In 2012-2015, the price of jet and diesel fuel used by air freight companies decreased dramatically. As CEO of FedEx, you have been presented with the following proposals below to deal with the situation. Evaluate these alternatives in the context of the decision-making model. Make long-term contracts to buy jet fuel and diesel at a fixed price for the next two years and set shipping rates to a level that will cover these costs.
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- In 2008–2009, the price of jet and diesel fuel used by air freight companies decreased dramatically. As the CEO of FedEx, you have been presented with the following proposals to deal with the situation: a. Reduce shipping rates to reflect the expense reduction. b. Increase the number of deliveries per day in some markets. c. Make long-term contracts to buy jet fuel and diesel at a fixed price for the next two years and set shipping rates to a level that will cover these costs. Evaluate these alternatives in the context of the decision-making model presented in the text.If you received a price increase request from a strategic supplier of goods, for which there is competition, and the request was for an increase of 4.5 percent due to 'abnormal trading conditions, raw material increases, energy prices and overheads', what would be your next actions?In the face of stable (or declining) enrollments and increasing costs, many colleges and universities, both public and private, find themselves in progressively tighter financial dilemmas that require basic reexamination of the pricing schemes used by institutions of higher learning. One proposal advocated by the Committee for Economic Development (CED) and others has been the use of more nearly full-cost pricing of higher education, combined with the government provision of sufficient loan funds to students who would not otherwise have access to reasonable loan terms in private markets. Advocates of such proposals argue that the private rate of return to student investors is sufficiently high to stimulate socially optimal levels of demand for education, even with the higher tuition rates. Others argue against the existence of significant external benefits to undergraduate education to warrant the current high levels of public support. As with current university pricing schemes,…
- From the late 1990s through the early 2000s, more than 25 domestic steel companies filed for bankruptcy. A combination of low prices with strong competition by foreign competitors and so-called legacy costs of unions are cited as the primary reasons why so many steel companies filed for bankruptcy. In 2002, as Brownstown Steel Corp. was in the process of restructuring its loans to avoid bankruptcy, its lenders requested that the firm disclose full information about its revenues and costs. Explain why Brownstown’s management was reluctant to release this information to its lendersGoogle share price is $1759.73; Microsoft share price is $223.72; and Apple share price is 118.69. Google has a P/E ratio of 34; Microsoft has a P/E ratio of 36.14; and Apple has a P/E ratio of 36.41. ______ is the most expensive stock and ________ is the least expensive stock to receive part of their earningsAssume that you’re the director of one of the corporations listed below and have been presented with the business opportunity described in the scenario. Would you advise the corporation to accept the opportunity? Consider both the financial return expected and any related ethical concerns. ToyCo has just been informed that its wooden trains produced in China contain lead paint and can no longer be sold in the United States. However, a distributor offers to negotiate a deal with a foreign company to sell the trains in a South American country that has no laws addressing the presence of lead paint in children’s toys. BabyHealth is seeing decreasing sales of its powdered infant formula in the United States due to more and more mothers choosing to breastfeed their babies. In an effort to offset these losses, BabyHealth chooses to sell its formula in third-world countries. However, it is widely known that the water sources in these countries are often contaminated and not boiled prior to…
- Tesla share price is $439.18; Netflix share price is $480.68; and Amazon share price is 3148.24. Tesla has a P/E ratio of 870.15; Netflix has a P/E ratio of 77.66; and Amazon has a P/E ratio of 92.20. ______ is the most expensive stock and _____ is the least expensive stock to receive part of their earnings.For many airlines in the short run, a major portion of the cost of production, such as aircraft and terminal space is fixed. Should these very large FCs be ignored when the revenue managers are making output and pricing decisions? Provide at least 2 reasons why they should or should not be ignored.Most of Australia’s coal-fired power plants are running at a loss as electricity prices continue to slide, battering the profits of energy giants AGL and Origin and sparking warnings from within the industry of earlier-than-expected plant closures. An influx of renewable energy has been driving down daytime electricity prices and piling enormous pressure on the nation’s fleet of coal-fired power stations, which are far more expensive to operate and, increasingly, struggling to compete. New figures reveal baseload electricity prices in Victoria crashed 70 per cent from about $80 a megawatt hour in March 2020 to $24 this month… Price falls across the nation’s main grid have been driven largely by the pandemic-led downturn in energy demand, a cooler-than-usual summer and the accelerating rollout of rooftop solar panels. While demand is recovering, the flood of cheap renewable energy continues. With four gigawatts of new wind and solar already committed to enter the grid between 2021-23…
- Which one of the following activities would most likely be considered a long-run pricing decision? A. setting prices to generate a reasonable rate of return on investment B. changing prices in response to weak demand C. product mix adjustments in a competitive market D. one-time-only special order pricing that would result in achieving the break-even pointLalaFast 21 is a major carrier based in the Philippines and has made a strategy of cutting fares drastically on certain routes with large effects on traffic in those markets. For example, on the Baguio-Cubao route the entry of LalaFast into the market caused average fares to fall by 48 per cent and increased market revenue from P21,327,008 to P47,064,782 annually. On the Tuguegarao-Caloocan route, however, the average fare cut in the market when LalaFaST entered was 70 per cent and market revenue fell from an annual P66,201,553 to P33,101,514.Questions1. Calculate the PEDs for the Baguio-Cubao route and Tuguegarao-Caloocan route.2. Explain why the above market elasticities might not apply specifically to Lalafast 21.3. If LalaFast 21 does experience a highly elastic demand on the Baguio-Cubao route, what is the profit implication of this?4. Explain why the fare reduction on the Tuguegarao-Caloocan route a profitable strategy for LalaFast may still be.You have been promoted to be the new manager of Nefertiti Hotel, and you must decide where to build a new hotel. The finance department believes that Morocco is the better option due to the tax benefits of $5 million, while the marketing department estimates the present value of gross operating profits to be only $10 million in Morocco compared to $14 million in Tunisia. If it costs $15 million to build the hotel in either location, would it be more profitable to build in Morocco or Tunisia? If the hotel is located in Morocco, what would the firm's economic profits be?compute, show solution, explain