![]() ![]() Profit will also fall significantly from $320 000 to only $80 000.Īrmornet can use this information to underpin its strategic decisions. The margin of safety will fall from 400 units to only 133. If they decide to lower their price from $1200 to $1000, this will lower the total revenue curve from TR to TR 2, with the effect that the break-even quantity increases from 800 units to 1067 units. ![]() Changing the priceĪssuming that Airsquare introduces a cheaper case priced at $1000, Armornet will have to consider whether to match this price. Using the break-even formula, the break-even point and margin of safety should easy to calculate? Can you calculate these in your head? Click here to see the answer to check. However, the directors believe that one of these competitors, Airsquare is working on a higher specification product which will be sold for approximately $1000 and could be considered a substitute. There are no direct competitors offering the same specifications, but two other manufacturers produce cases at a lower price with lesser protection. The cases are assembled in a small industrial unit using standardised parts from 3 different suppliers two of which are overseas. The firm employs 4 full-time staff (two of whom are directors of the business) and 2 part-time administrative assistants. The following are details of pricing and costs. At present given the firm's resources, the maximum production in any month is 100 cases. The firm has gained a high reputation for quality and customer service and recently won an award from a major travel magazine. At present they are produced in relatively small numbers using a batch process. They are designed for frequent travellers and for those professional who take their netbooks into high risk environments, such as construction sites. The cases offer exceptionally protection for netbook computers from impact, water and liquid damage and temperature change. Armornet computer casesĪrmornet produces one model of computer cases in a range of different colours. We will use a case study to illustrate potential changes and strategic impact.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |