Question

Please select three companies and describe what they do. Select a major component of their production process and speculate on how to calculate unit costs. Identify what you think are their variable, fixed, and mixed costs of each.

I need another essay with different companies and reference in APA style

Answer 1

Nokia Corporation

Description:

The company was founded at Tampere, the Grand Duchy of Finland in 1865 by Leo Mechelin and Fredrik Idestam. Its Chairman is Risto Siilasmaa and its President and CEO is Rajeev Suri. Timo Ihamuotila serves as its CFO. In 2014, its revenue stood at €12.73 billion and its operating income was €1.63 billion. In the same year, its net income was €1.17 billion and its total asset worth was €21.06 billion. Its total equity for that year was €8.67 billion.

On 11 February 2016, Nokia and IIT-Madras announced a three-year partnership to explore the possibility of using unlicensed radio spectrum to deliver broadband connectivity. Nokia Corporation has shown its willingness in funding the project through its Corporate Social Responsibility research programme for rural development. Plus, the MNC would provide technological expertise to IIT-M’s Centre of Excellence for Wireless Technology (CEWiT)

Major component of their production process :

NOKIA Production Process

Nokia has chosen Chennai in the state of Tamil Nadu, Southern India, for its tenth mobile phone factory. The facility will cost up to $150m over three years, and will make entry-level, mid-level, and top-end GSM (Global System Mobile) and CDMA (Code
division multiple access) handsets for the Indian market. The plant is located at Sriperumbudur, about 50km west of Chennai, on an 85ha (210ac) plot.

Construction began in April 2005, and production in March 2006. Nokia is building up the factory gradually, with small quantities of a basic entry-level handset ironing out any initial production glitches. By the end of 2006, Nokia should have about
2,000 employees at the site.

“Nokia received state assistance after different Indian states competed against each other for the plant.”

PRODUCTION STARTS WITH 1100 HANDSET

Nokia started production with its 1100 handset, which has in-built flashlight and is aimed at the Indian market. The 1100 accesses calling, messaging, and menu functions across a navi key silicon keymat.

Up to four lines of text messaging are shown on a two-way scroll display showing 96×65 pixel black-and-white images. Font size is selectable and an internal phone book stores up to 50 entries.

There is vibration alert, date and time screensaver, and a reminder function. Several other functions are built in, including alarm, stopwatch and countdown timer.

Nokia’s CDMA phones include the 6235, which captures and views images with an integrated VGA camera and video recorder. It connects to the internet via a WAP 2.0 browser to share images, or for news and entertainment. It also allows features like
voice recording for ringtones.

The company is expanding mobile voice and data capabilities across a wide range of mobile devices. Nokia primarily targets high-volume mobile phones and devices based on GSM / EDGE, 3G / WCDMA and CDMA global cellular technologies.

Increasingly, products are including megapixel cameras, music players and advanced-quality colour screens.

NEARLY TWO BILLION SUBSCRIBERS WORLDWIDE

The world’s mobile subscriber base is now running at around two billion. Sales in Asia Pacific will take a growing share, and India is a central location for production. There are already around 100 million wireless customers in India, with yearly
sales rising to nearly 50 million.

The Indian Government expects telecom manufacturing to soon hit $1bn. Nokia leads with nearly 50% of the country’s $2.5bn handset market, followed by companies like Samsung, LG Electronics and Motorola.

Manufacturing capacity in the country is rising, with Elcoteq starting manufacturing in Bangalore shortly before Nokia made its own announcement.

A SKILLED LOCAL LABOUR FORCE

The whole complex is being constructed by Leighton Contractors (India) in a $35m contract. A 23,000m² steel-framed building houses the two major production halls as well as offices, warehouses and locker areas. Leighton is supplying electrical,
air-conditioning, water treatment and sewerage infrastructure. It will also build associated roads and car parks.

“The facility will make entry-level, mid-level, and top-end GSM and CDMA handsets for the Indian market.”

Chennai has a skilled labour force, with support from the state government and good logistics connections. Nokia received state assistance after different Indian states competed against each other for the plant.

The company is also trying to persuade its suppliers to set up in India to simplify logistics, and the plant itself will have units reserved for suppliers. They will supply components like keypads, covers and other plastic and metal parts.

Nokia’s regional corporate headquarters are located at Alexandra Technopark in Singapore. Nokia Mobile Phones manufactures products out of three major facilities in Masan, Korea, and Beijing and Dongguan in China.

