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BA-561 MACINTOSH Abdulgaffur G. Deki Oscar M. Inocencio Chester Versus.

Lagutin Felomena C. Dionysus Edsel Cariz J. Tiu 12 March 2012 “Baldwin Bicycle Company Background from the Study: Baldwin Bicycle Firm (BBC) is actually a full-line bi-cycle manufacturing company with 40 years of experience. In 1982, BBC has earnings of over $10M pertaining to 98, 791 units developed. BBC entirely distributes through independently-owned merchants, their mountain bikes are known for all their above-average quality. In May 1983, a rapid-growing Northwestern price cut retail sequence, Hi-Valu, Suzanne Leister, VP Marketing, recommended a private-label agreement.

Under this program, BASSE CONSOMMATION would manufacture the Challenger line of mountain bikes exclusively pertaining to Hi-Valu. The Challenger collection was to certainly be a low-priced value bicycle, sold at retail rates under BBC’s normal catalog. Statement in the problem: Precisely what is the overall effects to the organization if BBC will accept the proposal regarding? a. ) PROFIT b. ) GO BACK ON PRODUCT SALES c. ) RETURN UPON ASSETS g. ) COME BACK ON VALUE Objectives: 1 ) To be able to demonstrate and evaluate the pitch depending on the consequence which will be utilized to serve as a basis in making decisions. installment payments on your

To determine the total relevant expense in generating additional orders for Hi-Valu. Areas of account: 1 . BBC sales within the next 3 years would be 75, 000 bicycles a year if they will postpone the Hi-Valu deal. 2 . If LABELLISÉ BASSE CONSOMMATION will accept the offer, a few, 000 units will be dropped in frequent sales quantity a year. 3. According to Ms Leister, Vice President intended for Marketing, she was severly aware that the “bicycle boom had fattened out, and this poor overall economy had induced Baldwin revenue volume to fall. some. BBC was currently working its plant at about 73% of ability meaning, 75, 000 devices is currently produced. excess ability 25, 1000 units) a few. The deal between LABELLISÉ BASSE CONSOMMATION and Hi-Valu is for 3 years and will be immediately extended over a year to year basis, unless one particular party offered notice that this did not desire to extend the contract. 6. Most of BASSE CONSOMMATION sales were into individually toy shops and bicycles shops, LABELLISÉ BASSE CONSOMMATION had by no means before distributed to their product to department store. Their BBC’s very first time to offer such consumer. 7. Hi-Valu wanted to purchase bikes coming from BBC by lower prices the fact that wholesale rates of comparable bikes sold through Baldwin usual channels. 8.

In case the proposal can pursue BBC requirement for getting, inventory and production cost will increased. 9. Hi-Valu would keep the units upon consignment in its own facilities and keep back payment till delivery to a specific retail store. 10. A bicycle will be paid within 30 days every bicycle was shipped into a specific retail outlet or one hundred twenty days acquired elapsed in the regional warehouse. Alternative methods of action: 1 ) Reject pitch RISKS: a. ) BASSE CONSOMMATION may encounter continually suffering sales as a result of a poor overall economy. b. ) BBC is going to continue to create at only 75% production ability. c. Another disadvantage is that the offer selling price of Hi-Valu was less than the regular selling price. d. ) There is yet another cost involved with producing extra units by Hi-Valu the $5, 000 additional price plus the property related cost. e. ) The possibility that the present dealers of BBC may drop-out series if they will find that BBC is making bikes intended for Hi-Valu. farreneheit. ) The freight demand will be shouldered by BBC until it reached the destination of Hi-Valu warehouse. g. ) added from standard sales of three, 000 models from standard costumers. ADVANTAGES: a. ) Maintain commitment from current distributors. ) Maintain 40-year reputation for above average price and quality. 2 . Acknowledge Proposal RISKS: a. ) Current dealers may drop Baldwin range. b. ) Current sellers may request a similar product c. ) Putting trust in a new product d. ) BBC could find itself with an abundance of Challenger-specific inventory electronic. ) Extra costs can result in needing to use less expensive materials farreneheit. ) Lack of “street cred ADVANTAGES: a. ) Greater penetration with the mark through new industry segments w. ) I f Baldwin name can be not for the Challenger bike, BBC’s standing may not be broken c. Strong Challenger revenue may harmony weak Baldwin sales g. ) With Challenger range, BBC will probably be producing by a higher capacity Recommendation: The group recommends the alternative methods of action number two which express Accept the Proposal. The followi ng computations was the basis of the advice. Potential Difficulty Analysis: 1 . Additional expense is involved. 2 . Lost added sales from your costumers a few. Additional investment to finance additional embrace receivables, arrays, record-keeping, taxes inventory, handling labor and equipment, likely obsolescence as well as damage.

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