Cost Reduction and Increased Revenues - Essay Example

Economics

Question 1

Introduction

Advancements in technology have enabled companies to gain a competitive advantage. This happens because of the advantages that are associated with technological advancements. Technological advancements range from efficiency n operations to internet technology. The use of the internet has rapidly affected the prevailing markets in the world. The paper will make a discussion of the ways in which the use of the internet that is high speed will affect the competitive conditions of the animation industry in Japan. The ways in which the internet will affect the level of competition include the following;

Cost Reduction

In the previous years, the film industry in Japan used to make use of many employees in the production process. That means that the company spends a lot of money in paying for labor. With the availability of the internet, there are animated pictures that are found on the internet and can be used for the film production industry. That means that the number of employees who are used in production will be reduced. The company will also be able to work in a fast way. That means that the wages that were paid to the drawer over the three months of production will be drastically reduced (Gardner, and Howard, 19).

With the cut in the costs of the production companies, the companies will have to reduce the price of their commodities. That will imply that the customers will purchase the products that are cheaper and easy to access. In that case, the cost leadership strategy should be applied in the companies. The level of competition in the industry will be increased, and that will be good for the development of the industry (Gladish, 14).

Increased Revenues

The use of high-speed internet will ensure that the companies in the industry will benefit from revenues that will accrue from increased production levels. The production levels will increase because the time spent in production will be reduced. That means the increased production levels will result in increased revenues and eventually increased profit margins. The other thing that will lead to an increase in profit is the availability of a better channel of marketing. The internet is a current trend that is used for advertising, and it will help in increasing the customer base of the companies that engage in the industry. The use of the internet to advertise means that the advertising costs will be reduced and the market share of the company will increase. The companies should come up with innovative ways of marketing that will give them a better advantage over their competitors. The increased market share will also lead to increased revenue that will eventually result in increased profit levels (Emery, & Trist, 30).

Availability of High Skilled Staff

With the availability of the internet, the companies in the film production industry will be able to advertise for job vacancies via the internet. Internet adverts usually go wide and broad. That means that the companies will have a wide variety of staff to select. That means they will get the best skills from all over the world. Availability of skilled labor will lead to more innovations in the company, and that will result in company efficiency. Availability of efficient staff usually leads to increased efficiency that cuts on the costs of the company (Bartlett, & Ghoshal, 140).

From the above advantages of the use of the internet, then to is evident that it will be the next big thing that brings about competition. Companies should invest in technology so that they can benefit from the advantages that accrue from the use of technology. With a rapidly growing technological environment, it is advisable for companies to invest more in technology and that will be their biggest source of competitive advantage (Due, 56).

Strategies That Can Be Adopted

Every organization should have laid down strategies that will help in the achievement of the goals of a company. The first thing for a company is to set up its goals. The goals will help in determining the strategy that will be used in a company. A company must have strategies that will act as their guiding principles. Mid-sized companies have some strategies that they can apply in their production process. The strategies include the following;

Cost Leadership

In any industry, customers usually prefer products of a company that is low in price and of high quality. In an attempt to compete with other companies in industry, mid-sized companies should be able to come up with strategies that will help in cost cutting. Reduction in cost will lead to the decrease in the price of a product. A company can gain cost leadership by investing in processes that are efficient. That implies that a company will have to invest more in technology. The advancement in technology will lead to processes that are efficient and that will lead to cost cutting. The other way that costs can be cut is a company investing in efficient staff. Staff who are highly efficient and skilled with the proper remuneration will lead to employees been more innovative and more motivated. The advantage will ensure that products of a company are affordable and of high quality (Guiltinan, 56).

First Mover Advantage

The first mover advantage is a case whereby a company gains a greater market share because of been the first to come up with a way of doing things in the market. The advantage is usually taken by a company that is willing to take risks (Walker et al. 56). Risk takers are usually willing to make the first initiative of penetrating a new market or starting a new way of doing things in the market (Drucker, 100).

Cost Differentiation Strategy

A company should be able to come up with different prices for their commodities. That happens when the company wants to capture a range of customers. A company can also offer discounts to the royal customers. Customer loyalty is rewarded by awarding them things like loyalty points. The points are usually gathered on the number of purchases made. That means that for every purchase made, a customer gathers some points. The redeemable points can be used in the future and used in purchasing company products. The strategy is usually aimed at ensuring that customers are retained, and potential customers are attracted to the company products (Baatz, 29).

Expansion Strategy

With the use of the internet, it is easy for a company to gather customers from all over the world. The internet allows online purchases. The businesses can advertise their products online and come up with secure purchase process that will safeguard the information of customers. The strategy usually encourages increase of the customer base of a company, and that leads to greater profitability of a company (Graham, 40).

