...Exam 1 1. The US beer industry was transformed significantly since 1980s. identify two important variables in this environment. Discuss the different strategy used by Anheuser-Busch’s and Samuel Adams? Change in environment: - Demand in US: 1980: 34.0 gallon/person, 2003: 29.1/person, 2010: 1.5% drop from 2009. - Technology allows production in very high quantity Anheuser-Busch: SAB-Miller and Molson Coors - High volume and standard quality - Economy of scale (production, marketing) - Commands about 80% of sales, sometimes result from M&A Micorbrewers: Samuel Adams, Corona and Heineken - Low volume, crafy, higher quality - The only segment that experienced growth 2. One of the “excuse” for business executives act unethically is moral relativism. What is it? Describe an example. Moral relativism is relative to some personal, social, or cultural standard and there is no one method for deciding whether one decision is better than another. Dennis Kozlowiski, who is the CEO of Tyco in 1990-2002. Tyco financed the acquisitions by taking on significant debt commitments, which by 2002 exceeded $23 billion. As Tyco expanded, some questioned the company’s ability to service its debt commitments. Other claimed that management was engaging in accounting tricks to pad its books and make the company appear significantly audited every year, and the outside accountants had detected no problems. These criticisms, which were ignored for some time, were finally shown to have...
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...Cite three examples of recent decisions that you made in which you weighed marginal cost and marginal benefit. The economic perspective focuses largely on marginal analysis—comparisons of marginal benefits and marginal costs. To economists, “marginal” means “extra,” “additional,” or “a change in.” Most choices or decisions involve changes in the status quo, meaning the existing state of affairs. For instance, should you attend school for another year? Should you study an extra hour for an exam? Should you supersize your fries? Similarly, should a business expand or reduce its output? Should government increase or decrease its funding for a missile defense system (Brue & McConnell, 2010)? Each option involves marginal benefits and, be- cause of scarce resources, marginal costs. In making choices rationally, the decision maker must compare those two amounts. Example: You and your fiancée are shopping for an engagement ring. Should you buy a 1/2-carat diamond, a 5/8-carat diamond, a 3/4-carat diamond, a 1-carat diamond, or something even larger? The marginal cost of a larger-size diamond is the added expense beyond the cost of the smaller-size diamond. The marginal benefit is the perceived greater lifetime pleasure (utility) from the larger-size stone. If the marginal benefit of the larger diamond exceeds its marginal cost (and you can afford it), buy the larger stone. But if the marginal cost is more than the marginal benefit, buy the smaller diamond instead, even if you can...
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...1. Overview Meli Marine is a leading player in the container shipping industry on intra-Asia routes and has built a strong presence in the market and demonstrated very high operating margins and operating ROA from 2002 – 2007 compared to its main competitors. As Meli Marine’s CEO, David Tian seeks to steer the company towards expansion in 2008, with an option to acquire 16 vessels from Teeh-Sah Holdings. With these ships, he plans to expand to the trans-Pacific market. However, we believe this deal will not be in Meli Marine’s best interest at the moment, and the company will be better off without the acquisition. 2. Prelude to Acquisition Consideration 2.1 Market Attractiveness: Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options; these...
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...1. Overview Meli Marine is a leading player in the container shipping industry on intra-Asia routes and has built a strong presence in the market and demonstrated very high operating margins and operating ROA from 2002 – 2007 compared to its main competitors. As Meli Marine’s CEO, David Tian seeks to steer the company towards expansion in 2008, with an option to acquire 16 vessels from Teeh-Sah Holdings. With these ships, he plans to expand to the trans-Pacific market. However, we believe this deal will not be in Meli Marine’s best interest at the moment, and the company will be better off without the acquisition. 2. Prelude to Acquisition Consideration 2.1 Market Attractiveness: Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options; these...