There are R&D centres in Japan and China, and an industrial park in Xingwang (Beijing) with R&D and manufacturing facilities. Nokia Networks has technology and training centres in Australia, Japan and Thailand, as well as six joint ventures in
China.

Nokia reports that total investment in a facility in China that similar to the Chennai plant has reached over $1bn over seven years.

Calculation of it’s Unit Cost :

When your company produces large numbers of identical goods, you can calculate the unit cost to track your manufacturing expenses. The total amount of your fixed and variable costs makes up the total manufacturing costs. These costs are accounted for as your products move through the manufacturing process. At the end of the production run, you can use the total fixed and variable costs to calculate your unit production costs. By comparing the unit costs for similar production runs, you can determine if the current costs exceed your budgeted costs.

Fixed Costs

Fixed costs are the expenses that do not respond to changes in your production output over a set time period. Some common fixed costs are your building and factory rent, amortization and depreciation, mortgage and interest payments, and property taxes. Some fixed costs change annually and increase your overall fixed costs. For example, if your insurance premiums increase when you renew your policy, the production costs for each unit will likewise increase due to the additional insurance cost.

Variable Costs

Your variable production costs change with each production run. Direct materials and direct labor are the components of your variable costs. The amount of direct materials is accounted for from the moment they leave your warehouse until the units are completed. Direct labor costs are broken down and accounted for by tracking the hours each employee works and the hourly pay rate. When the production run is completed, add the total amount of direct materials and direct labor costs to get your total variable costs.

Calculate Unit Costs

You can calculate the unit costs of production by dividing the total amount of your fixed and variable costs by the total number of units you produced. For example, say your total fixed costs are $30,000, your variable costs are $50,000 and you produced 40,000 units. The total production costs are the $30,000 fixed costs added to the $50,000 variable costs for a total of $80,000. Divide 40,000 units by $80,000 to get your $2 per unit production costs.

Breakeven Analysis

When you calculate the unit costs of production, you are calculating the breakeven point, or minimum price, you must sell each unit at to make a profit. For example, say you produce 2,000 units costing $3 per unit that you resell at $5 per unit. Your profit is $5 minus $3, or $2 a unit. You net income is 2,000 units multiplied by $2, or $4,000. If your production costs increase to $4 per unit, then your profit is $5 minus $4, or $1 per unit. Your net profit is 2,000 multiplied by $1, or $2,000. You must increase your sales or raise the selling price to keep your net income at $4,000.

Nestle Corporation :

Description: Nestlé S.A. is a Swiss transnational food and drink company headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world, measured by revenues and other metrics, since 2014. It ranked No. 64 on the Fortune Global 500 in 2017[8] and No. 33 on the 2016 edition of the Forbes Global 2000 list of largest public companies.

Nestlé's products include baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of Nestlé's brands have annual sales of over CHF1 billion (about US$1.1 billion), including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi. Nestlé has 447 factories, operates in 194 countries, and employs around 339,000 people.[11] It is one of the main shareholders of L'Oreal, the world's largest cosmetics company.

Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé (born Heinrich Nestle). The company grew significantly during the First World War and again following the Second World War, expanding its offerings beyond its early condensed milk and infant formula products. The company has made a number of corporate acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh in 1988, Klim in 1998, and Gerber in 2007.

Major Components of Their Production Process :

Nescafe coffee:

Making a cup of coffee might seem like the easiest thing in the world. But have you thought of all the people who are part of making that coffee? Around 60 million people work in the coffee industry across the globe. That’s a lot of people’s hard work and passion going into your cup of coffee!

It All Starts With Coffee Farms

Home to the coffee farmers and plants, the coffee farm is where the journey begins. Farmers tend to the coffee plants and harvest the coffee cherries, usually by hand. Next, they separate the bean from the outer shell either by drying the beans in the sun or washing them in a pulping machine. Once dry, the beans have a greenish colour and are called ‘green beans’. It’s in this state they are usually transferred to the coffee factory or exported.

Roasting Time

The most important phase of coffee production is roasting because this is when the flavours and aromas are released. But before the green beans can be roasted, the different mixes, or blends, of coffee beans need to be created. By combining different types of beans it’s possible to create different tastes in the resulting coffee.

Depending on the roasting equipment and the desired flavour of the coffee, green beans are roasted at between 180°C and 240°C for between three and 12 minutes.

Ground and Brewed

Before it can be brewed, the roasted coffee must be ground. Grinding increases the surface area of the coffee, allowing the flavour to be extracted more easily. To make instant coffee, the ground coffee is brewed and then dried. The drying can either be hot, in a spray drier, or cold, in a freeze drier. Finally the coffee is packed and sent to the stores.

