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Flashcards in Profit and loss Deck (31)
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1
Q

What is the Profit and loss-tree?

A

E(P=R-C)M

2
Q

How can profits be increased?

A
  1. Can we increase the revenue?

2. Can we decrease the costs?

3
Q

How can we increase revenue?

A
  1. Can the sales volume be increased?

2. Can the ex-factory price be raised or lowered?

4
Q

Can the product costs be lowered? (1)

A
  1. Is the design too expensive?
5
Q

Is the design specification too expensive? (2)

A

Yes: Are the consumers likely to favour a quality product?
No: Are the fixed costs too high?

6
Q

Are the consumers likely to favour a quality product?

A

No: Redesign and use VA en VE analyses
Yes: Reflect quality in marketing strategy

7
Q

Are the fixed costs too high?

A

Yes: Cut down on indirect personnel, control accounts receivable and payable, reduce fixed assets.
No: Are the variable costs too high?

8
Q

Are the variable costs too high?

A

Yes: Is the company making uneconomic purchases?
No: Is the work pace too slow?

9
Q

Is the company making uneconomic purchases?

A

Yes: Improve purchasing methods, replace suppliers
No: Improve production process control

10
Q

Is the work pace too slow?

A

Yes: Improve employee education and training, install incentive systems
No: Are there many reworks?

11
Q

Are there many reworks?

A

Yes: Tighten quality control?
No: Is there too much downtime?

12
Q

Is there too much downtime?

A

Yes: improve maintenance, replace obsolete machines, analyse work process
No: Reconsider skill level and capabilities of employees

13
Q

Can the sales volume be increased? (4)

A
  1. Can the market share of product A be increased in segment M?
  2. Can the market for product A be expanded beyond segment M?
  3. Will the market segment M expand?
  4. Can we develop a new product?
14
Q

Can the market share of product A be increased in market segment m? (4)

A
  1. Can Product A’s fit with segment m be improved?
  2. Can the strength of the sales network be increased?
  3. Can consumer awareness of product A be improved?
  4. Can share be increased by a change in pricing policy?
15
Q

Can product A’s fit with the segment m be improved? (2)

A
  1. Basic customer needs analysis

2. Analysis of value (real and perceived) offered by competing products

16
Q

Can the strength of the network be increased? (2)

A
  1. Trends in sales channel and geographical coverage

2. Comparison of servicing capability, delivery time

17
Q

Can consumer awareness of product A be improved? (2)

A
  1. Survey of customer awareness in brand and product

2. Analysis of purchasing decision-making process

18
Q

Can share be increased by a change in pricing policy? (2)

A
  1. Price elasticity

2. Influence of payment terms and trade-in conditions

19
Q

Can the market for product A be expanded beyond segment m? (3)

A
  1. Possibility of geographical expansion
  2. Possibility of expansion in final customers outside the segment
  3. Cost-benefit analysis of expansion
20
Q

Can we develop a new product? (4)

A
  1. Analyse product cannibalisation
  2. Analyse possible lay offs
  3. Analyse investment into new machinery/training
  4. Analyse the advantages and disadvantages
21
Q

Will the market segment m expand? (2)

A
  1. Will the total market M grow?

2. Will the share of segment m in the total market grow?

22
Q

Will the total market M grow? (1)

A
  1. Anticipated demand 3-5 years ahead for product constituting the total market M
23
Q

Will the share of segment m in the total market M grow? (2)

A
  1. Factors determining the size of segment m within the market M
  2. Trends and forecasts of the factors
24
Q

Can the ex-factory price be raised? (2)

A
  1. Can the market price be raised?

2. Can distribution margins be reduced?

25
Q

Can the market price be raised? (2)

A
  1. Is a simple increase of the list price possible?
  2. Is it possible to raise the price by changing the product model so as to more than cover the increased costs incurred?
26
Q

Is a simple increase of the list price possible? (3)

A
  1. Price elasticity
  2. Possibility of price rises differentiated by geographical areas, models, or by distribution channels
  3. Results achieved by competitors (Follow the leader)
27
Q

Is it possible to raise the price by changing the product model so as to more than cover the increased costs incurred? (3)

A
  1. Basic consumer needs in each market segment
  2. Price elasticity
  3. Cost-benefit analysis
28
Q

Can distribution margins be reduced? (3)

A
  1. Would integration or retail outlets enable margins to reduced?
  2. Could volume be maintained if only low margin channels were used?
  3. Could a switch to direct sales reduces distribution margins?
29
Q

Would integration of retail outlets enable margins to be reduced? (3)

A
  1. Basic economic analysis of distribution system
  2. Analysis of economies of scale
  3. Correlation between number of sales outlets and market coverage
30
Q

Could volume be maintained if only low-margin channels were used? (2)

A
  1. Flexibility of physical flow of goods by distribution channels
  2. Degree of motivation and sales efforts exerted by different channels
31
Q

Could a switch to direct sales reduce distribution margins? (3)

A
  1. Analysis of long-term strategic effect
  2. Analysis of short-term cost-benefit
  3. Possibility of maintenance of sales skills