COSTING AND PRICING

Name:Josua Bolaños

Section: BSBA OM 2A

TASK: Answer the following key questions:

1. What is the first option businesses have to increase profits, and how can it be achieved?

2. Provide an example of how a retail company can lower costs through supply chain management?.

3. What should a manufacturing company consider when renegotiating supplier contracts to lower
costs?

4. How can a technology company improve efficiency to lower costs?

5. What is the second option for increasing profits, and what factors should a business consider when
implementing it?

6. How can businesses justify a price increase to customers and maintain their loyalty?

7. What is the significance of having a diverse sales blend, and how can it benefit a business?

8. Explain what "sales blend" means in the context of a business?

9. How can a business effectively change its sales blend to increase profits, and what considerations are
involved?

10.In the e-commerce fashion retailer example, what were the key results of changing the sales of
blend?.

ANSWER.

1.These are reducing costs, increasing turnover, increasing productivity, and increasing efficiency. You
can also expand into new market sectors, or develop new products or services.

2.To reduce costs, companies can focus on it's operations, for example: optimise space, reduce damage,
minimise packaging and much more. A solution to optimise space is by having multi-client facilities. This
allows for costs to be shared across multiple companies and you only pay for the area that you use.

3.Start by reviewing your current contracts with suppliers and identify any clauses that may be costing
your company more than necessary. Consider renegotiating contracts to remove any unnecessary
charges or fees. You could also consider consolidating purchases with fewer suppliers to get better
pricing.
4.Automation of processes

Automation involves using technology to automate repetitive or time-consuming tasks, reducing the
need for manual labour and improving efficiency. By automating processes, businesses can reduce the
costs associated with errors, time-consuming processes, and labour.

5.Manage your costs

Close management of your costs can drive your profitability. Most businesses can find some wastage to
reduce, it's important not to cut costs at the expense of the quality of your products and services.

Have you looked at your key cost areas?

Your key cost areas to consider are:

Suppliers - are you getting the best deal from suppliers? Can you negotiate better terms or do you need
to change supplier? Can you drive better deals by consolidating your supplier base? Can you buy on a
'just in time' basis to make more effective use of your working capital?

Finance - do you need to review your finance facilities? - are they at the most competitive terms
available? Are you using any loans and overdrafts effectively?

Premises - have you examined whether you are getting the most out of your space? Are there more
efficient ways to use your premises? Could you sublet some unused space?

Production - have you assessed whether you can cut waste and lower the costs of your materials. Check
whether you can adapt your production processes so they are more streamlined, using fewer working
hours or resources to cut labour costs.

Uncover real costs

Using activity-based costing is an effective way to find the real cost of specific business activities.
Activity-based costing shows you how much it costs you to carry out a specific business function by
attributing proportions of all your costs - such as salaries, premises or raw materials - to specific
activities.

The initial analysis may take a little time but using activity-based costing often shows up costs (and
therefore potential efficiencies) that you would not normally uncover using more traditional costing
methods.

6.Communicate transparently and provide a justified explanation of why the price increase was
necessary. Contact your loyal customers directly and send a price increase letter well in advance. Explain
your reasoning and remind your customers that higher prices mean a higher quality of products and
services.
7. diverse workforce is more likely to understand your customers' needs and come up with ideas to fulfill
them. Diversity in the workplace will also increase employee morale and instill a desire to be more
effective and work more efficiently. This will greatly increase the productivity of your business.

8.In the context of a business, the term "sales blend" refers to the combination of strategies,
techniques, and approaches used to maximize sales and achieve business objectives. It involves blending
various sales methods, such as direct sales, telemarketing, online sales, and networking, to create an
effective and comprehensive sales approach. By using a sales blend, businesses can reach a wider
audience, build relationships with customers, and ultimately increase sales and revenue.

9.Facilitate team contributions

One of the first strategies to help in increasing profitability is to meet with members of your team to
establish common goals related to increasing profits. If team members are all aware of the goals of the
organization, it can help them make decisions that assist in the completion of those goals and motivate
them to increase their productivity. For example, you may hold a company-wide meeting where you
discuss the goal of increasing profit margins by 10% within the next year.

10.In the e-commerce fashion retailer example, the key results of changing the sales blend included an
increase in sales revenue, a broader customer base, and improved customer satisfaction. By utilizing a
sales blend approach, the retailer was able to reach a wider audience through various channels, such as
online sales and social media marketing. This resulted in a significant boost in sales and revenue for the
business. Additionally, the retailer was able to build stronger relationships with customers by offering
personalized shopping experiences and providing excellent customers.