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Week 8 Assignment 4 Submission If you are using the Blackboard Mobile Learn iOS App, please...

Week 8 Assignment 4 Submission

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Assignment 4: Win the Contract
Due Week 8 and worth 120 points

Imagine your small business produces tiny remote control aircraft capable of long sustained flights. You are ready to expand your business by competing for Department of Defense (DoD) contracts. You wish to bid on a deal that will be worth over $600,000 to your expanding company.

Write a two to three (2-3) page paper in which you:

Select the simplified acquisition method that fits your company the most, and then provide a rationale for your selection. Note: Remember you are a small business that will have a massive expansion if you win this contract.

Analyze all parts and sections of the uniform contract format that could present a problem in this scenario. Suggest how you will adjust your approach to turn the problems you have identified into strengths for your small company.

Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.

Your assignment must follow these formatting requirements:

Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

Assess the simplified acquisition methods.

Differentiate between the parts and sections of the Uniform Contract Format.

Use technology and information resources to research issues in contract administration and management.

Write clearly and concisely about contract administration and management using proper writing mechanics.

In: Finance

Morning Sky, Inc. (MSI), manufactures and sells computer games. The company has several product lines based...

Morning Sky, Inc. (MSI), manufactures and sells computer games. The company has several product lines based on the age range of the target market. MSI sells both individual games as well as packaged sets. All games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand controls. To date, MSI has developed and manufactured all the CDs itself as well as the accessories and packaging for all of its products.

The gaming market has traditionally been targeted at teenagers and young adults; however, the increasing affordability of computers and the incorporation of computer activities into junior high and elementary school curriculums has led to a significant increase in sales to younger children. MSI has always included games for younger children but now wants to expand its business to capitalize on changes in the industry. The company currently has excess capacity and is investigating several possible ways to improve profitability.

MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bid from Monte Legend Co. (MLC) to produce 25,000 units of the module per year for $22.00 each. The following information pertains to MSI’s production of the control modules:


Direct materials	$	13
Direct labor		6
Variable manufacturing overhead		2
Fixed manufacturing overhead		8
Total cost per unit	$	29

MSI has determined that it could eliminate all variable costs if the control modules were produced externally, but none of the fixed overhead is avoidable. At this time, MSI has no specific use in mind for the space that is currently dedicated to the control module production.

Required:
1. Compute the difference in cost between making and buying the control module.

Difference in Cost:

2. Should MSI buy the modules from MLC or continue to make them?

	Buy
	Make

3-a. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $41,000 in annual profit. Recompute the difference in cost between making and buying under this scenario.

Difference in Cost:

3-b. Does this change your recommendation to MSI?

	Yes
	No

In: Accounting

Account for the lack of success of a new product with reference to the following stages...

Account for the lack of success of a new product with reference to the following stages of new product development.

Concept Development

marketing strategy

test marketing

In: Accounting

Explain how corporations have adopted the Ecommerce as part of the strategy to expand its operations...

Explain how corporations have adopted the Ecommerce as part of the strategy to expand its operations over new customers or new geographic areas.

In: Computer Science

What were the traditional ways of doing marketing research and what are some of the new...

What were the traditional ways of doing marketing research and what are some of the new ways? What are the benefits of the new ways of conducting research?

In: Operations Management

What would a potential new price/payment method be that could be revolutionary? If a company is...

What would a potential new price/payment method be that could be revolutionary?
If a company is operating at a deficit, but has happy customers, what would the best strategy be to make money?
Why should a company’s pricing strategy reflect their core values ?
Should consumers make it a point to review a company’s core values before investing?

Product pricing is one of the most important determinants of company success. A product’s market price must account for numerous competitive factors, including research and development costs, target market size, lifetime customer value, marketing and acquisition costs, and competitive positioning. Yet for all the complexity involved in determining ideal pricing, a Chargebee and ProfitWell survey of software founders and executives found that companies spend an average of just 12 hours on their pricing. Not 12 hours for each product — just 12 hours total in the history of the company.

One reason for the disconnect between pricing’s impact and the time invested could be difficulty in understanding pricing strategies. As recently explained in a guide by Cobloom, the software as a service market employs a variety of pricing models (e.g., flat rate, usage based and tiered), strategies (e.g., free trials) and psychological pricing tactics that impact how buyers process pricing information. Such psychological tactics include tricks like charm pricing (featuring amounts that end in nine, such as $39 instead of $40) and decoy pricing that places an obviously less desirable option among three bundled packages to increase the perceived value of the other options.

While these strategies might seem obvious or purposefully deceptive, they continue to be used, because they work. Research has found that decoy pricing generates additional revenue. And if you think no one falls for charm pricing, guess again. A famous study by researchers at the University of Chicago and MIT found that an item of clothing marked $39 outsold identical items priced at $44 or even $34.

