Economics Plan for a Business
ROUND 1
I decided to produce seven (7) units based on the initial guidance of requiring less than 20 units being produced. The guidance also stated that in past production cycles I produced between 1-10 units. The next factor was the Market Research and the composition of a total of six companies that manufacture the same product. This led me to determine that the market demand forecast would be between $50K and $100K per unit considering all six companies. Upon selecting the total number of units seven and the other companies populated with lesser units I determined that I would receive the larger market share overall.
My production costs per unit is $25K x 7 units = $175K, the total number of units sold 7 multiplied by the Market demand price $50K = $350K. Based on the $350K - $175K = $175K profit over my operating costs. In discussing the relationship between demand and pricing to the units supplied provides a direct relationship to the cost of supply and demand. This law states a direct relationship of quality demanded of the merchandise and price per unit.
e. In general, products that are expensive to produce tend to have higher selling prices than those that are cheaper to produce. By calculating $ 8 - ($4,000 / 1,500) = $ 5.33, it is clear that to keep the same price for all units, there will be a need to reduce the selection of the 15 types currently available to a reduced number which would include only those with an average variable cost less than $5.33.
It is not possible to research the accuracy of their assumption of their target market due to the fact that they do not clarify the exact details of their target market. It is not clearly documented where the market size of “two million potential customers” is derived from, therefore, cannot be tested.
*A basic economic concept plays a vital part in prices of goods. The prices are set in a market that is supported by the laws of supply and demand. Supply and demand factors determined the wants and desires of people or a group. Supply is the product or service a producer has uncommitted and capable to legal transfer by selling . Demand is the amount of the product or service that buyers want to buy .This means that every market has two sides. The two sides are buyers and sellers. The demand side of the market are the buyer. The supply side of the market are the sellers. The relationship of supply and demand has a lot of influence on the price of tangible and intangible goods that are made and bought to satisfy the needs and desires of consumers in a society.
The sales director proposed that if the firm were to reduce the price of Item 345 to FF15.00/m, they would be able to increase sales to 175,000 units (or 25% of industry volume). But if they were to keep the price at the current value of FF20.00/m, they would be able to sell not less than 75,000 units (or 11% of industry volume).
Have you ever walked into a store and notice that your favorite items are always at the end of the store or on the right side? Stores and businesses use different ways to target your ability as a shopper to get you to purchase more and frequent their stores more often than what you would normally do. Malcolm Gladwell and Charles Duhigg explain different shopping method in which stores and businesses use to get you to walk into their store and purchase items in which you need and don’t need. In Gladwell’s article of the “The Science of Shopping”, Gladwell explains with great analytical detail the strategies that stores and businesses use to bring in customers frequently and buy more products than what the customer actually needs. As well as Duhigg implements his ideas and the psychology of “ The Power of Habit” that trigger the process of cues and rewards that creates a habit that maybe hard to break. Vons uses Duhigg’s and Glagwell’s marketing techniques well to attract more customers into their store by using the tracking of recent purchase made by the customer to provide coupons for the customers next purchase.
How much will the firm produce in order to maximise profits at a price of $4 per unit?
In this assignment I was asked to carry out a financial analysis of a proposal for the NOVA Corporation and to include analysis concerning the possible impact of a price change for their product in question. I was asked to consider several sales growth scenarios and expected to obtain the NPV of the project for over a five-year period. The model also needed to allow for measuring NPV as change in sales volume, price and labor cost occurred.
People all around the world have dreams of opening a business by creating a service, or product that is consumed by customers. Opening a new business requires a lot of hard work, patience, and extensive planning in order to operate a successful and legal business. However, before a person attempts to open a business, they must be sure they are up for the challenge, and they must be guaranteed that they have the right tools, personality, and experience to be a successful entrepreneur. Pick a mentor that owns a business who can give you advice. They can advise you of things you never knew, or things you should be aware of. Having this kind of person can save you a lot of trouble, and encourage you on the way. When opening a business you must have motivated, strong-minded, and goal oriented people that will provide the proper effort, planning, organization, funding, and structure of the entire business. To begin, creating a business plan for your company is essential for the future of your company, and how it intends to create revenue 3-5 years down the line. It is the most important step, and the first step of beginning your business. A business plan is an essential roadmap for business success; it is a formal statement of a set of goals for your business, the reasons they should be completed, and how you plan on reaching those goals for further success. Your business plan should contain an executive summary. An executive summary includes what you want out of your business, where you plan on taking it, and why it will be successful. Also, if you are seeking financing to get a loan, an executive summary is a great way to grab the investor’s interest. It shows the investor your intensions with your business, the structured guidelines...
In Houston, TX there is $ 33 Billion revenue generation and the business have estimated around 190,000 units or bakery items specifically customized cakes for our business, and the total market supply is 140,000 units. The gap in estimated demand and total supply from major competitors would be like 50,000 units shortage, which our bakery aims to fulfill within stipulated time.
Without a successful business strategy put in place the company would fail and be unable to compete with competitors. There would be on way of knowing what resources are required. No planning for the future of the business. If there are no targets set out to achieve there would be no way of measuring how successful the company has been.
Whenever a product’s production rate increases as compared to its demand in the market, the prices of that product start facing a decline and so does the company’s
So total revenue (TR) will be simply P × Q, where (P = price and Q = quantity sold). Marginal revenue (MR), the increase in total revenue for production of one additional unit, will always be equal to the market price for a price
This Paper examines and compares various forecasting techniques used for qualitative and quantitative business forecasting and their use in Firstlogic Inc., to forecast the demand under conditions of uncertainty. Time series and Delphi forecasting methods are considered for this research to evaluate their ability to make effective decisions regarding the future.
In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.
So far, we used supply and demand to examine the way in which prices are determined when firms sell their output to consumers in the market for goods and services. In producing, firms must buy the services of land, labour, and capital, the factors of production, in order to make the goods and services to sell to consumers. Supply and demand may also be used to examine how the prices of these factors of production are determined.