Expand, Sell or Maintain Case Study by Nicky

A look at some considerations a business owner must examine about the future of her company.
# 150241 | 2,714 words | 8 sources | APA | 2012 | US
Published on Jan 30, 2012 in Business (Small) , Business (Business Plans)


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Description:

This paper analyzes and examines the direction a business owner must take regarding the future of her company, specifically whether she should expand the business, sell it or maintain status quo. First, the paper briefly describes the company and the various options the owner has regarding its future. Then, the paper addresses the variables that would impact her decision, both those that are quantifiable and those that are subjective. Next, the paper considers the possibilities for the company if a new product is introduced. This includes an evaluation of the various pricing strategies that could be used with its introduction and other costing issues. The paper concludes by exploring the concept of break-even analysis in relation to the choices being faced, which are illustrated with a chart.

Outline:

1. Executive Summary
2. Net Present Value
3. Non-Financial Factors
4. Alternative Pricing Strategies for the 3-in-1 Lawnmower
5. Recommended Pricing Strategy
6. Absorption and Marginal Costing
7. The New Costing Schedule
8. Appropriateness of Relevant Costs
9. Importance of Break-Even Analysis
10. Limitations of the Break-Even Analysis

From the Paper:

"Moving on to the next step, the launching of the new 3-in-1 Lawnmower has to consider numerous costs incurred in its manufacturing and distribution. While the initial once-off costing schedule is relevant and generally comprehensive, some changes have been made to the sums presented. The changes were made in accordance with new estimations and other scenarios which differed from the ones existent at the time the first schedule was developed. In addition to these modifications, three new categories of relevant costs were included - testing and correction costs, in the amount of R20,000; marketing expenses in the amount of R50,000 and costs with the bank loans in the amount of R236,000. Despite the relevance of this costing structure to the overall business process, it is advisable for Mrs. Dibsa to focus on other aspects as well when setting the price for her product. This is generally given by the fact that relevant costs are a beneficial approach to setting price in the short term, whereas on the long term, they might prove less effective."

Sample of Sources Used:

  • Berman, K., Knight, J., Case, J., 2006, Financial Intelligence: A Manager's Guide to Knowing what the Numbers Really Mean, Harvard Business Press
  • Bolander, S.F., Gooding, C.W., Mister, W.G., 1999, Transfer Pricing Strategies and Lot Sizing Decisions, Journal of Managerial Issues, Vol. 11
  • Drudy, C., 2004, Management and Cost Accounting, 6th Edition, Cengage Learning EMEA
  • Goetz, Jr., J.F., 1985, The Pricing Decision: A Service Industry's Experience, Journal of Small Business Management, Vol. 23
  • Hilton, R.W., Swieringa, R.J., Turner, M.J., 1988, Product Pricing, Accounting Costs and Use of Product-Costing Systems, The Accounting Review, Vol. 63, No. 2

Cite this Case Study:

APA Format

Expand, Sell or Maintain (2012, January 30) Retrieved March 08, 2021, from https://www.academon.com/case-study/expand-sell-or-maintain-150241/

MLA Format

"Expand, Sell or Maintain" 30 January 2012. Web. 08 March. 2021. <https://www.academon.com/case-study/expand-sell-or-maintain-150241/>

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