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If Scenarios

Terms in this set (14)

- Revenues and Costs
- Start with Revenues because you need to understand the revenue streams before you can make educated decisions on the cost side.
If sales are flat and profits are taking a header, what do you need to consider? Where should you start and why?
This could indicate that industry sales are flat and that competitors are experiencing similar problems.
If sales are flat and market share remains relatively constant, what could this indicate?
- Overall declining market DEMAND
- The possibility that the current marketplace is MATURE or your product OBSOLETE
- Loss of market share due to SUBSTITUTIONS
If a case includes a decline-in-sales problem, what three things should you analyze?
- Whether PRICES are dropping and/or COSTS are climbing
- If costs aren't the issue, investigate the PRODUCT MIX and check to see if the MARGINS have changed
If sales and market share are increasing but profits are declining, what do you need to investigate?
...Concentrate on MARKETING or DISTRIBUTION issues
If profits are declining because of a drop in revenues...
...Concentrate on operational and financial issues (COGS, labor, rent, marketing costs)
If profits are declining because of rising expenses...
- Changes in costs
- Any additional expenses
- Changes in prices
- The product mix
- Changes in customers' needs
If profits are declining, yet revenues have gone up, what should you review?
...Concentrate on R&D (Research and Development), competition and pricing.
If a product is in its emerging growth stage...
...emphasize marketing and competition
If a product is in its growth stage...
...focus on manufacturing, costs, and competition
If a product is in its mature stage...
...define niche market, analyze the competition's play or think exit strategy
If a product is in its declining stage...
...your costs will shoot up because your employees will be working overtime and consequently, your profits will suffer
If you lower prices and volume rises, and then you are pushed beyond full capacity....
- The growth rate for all competitors is approximately the same
- The prices are paralleling costs
- The prices of all competitors are roughly of equal value
If prices are stable, three conditions are being met...what are these three conditions?
- How the internet affects the company
- How the economy affects the company
- How the competition affects the company (both internal and external to the industry)
What three things should be in the back of your mind during every case?
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