Business proposal review and evaluation framework

Business

Assessment of Two Case Studies

Assessment of FGI Case Study

Important information

Included?

Identification of market structure

The paper does not have any details which indicate the current market structure. Market structure usually refers to the way a firm operates is a monopoly, oligopoly, monopolistic competition, pure competition or monopsony. The actual industry itself is not specified, although there is reference to supplying construction firms.

Assumptions regarding market structure and elasticity

There are some assumptions regarding elasticity, although there is not a direct assessment. The case assumes that the product is one where there is a normal elasticity, it is stated that the lowering of the price may increase sales by attracting new buyers that would not otherwise be attacked, It is also stated that an improved economy is also likely to be a positive sign.

To what degree do you agree or disagree with the items below?

SD=Strongly Disagree

D=Disagree

N=Neutral

A=Agree

SA=Strongly Agree

Justification included?

Comments

Chosen method to increase revenue

Agree

Yes

(for one strategy)

There are several methods proposed to increase revenues, The first is to lower prices, the justification of this reflects the assumed elasticity, that the reduction in price will attract new buyers.

There is also a recommendation to enter a new market. However, this is a weak recommendation, there is no specification of the type of market, for example, is this a new product market, or if this new geographical market, while this may increase the market there is no justification how or why this may increase revenue.

Chosen methods to determine profit-maximizing quantity

Agree

No

It is suggested that the firm is streamlined with the use of automation this will reduced the fixed costs. It is assumed that this would lower the fixed cost by 'streamlining' the process. But how this will lower the costs is not specified; for example will it reduce the labor bills, will it reduce energy use, will it increase overall efficiency so the overhead per unit is reduced. It may also be argued that the investment may also have the potential to increase costs if there is a need to borrow funds far the investment needed, a cost benefit analysis may have been useful (Nellis and Parker, 2006). If the streamlining or equipment is for new products this could be risky.

The suggested strategy to alter the existing equipment, so there is increased value, reducing the potential for the buyers to default and cause a repossession is a good strategy, if this is possible. However the way this may be achieved is not specified, and without knowledge of the market structure it is difficult to assess if this is persuasive strategy. If it is achievable the way this will prevent repossession is viable.

Use of concepts of marginal cost and marginal revenue to maximize profit