the outcome of this resulted in frequent cases of worker’s suicide, worker’s strike and labour exploitation. Therefore, high supervision costs need to be enforced to avoid similar incidences. Apple suffered from severe damage to corporate reputation, brand image and further it could even decrease
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