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Corporate Sustaining Cost and Consumer Segmentation Essay

   

Added on  2020-07-22

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Case Study
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1A Comparing the old and new consumer segment.................................................................1B Opinion based on the corporate sustaining cost and consumer segmentation....................4C Advising director to enhance the customer profitability analysis.......................................5D Estimation based on the First year profitability of potential new consumers....................9E Suggesting ways to make the adequate improvements in ICPA.........................................9F Consumer accounting techniques which will be fruitful in business performance for ATV.14QUESTION 2.................................................................................................................................15A ROCE as a key financial performance and their merits and demerits..............................15B Suitable balance performance measurements for ATV and their main characteristics....15C Suitable balance performance measurements for director in improving firm's performance..............................................................................................................................................16CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
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INTRODUCTIONIn the present era, ATV is the UK's big wholesaler brand which in turn facilitating theadequate sales of TV's to its segmented consumers such as National, online and local retailers.However, the company has collaboration which Japanese organisation Panasonic with whichthey facilitate LCD screen TV's to them. In this report there will be discussion based on theprofitability, current market strength as well as operational efficiency of the firm on the basis ofCSPA and ICPA analysis techniques. Hence, the motive of this report is to present the adequatereasons behind the operational variation in such segmented market as well as the managers orprofessionals will be facilitated with the adequate business solutions.QUESTION 1A Comparing the old and new consumer segmentTable 1: In accordance with the CSPA statement which indicates that, there has beenprofitability gain by ATV in terms of selling, manufacturing the product for its key consumers.However, The total sales was made for £49350000 which reflect that the highest sales was of
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Online retails such as £21,000,000. However, in context with the discounts allowed by suchretailers in which the highest discounts made by National retails for £226800 and the lowest of£1102500 from local retailers. COGS of all the retailers have huge variation as per their nature ofselling such as NR has £9,900,000, OR has £16,500,000 and the LR has £12,375000. However,such calculations brings huge variations in Gross profit so the highest gross margin is of LRwhich is 14.4%. Thus, it is due to adequate sales revenue as well as lower cost of such goods.Moreover, after making deduction of all the operating expense such as selling and distributioncorporate sustaining costs which in turn reflects that there will be turn facilitate the outcome ofNet profit. Hence, NR has the deficit in such balances such as -315,163 While the highestoperating profit is obtained by LR retailers such as 123,667. Thus, it can be said that the Currentcosting system analysis presents that LR retailers are being fruitful for the business as it hasfavorable results.
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Table 2: The activity based costing system helps in identifying the profitability earned bythe organization is terms of making the adequate revenue gathering which in turn helpful for the
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organization in measuring turnover on the basis of each pieces of work. However, the highestsales revenue generated by OR retailers such as £21,000000 and same as Table 1 they all have thesame Gross profit. However, the variation took place in making the payments of the operationalactivities which in turn includes all the indirect charges such as Storage, order processing,delivery and stuff like that. There has been variations in the consumer contribution margin suchas NR has £185,000, OR has 1,602,000 and LR has £686,500. Thus, it can be analyses that ORhas the most favorable outcomes than compared with other retailers. Hence, this indicated thatConsumers preferred to purchase the product on the online stores which are more convenient andquick for them to analyses the feature of TVs as well as their prices.B Opinion based on the corporate sustaining cost and consumer segmentationBy analysing the results from both the tables and such methods which represents thevariations in their outcomes (Coskun, S. and et.al., 2016). However, it can be said that, activitybased costing will be fruitful for ATV in having the adequate outcomes from all the consumerswhich will be beneficial in presenting the favorable results. There has been huge debates in theorganization between retailers and consumers of ATV which in turn considers the benefits ofsuch analysis over different methods such as:Corporate sustaining cost: By considering the arguments of Jenny which in turnrepresentsthat NR is liable to make the losses for organization which are nearly £128,000.Hence, in accordance with the Grant's explanation they said that the Corporate Sustaining costshave implication of all the director's salaries and overhead expenses. However, Jenny says truethat she is not having the adequate control over the operational activities of firm which results inbenefits for NR. Thus, the directors ensures that the firm must be appropriately financed as wellas complies with the legal regulations and audited accounts.Consumer Segmentation: In context with this method the firm will be able to analysesthe turnover of the firm which will be based on the segmenting the consumers such as NR, ORand LR which in turn represent s the different results for each retailers. Hence, in accordance witharguments of Jenny, she said that the Selling and Distribution costs to customer segment are onthe basis of net revenue which not appropriately traced by the professionals. However, the salesmanager Daggs supported Jenny over these arguments that the selling of TV sets which costs tothe retailer is didn't record properly.
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