Balancing Cost-Effectiveness with Quality: A Strategic Insight for ATV

The essay evaluates ATV’s business strategy by focusing on key performance indicators (KPIs) that measure the effectiveness of their operational activities. By utilizing KPIs such as Return on Capital Employed (ROCE), ATV aims to enhance customer loyalty and overall business performance. The analysis further explores consumer segmentation techniques for strategic enhancements, balancing cost-effectiveness with quality in operations, leveraging ROCE and customer loyalty strategies to optimize market position, and the integration of sustainable practices within business operations. This comprehensive approach provides insights into how these elements collectively contribute to ATV's competitive edge in the market.

Case Study

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
A Comparing the old and new consumer segment.................................................................1
B Opinion based on the corporate sustaining cost and consumer segmentation....................4
C Advising director to enhance the customer profitability analysis.......................................5
D Estimation based on the First year profitability of potential new consumers....................9
E Suggesting ways to make the adequate improvements in ICPA.........................................9
F Consumer accounting techniques which will be fruitful in business performance for ATV.14
QUESTION 2.................................................................................................................................15
A ROCE as a key financial performance and their merits and demerits..............................15
B Suitable balance performance measurements for ATV and their main characteristics....15
C Suitable balance performance measurements for director in improving firm's performance
..............................................................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
In the present era, ATV is the UK's big wholesaler brand which in turn facilitating the
adequate 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 which
they facilitate LCD screen TV's to them. In this report there will be discussion based on the
profitability, current market strength as well as operational efficiency of the firm on the basis of
CSPA and ICPA analysis techniques. Hence, the motive of this report is to present the adequate
reasons behind the operational variation in such segmented market as well as the managers or
professionals will be facilitated with the adequate business solutions.
QUESTION 1
A Comparing the old and new consumer segment
Table 1: In accordance with the CSPA statement which indicates that, there has been
profitability 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

Online retails such as £21,000,000. However, in context with the discounts allowed by such
retailers 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 of
selling 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 LR
which 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 distribution
corporate sustaining costs which in turn reflects that there will be turn facilitate the outcome of
Net profit. Hence, NR has the deficit in such balances such as -315,163 While the highest
operating profit is obtained by LR retailers such as 123,667. Thus, it can be said that the Current
costing system analysis presents that LR retailers are being fruitful for the business as it has
favorable results.

Table 2: The activity based costing system helps in identifying the profitability earned by
the organization is terms of making the adequate revenue gathering which in turn helpful for the

organization in measuring turnover on the basis of each pieces of work. However, the highest
sales revenue generated by OR retailers such as £21,000000 and same as Table 1 they all have the
same Gross profit. However, the variation took place in making the payments of the operational
activities 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 such
as NR has £185,000, OR has 1,602,000 and LR has £686,500. Thus, it can be analyses that OR
has the most favorable outcomes than compared with other retailers. Hence, this indicated that
Consumers preferred to purchase the product on the online stores which are more convenient and
quick for them to analyses the feature of TVs as well as their prices.
B Opinion based on the corporate sustaining cost and consumer segmentation
By analysing the results from both the tables and such methods which represents the
variations in their outcomes (Coskun, S. and et.al., 2016). However, it can be said that, activity
based costing will be fruitful for ATV in having the adequate outcomes from all the consumers
which will be beneficial in presenting the favorable results. There has been huge debates in the
organization between retailers and consumers of ATV which in turn considers the benefits of
such analysis over different methods such as:
Corporate sustaining cost: By considering the arguments of Jenny which in turn
represents that 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 costs
have implication of all the director's salaries and overhead expenses. However, Jenny says true
that she is not having the adequate control over the operational activities of firm which results in
benefits for NR. Thus, the directors ensures that the firm must be appropriately financed as well
as complies with the legal regulations and audited accounts.
Consumer Segmentation: In context with this method the firm will be able to analyses
the turnover of the firm which will be based on the segmenting the consumers such as NR, OR
and LR which in turn represent s the different results for each retailers. Hence, in accordance with
arguments of Jenny, she said that the Selling and Distribution costs to customer segment are on
the basis of net revenue which not appropriately traced by the professionals. However, the sales
manager Daggs supported Jenny over these arguments that the selling of TV sets which costs to
the retailer is didn't record properly.