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...STRATEGIC MANAGEMENT AND COST MANAGEMENT CONCEPTS Introduction The concepts of cost management and strategic management are the foundations for managers. The growing pressures of global competition and technological innovation have made cost management more critical and dynamic than ever before. Now cost management has moved towards a broader strategic focus than that of product costing. This so-called strategic cost management needs to facilitate strategic management in order to allow the firm to retain its competitive advantage. In order to implement this, benchmarking, value chain, balance scorecard and SWOT analysis should be undertaken. A firm should then identify its strategic positioning in the market: how it will sustain a competitive position. Furthermore, the strategic role of cost concepts will also be described in relation to product/service costing, strategic decision-making (cost driver analysis), planning/decision making and control/feedback purposes. Costs are now more complex than ever since large companies like Proctor & Gamble have a large product portfolio, and costs have become a vital element of a firm’s strategy. In order to understand these concepts fully, we will relate them to real businesses; in particular, we will analyze these concepts with relation to the McDonald’s corporation. Strategic Management Strategic management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization...
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...Material Cost Classifications Consult Ch. 6 & 7 of Health Care Finance and other sources to complete the form. This worksheet requires you to match the definitions and examples of types of cost, and the types of centers where costs occur. Part 1: For each term in Column A, select the correct definition from Column B on the right. Write the corresponding letter of the definition next to the term. Column A F 1. Indirect costs A 2. Direct costs D 3. Fixed costs I E H B C G 4. Variable costs 5. Step-fixed costs 6. Responsibility centers 7. Revenue centers 8. Cost centers 9. Shadow cost centers Column B – Definitions A. Costs incurred directly as a result of providing a specific service or good B. Centers charged with controlling costs and generate revenue C. Have no revenue budget and no obligation to earn revenue D. Costs that do not vary as service volume varies E. Fixed over some range of service volume, but rise to a new level for a higher range of service volume F. Costs that cannot be tied directly to the patient’s stay in the bed G. Exist as budgets on paper only H. The places where costs occur and have budgets I. Costs that change as volume changes Part II: For each real-world example, select the correct term from the list on the left. Write the corresponding letter of the real-world example next to the term. Column A K 1. Indirect costs M 2. Direct costs P 3....
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...Value Chain Business 1_ Introduction: The concept and benefits of Value Chain Analysis in preparing business strategies: To survive in today's highly competitive business environment, any organization must achieve, at least temporarily, a competitive advantage. A low cost/price strategy: focuses on providing goods, services at a lower cost than the competition. This strategy requires as well a tight cost-control system, benefiting from economies of scale in production and experience curve effects. Differentiation strategies: The firm ability to offer products and services that are perceived by the customer as being superior and unique relative to those of its competitors like Coca-Cola in the soft drink industry...... A value chain can be described as the key activities engaged in by the organisation or industry.: Value chain analysis may benefit an organisation in a number of ways including: - Value chain framework: complements other recent initiatives like strategic cost management, which refers to the simultaneous focus on reducing costs and strengthening an organisation's strategic position. This commonly involves taking a longer-term view of cost management and decision making - Provides a foundation for strategic alliance decisions. A value chain framework serves as the foundation for considering decisions such as outsourcing of particular parts of the value chain and for considering the formation of strategic alliances with say a distributor. In this way, the...
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...year” There is a demand Incomes and populations have increased Pros and Cons PROS Income Educational People-oriented Fun CONS Cost Marketing People business Liability . . . Regulations Long hours Labor Management Different Agritainment Steps to Consider: Goals and philosophies (profit vs. non-profit) Market research . . . Market development People skills Site selection Liability Regulations Labor Finances What to offer? Agritainment Enterprises should be considered, evaluated and planned carefully . . . with as much vigor as any new enterprise What to offer: Bed & Breakfast Pick-Your-Own Hay Rides Maze (hay, corn, sudan) Pumpkin Patch Orchard Tours Petting Zoo General Store Workshops & Seminars Festivals Camps Trails Cabins Picnic Barnyard Olympics Museums Games Options? “List all the things others have done . . . then challenge yourself to create that many more new ones” Targeted Audience: Tourists Locals Groups Groups to Target? School Day Care Church Seniors Civic Clubs Others? Targeting Elementary School Groups UT Extension Publication - - PB 1669 Survey of Elementary School Teachers Results of Survey: Likelihood to take farm field trip? Number of field trips taken? Number of students/adults per trip? Maximum distance to travel? Cost limitations for trips? Willingness to pay? When trips are planned . . . and taken? How trips are selected Important factors when selecting...
