Pricing Strategies and Cost Analysis
Added on 2019-09-26
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CHAPTER-13 DISCUSSION QUESTIONS
Answer 1The components of pricing are following:Direct Cost: It is related to the actual production units. Material costs and labor costs areconsidered as a direct cost.Indirect Cost: It is mainly related to non-manufacturing costs such as depreciationexpenses, property taxes, insurance and managerial salaries.The main important psychological aspect is power. It is considered that powerful purchase couldforce a supplier to minimize the prices of selling products (Wisner, 2014). Apart of it, marketingmix is also considered as a major psychological aspect of pricing.Answer 2 Price is considered the most important reason for negotiation because transaction between sellersor buyers occurred on the basis of price. From a positional perspective, buyers want to purchasegoods at a lower price and with more values, whereas sellers want to gain the highest price fortheir products. Each transaction of both sellers and buyers limited with their pricing boundaries.Answer 3Self-employment is not for everyone. It is the responsibility of the person that they should decidewhether they have the capabilities and entrepreneur skills to open their business or not. Theemployment relationship is never developed in an efficient manner because effort towardsbuilding relationship continuously proves renegotiable (R. Jadhav, 2014). If employees of anorganization feel underpaid or slighted, they always have a choice to reduce efforts to the pointwhere the resulting rate per month or per hour gives an acceptable return for the amount of effort1
expanded. Therefore provide salary package brings equity in the eyes of employees. Lesscompensation to employees raises different problems for managers regarding the health of anoverall organization. Therefore, the manager feels a need to enhance the compensation packageof employees that link performance and incentives of employees with the objectives of theorganization. The risk factor in investment is measured by beta rather than probability. Answer 4The difference between value and cost is following:The cost of product and service is known as the sum which anyone spends onmanufacturing it. (Roberta Pereira, 2014) On the other hand, the value is known asbeliefs of the customers regarding the worth of services and products for them.Negotiation importance:Helpful in developing healthy relationshipsProvide quality, lasting solutions- rather than vague and poor solutions that do not fulfilthe requirements of parties.Helpful in avoiding conflicts and future problemsAnswer 5Sizing up the pricing strategies of suppliers on their competitive positions is known ascompetitive bidding. In the competitive bidding, the purchaser can also formulate the pricingstrategies of the selling organization (Monczka, 2015). If the sellers are selling their products intheir potential markets than the market of buyer organizations, price in that situation will behigher than the other markets.2
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