solution

Using the data in Problem S7.17:

a) What is the break-even point in dollars for proposal A if you add $10,000 installation to the fixed cost?

b) What is the break-even point in dollars for proposal B if you add $10,000 installation to the fixed cost?

Problem S7.17

Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and for B, $10.00. The revenue generated by each unit is $20.00.

a) What is the break-even point in units for proposal A?

b) What is the break-even point in units for proposal B?

 
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In his landmark book, business scholar C. K Prahalad details the business opportunities that exist for firms that are creative and resourceful enough to develop markets among the world’s poorest people.” Done correctly, marketing to the 4 billion people at the base of the global economic pyramid would employ market forces in addressing some of the greatest ethical and environmental problems of the 21st century Obviously, helping meet the needs of the world’s poorest people would be a significant ethical contribution. The strategy involves another ethical consideration as well: A market of this size requires environmentally sustainable products and technologies. If everyone in the world used resources and created wastes at the rate Americans do, the global environment would suffer immeasurably. Businesses that understand this fact face a huge marketing opportunity Accomplishing such goals will require a significant revision to the standard marketing paradigm. Business must, in Prahalad’s phrase “create the capacity to consume among the world’s poor. Creating this capacity to consume among the world’s poor would create a significant win-win opportunity from both a financial and an ethical perspective. Prahalad points out that the world’s poor do have significant purchasing power. albeit in the aggregate rather than on a per capita basis. Creating the capacity to consume among the world’s poor will require a transformation in the conceptual framework of global marketing and some creative steps from business. Prahalad mentions three principles as key to marketing to the poor affordability, access, and availability. Consider how a firm might market such household products as laundry soap differently in India than in the United States. Marketing in the United States can involve large plastic containers, sold at a low per-unit cost. Trucks transport cases from manufacturing plants to wholesale warehouses to giant big-box retailers where they can sit in inventory until purchase. Consumers wheel the heavy containers out to their cars in shopping carts and store them at home in the laundry room. The aggregate soap market in India could be greater than the market in the United States, but Indian consumers would require smaller and more affordable containers. Prahalad therefore talks about the need for single-size servings for many consumer products. Given longer and more erratic work hours and a lack of personal transportation, the poor often lack access to markets. Creative marketing would need to find ways to provide easier access to their products. Longer store hours and wider and more convenient distribution channels could reach consumers otherwise left out of the market. So, too, can imaginative financing, credit, and pricing schemes. Microfinance and microcredit arrangements are developing throughout less-developed economies as creative means to support the capacity of poor people to buy and sell goods and services. Finally, innovative marketing can ensure that products are available where and when the world’s poor need them. Base-of-the-pyramid consumers tend to be cash customers with incomes that are unpredictable. A distributional system that ensures product availability at the time and place when customers are ready and able to make the purchase can help create the capacity to consume. Prahalad’s approach-tied to moral imagination discussed previously-responds both to



3. What ethical issues are involved in a firm’s decision to market its products among the world’s poor by creating the capacity to consume?

4. Who are the stakeholders?

5. What alternatives does a firm have with regard to the way in which it markets its products?

6. How do the alternatives compare; how do the alternatives you have identified affect the stakeholders?
 
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Business process management (BPM) is about analyzing, monitoring, (re-) designing and execute business processes to improve performance.

Key Points

  • A process is an interrelated, sequential set of activities and tasks that turns inputs into outputs
  • Processes are typically represented using workflow diagrams
  • Business processes are cross-functional in nature. For example, customer support is enabled by multiple departments working together (e.g., sales and service)
  • People are normally trained in a function, not in a process. That is why cross-functional perspectives are difficult to attain

Application

Represent a process that you are involved in at work and explain how it may be redesigned to improve efficiency. You may draw a diagram or use an actual process modeling technique or tool, such as draw.io. Watch the below video for a quick introduction to BPM notation (BPMN) in draw.io: cCAN RELATE TO ANY JOB OR SITUATION!

 
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Prepare a sample time-series data on any probabilistic variable(s) of interest through using web sources. The data can be anything of interest to you: the price of a stock or the level of an index, inflation rate of prices in our economy, weather temperature at a specific location, total population of the world or a country (etc., etc.) but it must be collected over time for the same observational unit and must be comprised of 50 or more observations. Note that randomly generated data is not allowed: your data must mean something.

(a) Describe your variable of interest and elaborate on how you expect this variable to behave ex-ante.
(b) Report the minimum, maximum, median, upper/lower quartiles, and interquartile range for your data.

(c) Draw a simple time plot for your data and check if there is a trend. If there is, remove the trend (find out how) to obtain its cyclical component. Draw a correlogram (for the data itself if there is no apparent trend and of the cyclical component of the data if there is an apparent trend) and elaborate on your results.

(d) Compute the mean and standard deviation of your sample and elaborate on what these statistics mean.

(e) Construct a 95% confidence interval around your sample mean and elaborate what this interval signifies.
 
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