HI
I'd like someone to check explain me the following questions related to the text and how to find them out
The following text :
The ARC company produces and sells cosmetics for women and girls. The company is owned by a brother and sitser who originally wanted to earn more money than they could in their old jobs. Although profitable sales have been falling recently. This is causing many stakeholder groups to worry about the future of the business. However the owners are keen for the business to continue and become more successful. sales are falling due to new compettion in the market with exiting new products. So ARC must cut production costs to survive. The company has brought new manufactoring equipment which is much more specailised. As a result fewre workers are neede but this has caused workers to become unhappy with the now boring jobs they have to do. Some workers have now left and this has caused a problem in meeting production targets with ARC being unable to supply some of the retailers who sell their products.
The marketing director is keen to increase the value added of the cosmetics. One product - the Bella prefume - currently sells for $7. It is made from soap bought in by the business at a cost of $2 per item. The director beleives that b y desgining a new luxary packaging for the product added value could be increased.
1- How do the businesses objectives appear to have changed ?
2- Assume the marketing director bought in new packaging at an additional cost of $1 for each item sold. She increases the selling price by 20%. Calculate the new value added of this product.
3- Evaluate one alternative method that the marketing director could use to increase the value added of this product
I've written my answers and I'd like someone to check if they are right as soon as possible
Anwer 1 :
The businesses objectives appear to have changed as the profit has decreased because the company was very keen at the start. But the competiton between products has led the sales to decrease as not many people might buy from the ARC company. The ARC has changed as they have to cut of costs. this is because they need to survive as the economy has moved into recession , and the business is more concerned with survival than anything else even though the profil will be lower.
Answer 2 - The added value will be $11
Answer 3 - The director can offer a gift 0 wrapping service for the perfume so this added feature will add more costs to the compmany but a much bigger added value
Are my anwers right , should i include anymore or is it fine
?
please help
thnx
Hello! Let's check your answers:
Answer 1: Your explanation is partly correct. The business objectives have indeed changed due to the decrease in sales and the introduction of new competition. However, the mention of a recession and the prioritization of survival over profit is not explicitly mentioned in the text, so it might be an assumption. A more accurate answer would be that the business objectives have shifted towards the need to increase sales and profitability in order to secure the future of the company.
Answer 2: To calculate the new value added, we need to determine the original value added and then calculate the increase. The original value added can be calculated by subtracting the cost of soap from the selling price: $7 - $2 = $5. If the selling price is increased by 20%, the new selling price would be $7 + ($7 * 0.2) = $8.40. The new value added can be calculated by subtracting the new cost of soap from the new selling price: $8.40 - $2 = $6.40. Therefore, the new value added is $6.40.
Answer 3: Offering a gift-wrapping service is a good alternative method to increase the value added of the product. This additional feature would indeed add more costs to the company, but it can significantly enhance the perceived value of the product, which might justify a higher selling price or attract more customers.
Overall, your answers are mostly on the right track, but a few adjustments were needed for accuracy. Keep up the good work!
Answer 1:
Your answer is partially correct. The objective of the business initially was to earn more money than they could in their old jobs. However, the text mentions that although profitable sales have been falling recently, the owners are still keen for the business to continue and become more successful. So, while the decrease in sales and the need to cut production costs are challenges the business is facing, the objective of the business remains to survive and become more successful.
Answer 2:
To calculate the new value added, we need to first calculate the original value added. The original selling price of the perfume is $7, and the cost of the soap bought by the business is $2 per item.
Original value added = Selling price - Cost per item
= $7 - $2
= $5
The marketing director increases the selling price by 20% and incurs an additional cost of $1 for each item sold.
New selling price = $7 + (20% of $7)
= $7 + $1.40
= $8.40
New cost per item = $2 + $1
= $3
New value added = New selling price - New cost per item
= $8.40 - $3
= $5.40
So, the new value added of this product is $5.40.
Answer 3:
Your answer for alternative method, offering a gift-wrapping service, is correct. This additional service would add more costs to the company but also increase the perceived value of the product, contributing to a higher value added.
Overall, your answers are mostly correct with some minor adjustments.
Let's go through each question and evaluate your answers:
1. How do the businesses objectives appear to have changed?
Your answer mentions that the objective of the business seems to have changed as the profit has decreased and the company is more concerned with survival. This is a correct observation. However, you could add that the original objective of the owners wanting to earn more money has been affected by the recent decline in profitable sales. So, the focus of the business has shifted from maximizing profit to ensuring its survival in the face of competition and falling sales.
2. Assume the marketing director bought in new packaging at an additional cost of $1 for each item sold. She increases the selling price by 20%. Calculate the new value added of this product.
To calculate the new value added, we need to find the difference between the selling price and the cost of the soap.
Original selling price = $7
Original cost of soap = $2
New selling price = 120% of $7 = $8.40
Additional cost of packaging = $1
New value added = New selling price - Cost of soap - Additional cost of packaging
= $8.40 - $2 - $1
= $5.40
So, the new value added of the product is $5.40, not $11 as mentioned in your answer.
3. Evaluate one alternative method that the marketing director could use to increase the value added of this product.
Your answer suggests that the director can offer a gift-wrapping service for the perfume as an alternative method that would add more costs to the company but increase the added value. This is a valid alternative. However, you can further expand on your answer by mentioning other possible methods, such as improving the product's quality, adding complementary products, or creating a unique selling proposition that differentiates the perfume from competitors.
In summary:
- Your answer to question 1 is correct, but you could provide a bit more detail.
- Your answer to question 2 is incorrect. The correct new value added is $5.40.
- Your answer to question 3 is valid, but you could expand on other alternative methods.
I hope this helps! If you have any further questions, feel free to ask.