Existing Good or Service Business Proposal Essay

The doubting Thomas M hotshoty Service, Inc. is a consumer finance c completelyer-up that has been granting loans and pay since 1940. Within the first v years the troupe expanded its line of merchandise when it began issuing business loans, business erudition financing, and commercial real estate loans (University of Phoenix, 2011, p. 1). By 1946 the society expanded to include equipment financing by creating a subsidiary named succeeding(a) crop Inc. (FGI). repayable to developmentd direct in forestry and tress equipment in 1951 FGI purchased a manufacturing party so that the partnership was up to(p) to come out buttockscelleder financing as wellspringhead as their own brand of build equipment. Over the past 67 years, FGI has held a monopoly on financing and manufacturing social organisation equipment and has seen exactly add-ond avails year by and by year. FGI has also never had to lay off either of its employees.This track record has all(a)owed their m elody to grow from $5.00 to $85.60 with stock splits from 1975 to 1998. FGI has never issued bonds, and the inaugu regulate stock value is $35 (University of Phoenix, 2011, p. 1). Unfortunately, with the legitimate economic exhaustturns, natural disasters, and a adjust in raw(a)-home gross revenue, profits for FGI began to declension by 30% from the previous year. Due to the decline in cropion, the company was forced to layoff a third of their employees. Even with the period couch in new-home sales, at that place is still the luck for decrease to maturation as the thrift becomes healthy again. Below the author allow discuss how to cast up gross. cast up tax incomeFGI has many opportunities to increase taxation. Increasing revenue is not completely dependent on the sales price of the product still also on what the companies expenses include. The company testamenting pick up to re-evaluate the representation it spends money and encounter how to quail outg oing be. The first tonicity FGI should post is to review its vendor magnetic inclination and communicate with the vendor to desex the lift out right smart to reduce costs turn bringing the vendor money as well. FGI could request that all parts and supplies be purchased in bulk to cut down on freight devotes as well as reach out to early(a)wise businesses in the orbital cavity to purchase supplies from the homogeneous vendor together. They would shargon the cost of freight, which would reduce the expense for both companies. Advertising is other expense that FGI emergencys to focussing on. before long FGI has cut arse on its publicise efforts and has decided to only advertise during neat events. This might not be a productive advertising strategy. It would be to a greater extent than lucrative to advertise in several(prenominal) venues frequently(prenominal) as direct mail, newspapers, and recall books. This strategy get out get the company name and services to a broader bea of nodes. other expense is employee hours, schedules, and benefits that could use an overhaul. soon FGI was forced to layoff a third of its workforce. The company assumes to determine the best trend to keep its employees while still saving money for the company. Department heads forget fill to review and re-evaluate employee schedules and hours to ensure that they are apply the employee hours effectively. By re-scheduling and trim back employee hours, FGI will be able to publish even overmuch revenue. Benefits are also an expense that is offered by the company, besides the company is not essential to offer them to its employees. FGI should review and determine if it keister continue to offer all of the benefits it shortly does. If necessary, FGI could reduce 401k matching, reduce or regress employee bonuses and parties, and finally re-negotiate with amends companies to find a much cost effective insurance tract for the employees. Finally, the mos t effective way to ensure an increase in revenue is to cut the sales price of the equipment. The graph below shows that the lower the price, the higher(prenominal) the demand. If FGI were to mitigate its prices they would increase sales.Communicating with vendors, upping advertising, re-structuring employee hours and benefits, and cutting prices are all successful shipway to increase revenue. Another aspect of increasing revenue that FGI take ups to grapple is the using up reason of its nodes. The thrift of the join States is newly on the down turn again, heading back into a recession. The creed market conditions are not very strong the current unemployment rate is unchanged at 9.1% consort to the U.S. post of Labor Statistics. The fact that the unemployment rate has had no change means that the thriftiness has not changed. at that place are no new jobs, which motivate the twist industry. tidy sum cannot afford to build homes and they cannot apply for loans because th eir credit history is not strong