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...according to Hubspot, cost 62% less than leads from outbound marketing. But don’t expect that cost advantage to last. One of two things is happening: Inbound isn’t really more cost effective. Maybe Hubspot’s sample is biased or methodology is bad, but for whatever reason, the 62% isn’t true. Inbound really is more cost effective today and early adopters are reaping the benefit. If reports of inbound marketing’s cost effectiveness are wrong, then inbound today may be far more expensive than Hubspot’s research indicates. If not, it will be soon. THE COST OF INBOUND MARKETING: AN ECONOMICS PRIMER Remember the old supply and demand curves from Economics 101? Here is the Cliff Notes version you need for today: Price will eventually be set where the supply and demand curves meet in a competitive market. Supply increases as cost increases, while demand decreases. Inbound and outbound marketing can be substitutes for each other. The utility (value) of perfect substitute products will eventually be equal as demand shifts from one product (outbound) to another product (inbound) in order to equalize value. This shifts the demand curve for inbound out, increasing the cost to marketers, until the value of outbound and inbound are in equilibrium. HOW INBOUND MARKETING COSTS WILL INCREASE If inbound is more cost effective, investment will shift from outbound marketing to inbound marketing. As investment shifts, we will see at least three changes that drive up the cost of inbound marketing: ...
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...that can effectively hire strong candidates and keep them on staff add value to their business over the long run” (Staffing issues, para. 1). Employee turnover is very costly to an organization. Employees are a valuable resource and when a qualified employee leaves a company, the productivity, efficiency, and profits of that company will be affected. Calculations by retention/turnover experts that it costs a company 150% of an employee’s base salary to replace him or her. For example, it will cost $90,000 to replace a $60,000 a year employee when costs for recruiting, interviewing, training, and lost productivity are taken into consideration (“How Managing Employee Turnover Impacts the Bottom Line,” 2005). Although employee turnover can have a major impact on the financial bottom line of a company, the same could be said for keeping low-performing employees. Instead of merely retaining employees for the sake of keeping the turnover rate low, attention should also be given to the type of employee who is desirable for the company. Proper documentation of costs and savings produced by employee turnover can result in financial gains that supersede any losses incurred (Braun Consulting, 2005). The best way to manage turnover may not be just trying to keep it as low as possible. Perhaps the optimal approach to managing turnover is...
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...related) Explicit costs: payment made to outside suppliers of inputs e.g. salaries/wages, raw material, overhead costs implicit costs: do not involve direct payment of money, sacrifice of some alternative e.g. salary forgone/interest forgone (factors are already owned by firm) accounting cost: explicit cost economic costs → opportunity cost to society (explicit + implicit costs) traditional objective = profit maximization profit = revenues – cost. Non traditional objectives - received decent dividend - maximize long term value of omapny - maximize own utility: salary, status, power, professional excellence - aim to maximize short run TR /LR TR - maximize growth in sales volume PRODUCTION IN THE SHORT RUN To increase production of g/s, need to employ more FOP Short run → time period over which there is at least 1 fixed factor. Cannot increase level of production by altering fixed factors. Variable factors can be increased in supply in SR Long run → time period long enough for all FOP to be varied Law of diminishing marginal returns - as more units of a variable factor are applied to a given quantity of a fixed factor, there is a point beyond which the extra output from add. Units of factor will eventually diminish - output will eventually increase by a smaller amt - fixed factor will be used up - overcrowding FOP due to worsening factor combination FIXED COST - even if output is 0 TOTAL FIXED COST - sum of all COP...