Cofee Growing Regions

Coffee is grown in Africa, Asia and Latin America, in a so-called ‘coffee belt’ that encompasses the tropics. Brazil is the biggest producer, followed by Vietnam and Colombia.

Some countries specialise in one type of coffee bean. Robusta coffee is grown from sea level to about 800 meters, mainly in Vietnam, Brazil and Indonesia.

Arabica coffee grows at a higher altitude, usually above 800m and up to 2500m. Brazil, Colombia, Ethiopia, Central America, Mexico, India and Eastern Africa are among the best-known Arabica producing regions.

Coffees have typical regional tastes, influenced by soil and weather conditions. Costa Rica produces a mild coffee with nutty flavour, while Indonesian coffee has a thick, mellow character. Ethiopian coffee is prized for its smooth strong flavour.

Making NESCAFE?

The unique NESCAFÉ process starts with selecting green coffee beans. Each step of the production is carefully controlled and monitored to ensure the best quality.

After blending the green coffee beans, they are roasted at the best temperature for the right amount of time to achieve the desired taste and aroma profile. Next, the beans are ground and brewed. The coffee extract then goes through an evaporation and drying process that turns it into granules or powder: that’s the coffee you use to make a satisfying cup of NESCAFÉ.

But for us, creating great coffee is more than just providing the best quality in a cup. We place value on coffee that’s made with respect to the environment and to people. Our attitude is embodied in the NESCAFÉ Plan, a global initiative that supports responsible farming and sustainable production of coffee.

Sony Corporation :

SONY is a Japanese multinationalconglomerate corporation headquartered in K?nan, Minato, Tokyo. Its diversified business includes consumer and professional electronics, gaming, entertainment and financial services. The company is one of the leading manufacturers of electronic products for the consumer and professional markets. Sony was ranked 105th on the 2017 list of Fortune Global 500.

Sony Corporation is the electronics business unit and the parent company of the Sony Group which is engaged in business through its four operating components: electronics (AV, IT & communication products, semiconductors, video games, network services and medical business), motion pictures (movies and TV shows), music (record labels and music publishing) and financial services (banking and insurance). These make Sony one of the most comprehensive entertainment companies in the world. The group consists of Sony Corporation, Sony Pictures, Sony Mobile, Sony Interactive Entertainment, Sony Music, Sony Financial Holdings and others.

Sony is among the semiconductor sales leaders and as of 2016, the fifth-largest television manufacturer in the world after Samsung Electronics, LG Electronics, TCL and Hisense.

The company's current slogan is BE MOVED. Their former slogans were The One and Only (1980–1982), It's a Sony (1982–2002), like.no.other (2005–2009)[19] and make.believe (2009–2014).

Sony has a weak tie to the Sumitomo Mitsui Financial Group (SMFG) keiretsu, the successor to the Mitsui keiretsu

Major Components of Their Production Process :

Porter's generic strategies

Michael Porter suggested a firm's ultimate strength resides in cost advantage and differentiation. The organizations profit is based on the difference between sales and costs. Therefore more profitability can be achieved by less costs or high sales among the competitors. His strategies are as follows:

Cost

Differentiation Focus

Cost Focus

Differentiation

Product Line:

Product Line is the total set of products and services in which the company offers .The product line of the Sony Corporation as listed below

Television and Home Cinema

VAIO Computing

Digital Cameras

Printers and Photo frames

Camcorders

Hi-Fi and Home Audio

MP3 Players and Portable Audio

Car Audio

Reader eBook

Sony Ericsson Mobile Phones

PlayStation

Recording Media and Batteries

Accessories and Headphones

Television and Home Cinema:

Sony has produced wide range of Home media products based on purpose, style, model and performance. Sony targeted customers in segmentation strategy and are listed as follows:

LCD, LED, 3D Television

Home Theater

DVD and Blu-ray Disc

Projectors

Compatible Accessories

Pricing Methods of Sony Corporation:

The pricing methods are of three types such as based on the Product cost, Competitors product and products marketing [1]. Sony products are mainly based on products cost and Competitors product and rarely on products marketing.

