Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from essay:
Price: The customer will be able to choose from a wide variety of prices, starting with $15 and ending with $2,000. The average retail price is of $100.00 a bottle of specialty wine, with an average fixed cost per bottle of $50. The $50 difference allows me to reduce the retail price if I find this is necessary to attract customers. I could also implement various pricing strategies, such as the penetration one in the beginning and the variable one after the penetration.
Break-Even Analysis: It sees that I would start making profits after I sell 8 bottles of wine. This would not however be true if I sell 8 bottles of the cheapest wines. The implemented price and the incurred costs once again allow me to joggle.
Industry Features: This may be one of the most important aspects of the new business, mostly given the recent talks and figures on a global economic recession. If the threats of such a situation materialize, it is quite likely that the living standards and priorities of the population would decrease. Ultimately, this means a reduced demand for speciality wines and a potential failure of my store.
In order to make the best informed decision, one should better understand the so far presented concepts, as well as their potential implications. To achieve this, I should organize them into pro and con arguments.
Pros the industry has been growing and globalization offers easier access to resources and international purveyors have sufficient financial resources and I would not have to borrow any money the customer palette has been growing due to the desire to belong to elitist groups would not encounter direct competition in the surrounding area
Cons stand to lose my life's savings the opportunity costs is rather high and includes both money as well as social life activities return on investment could not be achieved within the first year might have to lower the initially established prices the break-even analysis is irrelevant if I don't sell expensive wines the current economy is facing serious threats and may not foster the best environment for opening and developing a new business
History has though us that the times of economic difficulties have proven fruitful periods for wealthy and courageous investors. However, they have also represented times of massive bankruptcies and the loss of live savings. The ultimate decision depends on each entrepreneur's aversion to risk. I myself have a low threshold for risk, preferring to avoid it and only engage in safe operations. However I do realize the limited chances of success with such a mentality, I am not willing to get passed it in the current circumstances, as the risks are too high.
Motivated by others' stories of success as well as by the desire to become my own boss, I came to think about opening a new business. It would basically imply the import and selling of specialty wines. However the idea seems to reveal chances of materializing into a successful venture, the final decision must be an informed one, based on the analysis of various forces in the micro and macroenvironments, which could impact the operations and outcome of the new business.
In order to conduct such an analysis, one should first identify the forces which are likely to have an impact. In the case of my wine specialty store, these forces revolve around an observed demand for the specialty wines, the supply, the opportunity cost of opening and running the store, the expected return on investment, the retail price, the break-even analysis and finally, the industry features, the competition, funding opportunities and the inflation.
Based on the pro and con arguments generated by the above mentioned forces, I came to the conclusion that opening a specialty wine store may not be the best course of action, especially when considering the economic instability and threats of a global economic recession.
Writing the paper, I come to realize two important things. The first is that however a question may seem simple, it cannot be rightfully answered before a clear analysis of all the forces which affect it. In this case, I would have felt eager to say Yes! I Should Open a New Business!, but after further analysis, I came to realize this may not be the best decision at the time.
The second thing learned while writing the paper is that finding economic elements irrelevant to a matter is rather difficult. This is generally due to the fact that any economic movement could generate at one time or the other an impact upon any business. In the case of the speciality wine for instance, a change in the exchange rate between the U.S. dollar and the Chilean Peso may seem irrelevant, but in fact is not, as I would import wines from Chile at modified rates. Otherwise put, finding independent economic factors is quite a challenging task as most forces are connected.
Thomas, C.R., Maurice, C., 2008, Managerial Economics, 9th Edition, McGraw-Hill/Irwin, the McGraw-Hill Companies
"Managerial Economics - Should I" (2008, November 24) Retrieved October 25, 2016, from http://www.paperdue.com/essay/managerial-economics-should-i-26481
"Managerial Economics - Should I" 24 November 2008. Web.25 October. 2016. <http://www.paperdue.com/essay/managerial-economics-should-i-26481>
"Managerial Economics - Should I", 24 November 2008, Accessed.25 October. 2016, http://www.paperdue.com/essay/managerial-economics-should-i-26481
Managerial Economics Telecommunications has changed dramatically in recent years and continues to show signs of future change. The introduction of the smart phone has shifted technology away from communication via telephone. New applications allow users to use their phone as a walkie-talkie, way to access social-networks such as Facebook, a way to access email, skype and texting within applications. This changes the way customers approach buying a plan. There is less
Economics Observing the Influences that Impact Market Equilibrium Purchasing fresh produce in a farmers market offers an opportunity to buy direct from a supplier. The process of buying fruit and salad items direct from the suppliers, rather than though an intermediary such as a supermarket, increases the exposure of the purchaser to price fluctuations. Visiting the market, which is held every weekend, over a number of weeks it was possible to see
(Png; Lehman, 2007) As far as supply is concerned, if one were to assume that all the firms within an industry, like for example, in a government holding, are identical, then a market supply curve would be made up of the supply curves of all the supply curves of the individual producers in the country. (Adams; Periton, 2006) the elasticity of demand therefore measures the responsiveness of the demand to
Economic Analysis: Durbin Amendment As part of the Dodd- Frank financial regulatory overhaul passed in 2010, the Durbin Amendment was designed to "reduce costs for merchants that accept debit cards" (Sidel, R. December 8, 2011. PP. 1) by imposing a ceiling on the interchange fees which the banking service industry could charge their clients. As with most government intervention into economic activity, there is well intention to ameliorate perceived market failures,
(CED, 2006) The work entitled: "Rights based approach the Millennium Development Goals: The UNDP and Hurist Experience" states that the commitment of the UNDP is characterized by "the promotion and application of the human rights based approach to development dates from the issues in 1998 of its policy of integrating human rights with human development." (2003) it is believed that this policy option will "derive additional strength from the system
Managerial Accounting Accounting Managerial accounting is different from financial accounting because it is used primarily by companies and organization to generate weekly, daily and monthly reports to help them forecast future financial events (Birnberg, 1992). The profession of managerial accounting looks at the many ways managers can help facilitate increased revenues over defined times, and the future in general. It is not concerned with investments as much as it is concerned with
Managerial Accounting The company taken for analysis is: Microsoft Corporation. The company has a history as follows: The revenue comes from developing a wide range of software products and services for all types of computing devices. The software products include operating systems like the Windows Series for personal computers, servers, and many other business solutions applications. The company also sells some hardware and gaming products like Xbox 360 gaming and even