Question

Small Group Discussion (Class will be divided into Groups of up to 5 students)

We have made the point that managers often attempt to maximize the contribution margin per unit of a particular resource that limits output capacity. The following are five familiar types of businesses:

Small medical or dental practice

Restaurants

Supermarket.

Builder of residential housing.

Auto dealer’s service department.

Instructions:

Within a group of students:

Each student will be assigned one of the five familiar types of businesses

(MUST POST FIRST) Initial Post – As an employee, write an internal memo to your manager addressing the following:

For each type of business, identify the factor that you believe is most likely to limit potential output capacity.

Suggest several ways (other than raising prices) the business can maximize the contribution margin per unit of this limiting resource. (Hint: These businesses often do implement the types of strategies you are likely to suggest. Thus, your solution to this case may explain basic characteristics of businesses that you personally have observed.)

For your response post, you will be taking on the role of the manager and respond to your employee’s and another manager’s memo. For the employee memo, Inform the employee as to what specific managerial decisions, conclusions, and/or judgments can you make from the information provided in that memo. For the manager response, provide an alternative conclusion based on the information provided.

Need both respond to an employee’s and another manager’s memo for SMALL Medical or dental practice....

Answer 1

Response 1: As an employee to the Manager

Please refer to our earlier discussion regarding the limiting factor in our medical practice because of which our output capacity is not increasing. I have made an indepth study and concluded that following can be the reason attributed for the same:

• Our medical store is basically known as drug store only for the dental medicines, because of which customers enquiring for the other medicines are quite less, moreover, looking at the inventory cycle of non dental medicines this can be substantiated that we are having a very low turnover of these medicines.
• I suggest to make efforts to make the image turnover and also include a section of cosmetics and grooming so that footfall increases and increases our drug store sales/practice also

Response 2: As the Manager to Employee

?Hi James, I appreciate your active participation following our earlier discussion. While I honor your views and is in line with them, there is a practical problem in followng it. You see that we are in town known for having every medicine of dental problems. This is the reputation we have harnessed over the long period of customers service. Adding other product lines would mean that we have to make compromise with the wide range of dental medicines we have because of the space issues. The more practical approach here I belive we can take to increase our sales and contribution margin can be that we introduce order on phones/watsapp/mail or just develop a website for the store and encourgae our regular customers to place order from there and we shall deliver the medicines to them on flat delivery charges. Please let know your views on the same

***I believe this is what you required, if not than please let know more specifically and would ammedn answer accordingly. Thanks***