Classic Pen Company: Developing an Abc Model
ANALYSIS Background Information: The Classic Pen Aggregation was a bargain ambassador of acceptable BLUE and BLACK pens with accumulation margins over 20% of sales. They afresh alien RED pens at a 3% premium, and a year after they alien PURPLE pens due to the 10% exceptional that they could command. However, they were aghast with the best contempo year; RED and PURPLE pens were not bringing in accepted sales (still because their college accumulation margin), and BLUE and BLACK pens advantage was down.
Issue(s) Identification There are two capital issues aural this case: -Profitability -Pricing ?Which involves Production time and accomplishment per unit. -Should they acquaint alike added variety? Can they accumulate up with appeal and competition? Recommendations: 1. Get rid of RED pens – They are the trickiest to make; their acquirement is alone $. 03 added than accepted pens. 2. Lower the Amount for BLACK pens, aback they are the best simple to accomplish and crave beneath aerial and absolute labour. . Lower amount of BLUE pens- they are the best popular, but with the alteration bazaar prices charge be adjustable. 4. Advance in new accessories (Therefore eliminating time to apple-pie vats in adjustment to accomplish new coloured pens). 5. Focus in alone authoritative BLUE and BLACK pens as specialty pens Conclusion: My advocacy to Dempsey would be to advance in new technology to lower the aerial costs (Set-ups, runs) in the future. With a aggressive bazaar it is important to adapt.
The accession of new colours is acute to their survival, but with the accepted accouterment it may not be possible. New accessories would beggarly bound excess (if any), added options in colour, and affair customers’ demands. If advance of new accouterment is not achievable for the company, it would be best to try and cut cost, and focus on accepted pens for approaching investments. BLACK and BLUE pens accompany in the best sales volumes and they could potentially cut aback to 200% aerial already again.
Order a unique copy of this paper