enough.There is a silver lining for wrench companies and equipment companies such as FGI. In 2009, the brass created the 2009 Stimulus Package, which included $131 billion allocated for social organization-related spending (The McGraw-Hill Companies, Inc., 2011, paratrooper 1). This input signal allows for construction companies to pray for upcoming transportation construction jobs. facial expression companies will quest to upgrade their equipment to newer much efficient equipment that can handle the new workload and conditions. FGI will pack to take advantage of the influx in construction equipment purchases by advertising and offering discounts and rebates to all new and current customers. Maximize gainThe concept of peripheral cost and peripheral revenue is used to determine how much it will cost to give one more piece of equipment. Companies typically prospect to reach a production proportionality where borderline cost and margi nal revenue are equal. At this point, the company will maximize its profit (Vitez, 2003-2011). If an imbalance were to legislate on either marginal costs or marginal revenue there will be inefficiencies with production. There is a mishap that it could cost the company more to produce the extra piece of equipment than it would profit from. According to Huter The standard that maximizes profit is where marginal profit shifts from positive to negative (1999-2011). To determine the profit-maximizing quantity it is necessary to fuck the price, variable costs, marginal revenue, and quantity ordered. aspect at the chart above it is extend that the company is making money off of the maximum of 12 orders. If the order demand were to go from 12 to 13, there is the possibility that it would cost the company more to produce that many than they are able to charge for all 13. With that in mind, theprofit-maximizing quantity would be 13. Suggested Mix of Pricing and Non-Pricing StrategiesFGI is no hourlong the only equipment manufacturing company for customers to choose from. In order for FGI to stay competitive, the company must(prenominal) include a assortment of pricing and non-pricing strategies. Non-pricing strategies would include advertising the company as well as any discounts, financing, and warranties the company has to offer. Pricing strategies could include low-interest financing, longer payment terms, warranties, and product bundle. Product bundling could simply state that if a customer not only orders the equipment through FGI but also finances the purchase than they will receive a discount on the total price.According to the Wall passageway Journal, the Labor Departments snap of the August jobs landscape, cuts in the public domain entirely offset the private empyreans gain of 17,000 positions. Figures from earlier months were lowered, callable largely to deeper cuts by politics. The unemployment rate remained at 9.1% but is likely to move highe r in coming months amid the lackluster cubic yard of job creation (Reddy, 2011, para 4). Due to the possible economic downturn, FGI must consider a primitive change in policy to stay competitive and on top of the market for construction manufacturing equipment. This radical change would be to offer customers the fortune to rent or lease the construction equipment instead of purchasing it out right. Leasing construction equipment will allow construction companies to save money and will allow FGI to earn income and stand out among its rival.Create or Increase Barriers to EntryIt can be difficult to create or increase barriers to entry when there is already competition in place. A few things that FGI could do to increase barriers to entry is to offer customers something that is whole different from the competition. Making the customers want to only purchase from FGI. Those differences would include the ability of the customer to rent the construction equipment for the duration of their contract and increase customer service. Increasing customer service would include offering the customers more options to contact FGI. FGI will need to lend oneself technologysuch as the Internet, Websites, electronic mail communication, and QR codes, which allows customers to access company information and discounts. Increase Product DifferentiationProduct specialism includes pricing and non-pricing strategies as well as increasing barriers to entry. FGI will need to throw away their construction equipment stand out from its competitors. In order to stand out, FGI will need to fuck off changes to how it advertises its product, increase offers customers who purchase the equipment, and fasten the customers experience with FGI unique. Customers want to be excite about spending money, FGI should make their shop experience exciting and rewarding. Customers who are ingenious about their purchases will spread the give-and-take to other potential customers who will consequen tly decide to purchase from FGI over other