As CFO, I focus on developing pricing that supports customer acquisition and long-term fiscal stability. But as part of a purpose-driven leadership team, our product pricing is also viewed through the lens of our corporate values considering shared customer value and sustainability. While we are absolutely driven by revenue, we also gut check our decisions against core company values. Below are some of these values and how they can help your company’s own pricing strategy.

1. Put customer value first.

Many of the widely used technology pricing strategies focus heavily on company revenue and internal metrics rather than end-user value. As an example, many companies take the simplified approach of calculating their product development and production costs and then adding their desired margin, and they use that information to set pricing. Unfortunately, this model is based entirely on internal metrics that have no connection to customer preference, price sensitivity or even competitive pricing. Another widely used example is pay-per-feature pricing. This model relies on a core set of features to entice new customers and adds charges as users evolve and want more advanced functionality. While it offers companies a reliable growth channel, this kind of pricing tends to create resentment with users who are paying for a product and can’t access all of its features.

Putting customer value first requires an innovative, research-based approach to understanding how end users will be using your product, as well as flexibility in designing pricing structures to take into account different product usage rates and feature consumption between departments and locations. Some examples of innovation in pricing include companies such as Amazon Web Services, Uber or Airbnb with prices based on actual usage. The only drawback to this approach is it can lead to higher-than-expected bills when customers need to add capacity or service during popular or “surge” time frames. And while these strategies might work for the vendor, research indicates consumers and technology buyers prefer the simplicity and predictability of flat-rate pricing

2. Keep your pricing promises.

In 2011, Netflix lost 800,000 customers after an unexpected price hike and service change. Based on backlash, the company quickly reversed the change. Earlier this year, history repeated itself as new subscriber acquisition slowed and Netflix announced a new price increase, followed immediately by a stock price plummet and the loss of more than 126,000 subscribers. Customers usually don’t react well to paying more without a significant increase in features, usability or overall value — a lesson many freemium-driven companies are finding out the hard way. Although there are some success stories, such as Spotify’s impressive freemium-to-paid conversion rate, sticking with your pricing strategy in the long term can be as important as the strategy itself when it comes to customer retention.

3. Lead; don’t follow.

Most new companies founded today will enter a market with existing competition. As a leader focused on consumer value, I would challenge you to do your customer research and set your initial pricing based entirely on your unique offering and reason for being. Only then look at the rest of the market and determine how your choice will support or ensure success. When our company launched conference-calling services more than 20 years ago, there was significant competition in the space charging hundreds of dollars per month to deliver services to big corporate clients. Our founder looked at the market from the consumer point of view and found a way to deliver services for free while still generating revenue from carrying calls on our network. Other examples of pricing leadership include Slack, one of the pioneers of charging based on active users, and Creately’s albeit-short-lived “pay whatever you want” experiment.

No single decision can have a more far-reaching effect on company success than pricing. But pricing decisions should always be considered holistically as part of a long-term, value-based model. Pricing strategies that leverage who you are as a company and what you value create a foundation of mutual benefit that helps everyone from your customers and partners to your shareholders and employees.

In: Operations Management

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of...

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:

Sales $ 22,440,000
Variable expenses 14,094,600
Contribution margin 8,345,400
Fixed expenses 6,130,000
Net operating income $ 2,215,400
Divisional average operating assets $ 4,480,000

The company had an overall return on investment (ROI) of 18.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,430,600. The cost and revenue characteristics of the new product line per year would be:

Sales $9,705,000
Variable expenses 65% of sales
Fixed expenses $2,591,710

Required:

1. Compute the Office Products Division’s ROI for this year.

2. Compute the Office Products Division’s ROI for the new product line by itself.

3. Compute the Office Products Division’s ROI for next year assuming that it performs the same as this year and adds the new product line.

4. If you were in Dell Havasi’s position, would you accept or reject the new product line?

5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line?

6. Suppose that the company’s minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income.

a. Compute the Office Products Division’s residual income for this year.

b. Compute the Office Products Division’s residual income for the new product line by itself.

c. Compute the Office Products Division’s residual income for next year assuming that it performs the same as this year and adds the new product line.

d. Using the residual income approach, if you were in Dell Havasi’s position, would you accept or reject the new product line?

1. ROI FOR THE YEAR		%
2 ROI FOR THE NEW PRODUCT LINE BY ITSELF		%
3 ROI FOR NEXT YEAR		%

4. ACCEPT/REJECT?

5. Adding the new line would increase the company's overall ROI.
Adding the new line would decrease the company's overall ROI.

6.

1	RESIDUAL INCOME FOR THIS YEAR
2	RESIDUAL INCOME FOR THE NEW PRODUCT LINE BY ITSELF
3	RESIDUAL INCOME FOR NEXT YEAR

6D- ACCEPT OR REJECT?