Calculation of it’s Unit Cost :

Pricing Strategies of Sony:

There are different strategies for pricing which are premium pricing, economy pricing, product line pricing, psychological pricing, captive product pricing, optional product pricing, value pricing, geographical pricing, product bundle pricing, and promotional pricing [1]. But Sony follows the below pricing strategies:

Premium Pricing

Economy Pricing

Psychological Pricing

Product Line Pricing

Premium Pricing:

Sony's core products such as Television, Laptops, Home theaters are premium priced. Some of premium prices products as follows:

TVs: Ranges from £250 to £3000 according to the various model and functional capabilities

VAIO Laptops: Ranges from £250 to £2500 depending on various types and performances

Projectors / Home Audio: Ranges between £150 and £1800

Source: http://store.sony.com/webapp/wcs/stores/servlet/StoreCatalogDisplay?langId=-1&storeId=10151&catalogId=10551

Economy Pricing:

Sony Corporation follows economy pricing for some competitive products with less price and great quality, such as:

Digital Cameras / MP3 Players: from £100 to £1800 and for MP3 Players - £35 to £450 with great audio quality

Car Radios

Mobiles (Sony Ericsson)

Source: http://store.sony.com/webapp/wcs/stores/servlet/StoreCatalogDisplay?langId=-1&storeId=10151&catalogId=10551

Product Line Pricing:

Sony released many products and its sub-products based on their performance and style. For Example Sony VAIO and TV has many products based on their types and they prices according to the features such as LED, LCD, 3D etc.

Psychological Pricing:

The Sony Corporation also implements psychological pricing strategy to their products to attract the consumers psychologically. For example, their products - Digital Cameras ranges £199 instead £200, MP3 ranges from £49 instead of £50 and TVs from £279 rather £280 etc.

Source: http://store.sony.com/webapp/wcs/stores/servlet/StoreCatalogDisplay?langId=-1&storeId=10151&catalogId=10551

Penetration Pricing:

While Sony Corporation launching some new products, the prices are kept low in the beginning without decreasing the quality of the product in order to capture the market. For example, some model of VAIO laptops ranges £300 to £500 approximately, the price will be increased later depends on the demand for the product.

Skimming Price:

Sony's uses skimming price strategy on some products where the customers who will focus on the cost of the product by keeping high prices and later the prices are decreased. For example - MP3 Players prices £450 and digital cameras prices £1800.

Promotion Mix:

The promotion mix includes some key characteristics which helps to promote the products and are as follows [2]:

Advertising

Personal Sales

Direct Sales

Sales Promotion

Public Relations and Publicity

Internet Promotion

Source: Principles of Marketing, 13th Edition, Philip Kotler, Gary Armstrong

Sony's Promotion Mix:

Advertising:

Sony Corporation spends $3.8 billion every year in advertising in its products to push it to the customers and pull them towards the products. Sony Corporation advertises in many different ways. For example, its core products - TV and laptops are usually advertised through media and they sponsors in football league games to promote their PlayStation etc.

Direct Marketing:

Sony promotes its products directly to the customers by various strategies as follows:

Telemarketing: Sony spends in call centers companies to promote their products throughout bound and in bound call centers.

Direct-Response Advertising: By providing Sony coupon directly to the customers and gets their feedback

Catalogue Marketing: Sony frames the products catalogue and promotes their new products to the customers.

Electronic Marketing: A wide range of advertisement in Internet, E-mails etc.

Inserts: By dropping the Sony leaf lets in magazine and door-to-door.

Sales Promotion:

There are of two types

Consumer Promotions [2]: Sony promotes its products by giving Money off, Seasonal offers during summer time, New Year eve, Christmas offers etc.

Trade Promotions [2]: Sony provides allowances, warranty and other free services for premium products only.

Public Relations and Publicity:

Sony maintains good public relations and publicity by its social and eco activities. Sony have involved in sponsoring the educational institutions and by implementing the activities which helps to attain the healthy ecological environment. The company followed all legal activities and maintains a good relationship with the government. These news which helps to improve the brand image of the company, indirectly advertises and promotes the company products.

Source: http://pro.sony-asia.com/section/articles

Personal Selling:

The products in which are directly sold to the customers are called as personal selling. Sony follows this strategy by selling its products directly to the customers through Sony store, which is in the Sony's website.

Sony's Place Mix:

The marketing strategic decisions on distribution of the company products should focus on the competence of the customer needs and products quantity. There are four main types of distribution channels and they are as follows [1]:

Producer - Consumer

Producer - Retailer - Consumer

Producer - Wholesaler - Retailer - Consumer

Producer - Agent - Wholesaler - Retailer - Consumer

Source: Principles and Practice of Marketing, 5th Edition, Jobber and Page No: 682