Thus, it can be said that Consumer Segmentation will be beneficial for the managers to
have the adequate earnings. There can be benefits that all the retailers are operating in different
state of business operations which in turn serving the firm with the adequate outcomes.
C Advising director to enhance the customer profitability analysis
OR Pixmad.com and LR Jones and Sons: In consideration with the adequate
reasoning based on the comparison between two retailers and their consumers in the below
mentioned table such as:
Interpretation: In terms of OR's PIXmad.com and LR's Jones and sons consumers the
revenue generated by both the buyers have variations such as PIXmad.com has the revenue for

£2100000 and Jones and sons has the revenue for £1050000. The gross profit margin of both the
consumers are 15.40% and 14.40 respectively. Thus, it can be said that PIXmad.com is beneficial
in having the adequate gross profit over the revenue and COGS. However, after having the gross
profit many operating or overhead expenses were being reduced from the revenue such as storage
processing etc. In Jones and Sons account the company has the delivery charges for £19200 while
in PIXmad.com there is no such expense were lies. Hence, in accordance with such expenses or
revenuer gathering by such consumers there is huge difference seen in contribution obtained by
the firm such as 13.50% for PIXmad.com and 7.70% for Jones and sons. Thus, In terms with such
comparison it can be said that PIXmad.com is fruitful consumer of ATV.
OR eTV.co.uk.: By considering the online retailer of eTV.co.uk which will be analysed
by the professionals on the basis of it s revenue gathering and the cost of manufacturing such
units. Hence, such analysis can be understand a per the below listed table such as:

Interpretation: In terms with the above listed table it can be said that, there has been
revenue gathered by the consumers in the year for £2100000. The GP margin of firm in such
time is 7.40% which is adequate as it shows the positive ratio. Hence, there will be deductions
which are based on the various operating expense but results with the negative balance of
consumer contribution such as -200. Thus, with such negative results the contribution margins
tends a 0%. However, it can be advised to the directors of this organisation that they must make
adequate strategies to lower down the cost over production as well as reduce the such indirect
expenses that they will be able to gain the fruitful profits or outcomes.
NR House of Fraser and LR TVs R Us: The analysis will be based on the two retailer
such as House of Fraser and TVs R Us which is in below listed table as:

Interpretation: In order to make the better analysis on which the directors would be
suggested to make their adequate investment for such kind of consumers who give the positive
returns., however, the above table reflectance the performance of House of Fraser and TVs R
Us. Hence, the GP ratio of both companies are 3.40% and 14.40% hence, such variation is due
to their revenue gathering on making the sales as well as the costs of good sold. Hence, TVs R
Us are beneficial in this term as they present the positive balance.
D Estimation based on the First year profitability of potential new consumers

Particulars Amount
Revenues (at list prices) 3500000
Discounts 665000
Net Revenues 2835000
COGS 2750000
Gross Profit 85000
Gross Profit Margin 3.00%
Less Selling &Distribution (S&D) Costs:
Storage 300
Advertising 40000
Total S&D costs 40300
Customer Contribution 44700
Customer Contribution Margin 78.2997762864
Net Operating Profit 44700
Net Operating Profit Margin 1.58%
There has been various plans and new strategies which are made by the organisational
professionals in terms with enlarging the profitability of the firm. However, in accordance with
John Lewis the plans for next year on the basis of NR retails and their business performance it
has been estimated that approx 5000 TVs will be sold out and they will be able to gain the
adequate prices for such investment which are 3.5 million. However, the discount of 19% will
be charged over it as well as the COGS was assumed at 2.75 million by them (Jalili, Aydinliyim
and Murthy, 2016). Thus, it can be said that there is need to examine the current scenario of
such business as well as try to fetch the information from market relevant with the current trends
and preferences of the consumers. In accordance with the changes in the choices and preferences
there can be use of various kinds of operational activities which in turn helps the firm in making
the adequate profit gathering. Moreover, it can be said that such estimation will be fruitful for
ATV is they monitor the first year's business.

E Suggesting ways to make the adequate improvements in ICPA
In order to have the favourable outcomes from such retailers of ATV Distribution limited
which in turn helps the directors or professionals in making the fruitful changes in the
operational strategies as well as provokes them to make the planning to make the improvements
in such techniques. Hence, there will be various loopholes of such retailers in revenue gathering.
Table 3: