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AFM131 Lecture Notes - Lecture 8: Open Relationship, Uptodate, Outlet Store

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tanscorpion990
13 Sep 2015
School
University of Waterloo
Department
Accounting & Financial Management
Course
AFM131
Professor
Bob Sproule

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AFM131 Full Course Notes
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AFM131 Full Course Notes
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Document Summary

Marketing is always focused on the value (good quality at a fair price) of a product benefits less the cost. Perceived as best value depending on many factors like benefits they seek and the service they receive. The total product offer is everything each consumer assesses when buying a good or service. Value enhancers, see figure 15. 1. on page 454. Product differentiation are the unique value enhancers used by a company to create differences when compared to competitors" products become the standard or norm product in market. smart posters - this information is made available to both the retailer and the manufacturer: bundling - multiple products and/or services sold for a single price. What does a brand do for the buyer assures quality, reduces search time, adds prestige to purchases. What does a brand do for the seller new product introductions, help promotion, and adds to repeat purchases, differentiate products so that prices can be set higher.

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Related Questions

FlashX company sells hi-end video games to consumers via the internet, each at a price of $75. It buys each game at a cost of $40, and it incurs another $5 per unit in distribution expenses. If FlashX incurs fixed overhead expenses per year of $2.1 million how many units does it need to sell in order to break even?

70,000

65,000

52,500

28,000

QUESTION 6

Why do retailers use the “markup on price” method of pricing, rather than the “markup on cost” method?

Because it costs less to use the “markup on price” method.

So that the “markup” and “markdown” percentages can easily be compared.

Because it is more profitable to use the “markup on price” method.

All of the above.

2 points

QUESTION 7

What can a service marketer do to manage the issue of “perishability?”

Charge higher prices during periods of peak demand, and reduce prices during periods of low demand.

Make sure that ambient conditions (physical surroundings) are pleasant.

Use better packaging to make sure the product does not spoil.

All of the above.

To say that service offerings are “inseparable” means that:

A service offering cannot be seen or touched.

A service offering is “produced” or “delivered” in the presence of the customer.

The quality of a service offering can vary from customer to customer.

All of the above are true.

2 points

QUESTION 10

Which of the following factors should be considered when setting the price of a new product?

The price of substitute products.

The anticipated length of the product life cycle.

The degree of differentiation between the new product and existing products on the market.

All of the above.

2 points

QUESTION 11

Which of the following statements regarding packaging is true?

A package should provide protection to the consumer and to the product.

A package should attract consumers' attention

A good package should explain the features of the product, and how to use it.

All of the above are true.

2 points

QUESTION 12

The "demand based" method for determining the selling price takes into consideration the fact that:

Lower prices lead to higher sales volumes.

Higher sales volumes lead to lower unit costs of production.

Different levels of price (and cost) lead to different levels of profit.

All of the above.

2 points

QUESTION 13

The concept of the “experience curve” is a recognition that:

For new innovations, production costs typically increase as more and more units are produced.

For innovations, production costs typically are not affected by production volume.

For new innovations, production costs typically decline as more and more units are produced.

Marketing managers who have more experience are typically more effective at their jobs.

2 points

QUESTION 14

Factors that affect the rate of adoption of new, innovative products include:

The level of compatibility with existing technology.

The extent to which people can observe others using the product.

The level of functional, social, and/or monetary risk associated with the product.

All of the above.

2 points

QUESTION 15

Which of the following statements regarding "convenience products" is true?

Consumers typically will not accept substitute brands.

Consumers typically are willing to put forth a high level of shopping effort.

These products should be distributed through a wide variety of retail stores.

All of the above are true.

2 points

QUESTION 16

Which of the following statements regarding a “family branding” strategy is true?

A family branding strategy allows a firm to capitalize on its previous successes.

A failure of one product within the family brand can harm sales of the other brands in the family.

Family branding is advantageous in that it allows consumers to identify the manufacturer much easier, thus helping consumer to better judge the quality of the product.

All of the above are true.

2 points

QUESTION 17

Which of the following factors argue for a penetration pricing strategy?

The market potential is large, and is expected to increase over the years.

It is highly likely that competitors will soon enter the market.

Higher levels of sales volume are likely to bring lower production costs per unit.

All of the above.

2 points

QUESTION 18

Which of the following statements regarding packaging is true?

The quantity of product offered in a package can affect whether some consumers try the product.

Different markets segments oftentimes desire different size/quantity packages.

Different types of retail stores oftentimes prefer to carry different size/quantity packages.

All of the above are true.

2 points

QUESTION 19

To say that a service offering is “intangible” means that:

The service offering is “produced” or “delivered” in the presence of the customer.

The quality of the service offering can vary from customer to customer..

The service offering cannot be seen or touched.

All of the above are true

Quick-where’s the nearest Starbucks coffee shop? Down the block, at the airport, in your office building? Seems like they’re everywhere, doesn’t it? With more than 8,000 locations worldwide and long-run plants to grow to 25,000, new stores open at a rate of about 3.5 stores per day. This explosive growth means Starbucks, which doesn’t franchise, must carefully train its personnel in each location on the fine points of serving a product that demanding customers expect to be consistent all day, every day. Their secret? Not just fine coffee; it’s close attention to fundamental cost accounting principles.

The store manager in your local Starbucks probably doesn’t look like an accountant. Yet behind the coffee bar, she receives and reviews a number of key reports that focus her attention on the standards set by corporate headquarters in Seattle. Even when a new Starbucks store opens down the street and cannibalizes 30% of the existing stores-sales, the manager knows that, in the broader picture, it means lower delivery costs, shorter customer lines, and increased foot traffic for all stores in the area.

The typical Starbucks menu offers bulk coffees in the bold, smooth, and mild categories; classic drinks such as frappuccinos, and coffees and espresso drinks with prices ranging from $1.40 for a tall freshly brewed coffee to $4.45 for a high-end iced venti white chocolate mocha. Depending on store location, a single barista (the person making the drinks) may serve about 20 drinks per hour, generating somewhere in the neighborhood of $60 to $80 an hour in revenue. The costs behind those revenues are primarily barista labor, starting at $7.75 an hour (increasing to more than $8.00 after a year); and materials, or ingredients such as coffee, milk, and flavorings. Overhead for store leases, utilities, insurance, water, and other costs are reported to the store manager, but they’re only held accountable for variations in the labor costs and ingredient costs.

Chances are good you are one of the millions of people who queue up 18 times a month for your pricey coffee fix. Maybe you even linger to read the paper, hold a meeting, or use the in-store wireless network. Starbucks wants you to come back repeatedly, not only for its product offerings, but because they deliver solid customer service and consistency as a result of strict adherence to their stated standards, morning to night, around the globe.

Questions -1

Assume each Starbucks store tracks direct labor and direct material costs for a single grande cappuccino as follows:

Labor $0.40

Coffee 0.70

Dairy products 0.35

Cup and lid 0.07

Stirrers, napkins 0.03

Suppose actual output for one week is 1,000 grande cappuccino drinks. The actual total cost of coffee used to make these drinks was $730. The manager of the store has no control over the price paid for the coffee provided by Starbucks-this is a predetermined price. What is the total direct materials variance for coffee for this drink? Is this a price or an efficiency variance? Is it favorable or unfavorable? Why?

-Nonfinancial measures are important to the operations of each Starbucks. For example, cleanliness of public areas is one such measure. Another measure covers achieving the company’s ‘third place” concept (in which home and work are the first two places in a person’s life, Starbucks is third). What other nonfinancial measures do you think the company might use? Why do nonfinancial measures matter in cost accounting?

I have a essay written up already, the problem is that I submitted it and received a 62% return from turnitin, which is totally unacceptable. It must be below 20%. Is it possible for you to look over it, make any corrections or suggestions to re-submit it. The majority of the repetitiveness was from my intro paragraph and the definitions I used in the essay. Sent at 04:42 AM The essay is attach. I will need this by this evening if that's possible. thanks

Identify the type of corporate restricting that fits with common theories of what are assumed to be causes of mergers and acquisitions.

Corporate reconstructing is more often defined as re-designing organization’s practice and structure; so to remain competitive and sustainable in the market (s). There may be several reasons for corporate restructuring. These includes, but not limited to, re-positioning in the market, discovery of a new market or becoming more profitable and/or economical. The corporate restructuring is generally classified into or two different categories: operational reconstructing and financial reconstructing. This entails changes in the alignment of firm’s asset structure by acquiring new business outright, by partial sale, by a spin-off of companies or via product lines. This can also include downsizing through closure of non-profitable units. Financial reconstructing deals with the changes in the capital structure of the firm. Share repurchase or adding debt in capital structure; just to name. Financial limiting hardly deals with mergers and acquisitions, hence we will discuss the cause of mergers and acquisitioning and how it is related to that the operational restructuring only.