construction equipment companies. Other Ways to sully representsA few ways to minimize costs for the product includes trim down the amount of employees, which FGI new-madely did. One way to minimize costs is for FGI to lease their manufacturing centers and financial offices instead of purchasing the buildings. Leasing will reduce costs to FGI because the owner of the buildings will need to pay for the upkeep and maintenance of the building and grounds. Reducing spending on supplies and manufacturing equipment is some other way to minimize costs. The issue with reducing spending on supplies and is that the supplies could potentially be inferior products which would then make the products that FGI sells inferior. FGI will need to determine if the quality of their product is worth risking so that the company can reduce the cost of producing the equipment. internationalistic look atInternational mass in is beneficial to both the Unite d States and foreign countries because it is the exchange of goods amongst both countries. Trading globally gives consumers and countries the fortune to be exposed to goods and services not available in their own countries (Heakal, 2003, para 4). International trade can furbish up and is bear upon by each nations political issues. A current example is the Greek economic bail out. The Greek deliverance is currently in need of some other debt bailout to hopefullyturn its economy around. The affect that the European bailout of Greece could have on the United States is that Europe will have slight money to spend on American goods, which will then cause trade to decrease.If a full default occurred, other troubled countries, notably Spain and Portugal, could also practise suit, leading to a wave of defaults that would mischievously affect the European zone and could send shockwaves all the way to Wall alley (Katrandjian, 2011, para 13). As the Global providence stands now, inte rnational trade has not been affected significantly. There is the possibility of international trade being affected if the European economy doesnt stabilize. With that in mind FGI must consider how the international economy will affect the overhaul of FGIs current marketing structure. FGI will need to make its products more lucrative for foreign companies to purchase. FGI would need to create a special package offer to foreign companies that includes special incentives such as discounts, extended warranties, and shorter lead times. finaleFGI has been a successful company since 1940. With the recent economic hardships and additional competition, FGI has determined that they need to re-evaluate their current marketing and product strategies. To increase profit and market value, FGI will need to revamp their spending, marketing, employee hours and benefits, and reduce the cost of their product. Another aspect of business that FGI needs to focus on is the marginal costs and marginal re venue to maximize profits so that they are not producing too much product that will end up costing them more than it is sold for. FGI has the hazard to re-strategies their pricing and incentives to draw in more customers as well as increase blocking more companies from entering the construction equipment manufacturing industry. With the current credit markets being at an all time low, FGI will need to adjust their production and extended announce to meet the potential decrease in sales. The 2009 Stimulus Package offers hope to FGI that sales will increase due to the government projected construction improvements on all Freeways and Highways throughout the country.ReferenceKatrandjian, O., (2011) Greek Debt Bailout Could proceed the U.S. Economy.Retrieved family line 5, 2011 from http//abcnews.go.com/Business/greek-debt-bailout-affect-us-economy/story?id=13879426 Heakal, R., (2003) What is International Trade? Retrieved September 5, 2011 from http//www.investopedia.com/articles/0 3/112503.aspixzz1X6dCaTuv Huter, S., (1999-2011) How to Calculate the value Maximizing Quantity. Retrieved August 20, 2011 from http//www.ehow.com/how_6713701_calculate-profit_maximizing-quantity.html Reddy, S., (2011) Job Growth Grinds to a Halt. Retrieved September 4, 2011 from http//online.wsj.com/article/SB10001424053111904583204576546220157206548.html The McGraw-Hill Companies (2011) expression Stimulus Special Section. Retrieved September 4, 2011 from http//construction.com/stimulus/market_sectors/ University of Phoenix, (2011). Thomas Money Service Inc. Scenario Computer Software. Retrieved from University of Phoenix, Simulation, ECO561 website. U.S. Bureau of Labor Statistics (2011) Employment Situation Summary. Retrieved September 4, 2011 from http//www.bls.gov/news.release/empsit.nr0.htm Vitez, O., (2003-2011) What Is the Relationship Between Marginal Cost and Marginal Revenue? Retrieved August 21, 2011 from http//www.wisegeek.com/what-is-the-relationship-between-margina l-cost-and-marginal-revenue.htm