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...success lies in providing beers to a particular beer market. The idea is a small, regional, niche market with a focus on customers which enjoy craft brewed, quality beers, as opposed to a large mainstream high volume business catering the majority of the beer drinking public. The process of brewing beer, whether it is on a large scale or small, is the same. The main components of direct materials used to produce beer are; hops, barley, select spices and water. Because these ingredients are grown naturally and supply can changes based on growing conditions, they are a commodity, resulting in price fluctuations depending on demand and the health of the crop in a growing season. The commodity nature of these ingredients, effects the way in which cost are accounted for. In this small brewing company, the direct labor consists of eight employees that help with brewing and packaging process and two mangers responsible for production process. In the packaging process components to consider as direct materials are going to...
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...is aimed to meet customers needs, and logistics is part of it * Customer Service Level: how rapidly and dependably a firm can deliver what the customer wants * Don’t care how it got there * Physical Distribution is (and should be) a art of marketing that is “invisible” to consumers * Only catches their attention when something is wrong (too late) * Those in U.S. don’t think much about it * Market-directed macro-marketing system is working pretty well * Trade-offs of costs, service, and sales * Most people want the best service at the lowest prices (not possible) * IT has lead to improve d service levels and lower costs * Better information makes logistics easier to coordinate Physical Distribution Concept Focuses on the Whole Distribution System Physical Distribution Concept: says that all transporting, storing, and product- handling activities of a business and a whole channel systemshould be coordinated as one system that seeks to minimize cost of distribution for a given customer service level * Cant be...
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...materials necessary to complete a task 2) Why aren't resources assigned to summary tasks? Summary tasks are simply a grouping for a set of related tasks. The indiv tasks require resources but the summary task is just a compilation of those resources. 3) What is the difference between Start, Prorated and End in association with costs? Start – cost applied at the beginning of the task Prorated – cost applied as work is completed End – cost applied when the task is completed 4) Give a real-world example of the difference between a fixed cost and a cost per use? Give a real-world example of the difference between a fixed cost and a cost per use? Fixed Cost: (buy equipment) company bids $500 to clean carpet, cost of airline ticket… Cost Per Use: (rent equipment) Hourly rate on moving van, rental of shampoo machine, landing fee each time plane lands… 5) Why is a fixed cost entered with the task and not the resource? Because the cost is the same no matter how many people, hours, materials used. Not dependent upon the amount of time or number of resources it takes to complete. 6) Why is the resource cost for the Wiring Contractor $0.00? Because the installation of the wiring is a fixed contractual price of $4000 – it will not matter how many hours the contractor takes – still the same price. 7) Which resource is Overallocated and why? Systems Administrator, scheduled to work more than 8 hours in a day…For example: 12/5 scheduled...
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...record $1.92 a liter in July 2008. It explains why the prices of petrol to be increased so high in recent years in terms of overusing the petrol to cause it to be less nowadays. Besides that, it leads to many environment issues from exploiting petrol-oil resources and US needs more oil from Iran, causing the economics unbalanced in the world and the purchasing of petrol-oil is increased, therefore, demands exceed the supplies. The cost of petrol-oil consumes a lot in US economy and makes a little change to the world economy as well. The US government has to take responsible for this case and they find many properly approach to cope with these difficulties by way of negotiations, exchanging energy products and analysis. A professor from University of Washington said that the prices of petrol-oil will be increased linear in recent years since it is lacking, and it shows up a graph of parabola dramatically increasing at the point where it demands is beyond supplies. For example, it only costs $1.57 dollars when it is abundance in oil resources; however, it costs $2.22 when the petrol-oil resources rarely exist even though the same volume of oil being utilized with running the same distance. With the utilization of petrol-oil increased, the price of it is going to be steadily increased for next few years. Nevertheless, it will not be increased up forever since human beings could find another ways to replace petrol-oil such as algae extraction to make diesel oil and so forth. Do you...
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