Omit the chart in the question!

There are several types of Restructuring are given below:

A merger is a combination of two or more firms who combine all operations, officers, structure and other functions of business to form a new entity. Desired effect being not just the accumulation of assets and liabilities of the distinct entities, but also to achieve several other benefits such as: economics of scale, acquisition of new technologies and having access to new markets. Additionally, the merger allows for one company giving shareholders in the other stock in exchange for surrounding the stock of the first company. And it allow for the entities to retain its original identity.

Mergers can be classified into the following categories:

Horizontal Mergers

Two merged units were doing the same business i.e. TMobile and Sprint they were competitors with one another in the market. The basic motive in this type of merger is to consolidate in the market so as to gain advantage in negotiating with customers as well as having better position with respect to other competitors.

Vertical Mergers

This type of mergers is conducted between customer and suppliers of a value chain process and main motive in this type of merger is gain maximum efficiency in supply chain and minimization of transaction cost.

Congener Mergers

In this type of mergers, the two firms will be sharing similar kind of industry structure at least in one form of their operation and therefore try to combine operation in that one form and get efficiency benefit in supply chain and other operations.

Conglomerate

A conglomerate merger is a merger between two firms having unrelated business. The motive behind a conglomerate is a.) Better utilization of financial resources b.) Increase in debt capacity, c.) Increase in the share price by increased EPS with decreased cost capital d) Cross selling and e.) Synergy

Cash-out merger

In this type of merger the share of one unit involved in merger don’t want to retain their share in the merged unit and therefore are compensated with cash in place of the share.

Acquisitions or take-over has said to have happened when the acquirer company buys out majority of the shares of the acquired company and the ownership of the assets and liabilities of the acquired company get transferred to the acquirer company. The process of acquisition or take-over may be conducted in both friendly and hostile manner depending upon the specific strategy of the acquirer.

Friendly takeover

In a friendly takeover, the target’s board and management recommend shareholders’ approval. To gain control, the acquiring company usually will offer a premium to the current stock price. The excess of the price over the target’s premerger share price is called a purchase premium and can vary widely by country, which reflects the perceived value of obtaining a controlling interest in the target, the value of expected synergies resulting from combining the two entities and any overpayment of the target firm. Acquirers often prefer friendly takeovers because the post-merger integrations process in usually more expeditious when both parties are cooperating fully and customer, employee attrition is less.

Hostile takeover

A Hostile takeover occurs when the offer is unsolicited, the approach was contested by the target’s management and control changed hands. The acquirer prefers hostile mode rove the friendly mode only when it becomes possible to acquire the shares in a friendly mode. The acquirer may attempt to circumvent management by offering to buy shares directly from the targets from the target’s shareholders and buy shares in a public stock exchange. A hostile takeover can be accomplished through either a tender offer or a proxy fight.

The Pros to a merge and an acquisition is that both types of transactions include the potential increase in the competitiveness, cost-efficiency and stock value of the new enterprise. And with everything pro there has to be Cons. One disadvantage of these transactions; it could be very expensive. A significant amount of capital typically must be raided before entering negotiations. Another mergers drawback is that there is now a new owner, co-owners, in which they must now collaborate.

In conclusion any entity or entities that have chosen to merge or entering an acquisition should consider prior to move. Identify the goals of acquisition clearly, if the move is a good fit and what conditions must be met for the pursing the merge or the acquisition. An in-depth due diligence must occur; the financial records must be thoroughly examined, is the marketplace a profitable absolute, as well as the senior executives should also be conducted. There could be potential for disaster if all areas are not explored. Negotiation process is should have clear written rules and guidelines before following through with the merger or acquisition. Assembling an acquisition team can be very valuable to the success of the new owners. The team will be able to define the responsibilities of each company; considering all parties are in agreement with the new implementations such as computer systems, new HR policies and so forth. Lastly, be flexible and ready for unexpected surprises and have a supplemental plan in case of potential disasters.