ACCY 111:
Chapter 1 Tutorial Exercises:
Exercise 1.6 – Factors in making a business decision: * The fast-fashion store Lovisa has recently decided to raise their prices in an attempt to beat the falling Australian dollar. Lovisa has had to take many different factors into account such as the effect of the price raise on the volume of sales and the effect on business reputation as they are seen as a cheaper fashion store. The company would also need to take into account further fluctuations in world exchange rates. Another factor that was taken into account by the company was the fact that they want to reach certain forecasted targets (profit). * The price raise will affect several stakeholders. Customers will feel the consequences of the price raise as this could change their view on the store. The company has been very successful to date due to its low prices and the price raise could result to a change in this. The price raise could also affect the shareholders as this might effect the business in a negative way thus a fall in share price and a loss of money for the shareholders/investors. * Mitchell, S (2015) ‘Fast-Fashion jewellery retailer Lovisa to raise prices to beat falling dollar. Business Review Weekly published 10/02/15 accessed 11/3/15 http://www.brw.com.au/p/business/mid-market/fast_fashion_jewellery_retailer_v71wsMTWKJJEN8fBYA4WqI
Exercise 1.7 Factors in making a government decision: * The RBA’s decision to leave the cash rate on hold at 2.25% has allowed the housing market to boom further. The decision has been made by taking into the account that the government needed to stimulate the economy to get its growth rate back to the average 3-4% of Aus. * This decision has affected many shareholders because the RBA’s decision has not had the assumed outcome and has instead stimulated the housing market even further. This has an