Question 2

Part A

Knowledge of the Industry

Janet, the founder of the company, has the information that is required in the flower business. In any business, a person is required to have adequate knowledge of how the industry works. That is the reason why businesses usually carry out a market analysis to get the correct information on how an industry works. That means that Mayfair flowers have adequate information on the industry. They will have the knowledge on the weaknesses of the competitors and the way in which they can work the weakness to their advantage. Janet was also in the cop rate industry and is aware of the things that are demanded in the corporate world. That means that they will work towards satisfying the needs of the customers. Janet is also aware of the places that she can get flowers at lower prices. That will give the company a price advantage because that will be used to sell out the products of the company. Knowledge of the industry is important because it enables a company to customize their products in a manner to ensure that they are fast moving and acceptable among the customers (Hiam, and Schewe, 140).

Ready Market

The flower business is a booming business in the corporate world. The industry in which the company is venturing is beneficial because the products are demanded by the customers and that will ensure that their revenues are stable and increasing with time. A ready market ensures that business can sustain itself with the help of the revenues that are available. Janet been in the corporate world previously, she will be able to negotiate with the people from the corporate world and get them as her clients. That will increase the market share of the company. If the company provides perfect services, then she will get additional customers from the referral from her current customers. That will be advantageous to the business because it will be able to maximize the revenues that are accrued so that they can expand their business.

Capital

Mayfair flowers are established by a former banker. That means that she will have access to the loan facilities that are offered by the financial institutions. In her time in the corporate world, Janet was able to network with people who could extend her financial loans if she required the financing. Janet also has the advantage of knowing how the financial institutions work and how she can apply for loans. For any business to become successful, there has to be enough capital that will ensure that the operations of the business take place effectively. The flower business is not capital intensive, and that means that the founder can use her savings to start the business and in future expand the business based on the revenues that she accrues from the business (Cravens, et al, 67).

Human Resources

The human resource element in business is an essential resource in business. Janet was able to acquire herself an assistant. The assistant acquired has enough knowledge on how to market the products of the company. If the assistant has perfect public relations behavior, then she will be able to work well with the customers of the company. Having good human resources in a company usually ensure that the business expands because of the good relations that she gets with the customers (Eisenhardt, 560).

Part B

A business that is starting up should apply some strategies to ensure that they can survive in the industry and to manage the operations of the company in a manner that is acceptable. The strategies that can be applied to Mayfair flowers include the following;

Expansion Strategy

For a business to last long in the industry, the business has to ensure that they expand their business in a way to increase revenue. The main aim of business is to maximize their revenues. That means that Mayfair flowers have to work on increasing their customer base so that they can increase their profit levels. The business can expand their borders by carrying out an aggressive marketing plan (Ashby, 89).Marketing is the only department in a business that brings revenue to the enterprise. Mayfair should invest more in marketing so that they can increase their customer base. Marketing will also increase the level of competition in the industry so that they can beat the competitors in the industry. If the strategy works, then the company will be the market leader in the industry, and that will be good for their revenues (Fiol, 410).

Cost Differentiation

Many customers in an industry usually check the package that is offered by a company. The package usually includes the service provision and the price of the products in the business. Most customers prefer a business that will offer a high-quality product at a good price. If the price of Mayfair products is good, and the products of high quality, then the company will get more customers. The business can cut on their costs by using the process that is efficient and acquire their products at a low price. Efficient processes will include the timely provision of services and delivery of products. Those are the main factors that will help a company in cost cutting. The company can also negotiate with their customers so that they can get discounts for their products. The discounts will help in cutting on costs and at the same time increasing the earning of the business.

Market Penetration Strategies

Mayfair flowers should work out a plan that will help them in penetrating the market. There are some market penetration strategies that exist, and that will help in the increase in market share of the business. The strategies include a situation of low price and high advertising. The strategy is aimed at attracting more customer by informing them about the products of the company. The strategy is usually capital intensive but yields profits in the future. After the business gets enough customers, then they can reduce their level of advertising (Cohen, 106).The other strategy that they can use to penetrate the industry is high price- high advertising. The strategy is usually capital intensive about the high margin levels usually cancel out the costs incurred in advertising. The strategy often informs customers of the services of the business and tell them why they should use the products of the company as opposed to those of their competitors. The other strategy is low price and low advertising. The strategy is not capital intensive. In such a strategy, the business usually expands slowly. The only thing that attracts customers in such a situation is the low price offered by a company for their services (Bartels, 90).