Question

1. Read the following scenario and answer the question in 5-10 sentences.

You are the president of the American Construction Company (ACC), a company that contracts with builders to use its heavy construction equipment to move large items in to place for the building of commercial buildings (cranes to move large pieces of building frames, large furnaces or air conditioners, etc.). You typically buy your cranes and other equipment on credit and so have monthly payments for that equipment. You cover your costs and make some profit through the rental fees you charge the builders. There are two other companies in town that own equipment similar to ACC equipment and compete with you for contracts. In a meeting of your executive team, one of the members suggests that you do an extended "discount period" where you will price the rental of your equipment significantly below your monthly payments on the equipment to increase business. The suggestion is that once you have captured the business, you can then raise your prices slowly until you above your current price. Discuss this suggestion.

Answer 1

The above proposal gave by the officials is fundamentally a method for giving a serious edge to the organization by letting down the "Rental expenses" for a particular timeframe called the "Rebate period" In request to increase all the agreements from the developers by giving them types of gear at a lower lease than that of the expenses charged by the contenders.

Presently this proposal of officials does can possibly pick up agreement and increment the business yet the reality to be noted here is that ACC organization is rather additionally buying its types of gear like cranes and so on using a credit card which implies that if the recommendation of official is sought after and cost of rentals are kept lower than regularly scheduled payments,,,, the organization probably won't have the option to cover it's loan bosses on time which can hamper the validity or FICO assessment of organization. Along these lines this recommendation is additionally dangerous as business will on one hand be acquiring no benefits and on the hand may likewise be deferring its month to month credit installments.

This recommendation needs a hesitation and a successful execution.

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