PDA Slim Part 2 Essay Example | Topics and Well Written Essays - 1000 words

PDA Slim Part 2 - Essay Example The strategy chosen implied decreasing the price of the X5, raising the X6 price and raising the X7 product price. The X5 product is entering the latter part of its growth phase thus a 10% price decrease was used, the X6 was increased by 10%, while the X7 price was increased by 20%. The reason for the greater increase in the X7 product was that the product shown negative profitability thus the price had to be increased enough to turn the product line into a profitable one. Based on the original information no product would be discontinued. The allocation of R&D budget strategy is based on giving more money to product with the greatest potential and under saturated markets. Allocation of R&D budget for each of the products was: X5 =15%, X6=50%, X7=35%. Tbe result for the first round was a total profit of 328.2 million. Both the X5, and X5 profits did very well with over 150 million of income each. The X7 profits were -$3.3 million. The X5 product more than double in total revenues, with profitability going up The market saturation of this product went up to 53%. The strategy seemed to work wonders as far as drastically increasing the revenue stream from this product. The X6 product market saturation went up to 33%, while its revenue growth went down 18%. The profitability of the product improved by 7%. The performance of the X7 product was lackluster. Its overall revenues went up a moderate 8%, while its profitability improved by still remained at a -6% level implying an unprofitable operation. The second round followed the same exact strategy with the same weighted distribution. The results from the first round seem very good, thus I continue with the formula. The results were not what I expected. The major problem was that the 10% decrease to the X5 handeld caused an accelerated movement in the product life cycle. The price movement caused the market saturation to reach 98%. The

International Business Expansion to South Africa Coursework - 1

International Business Expansion to South Africa - Coursework Example It is also seeking to enter an international joint venture with SAPumps to repair and/or produce components and parts. This paper examines these major events in-depth and gives RRP advice on how to proceed with its international expansion drive. In the first part of the paper, we examine the risks involved in the contract RRP has with its existing sole agent, Agent B and the consequences it will bring to the company if it signs a contract with the new agent, A. It goes further to examine how the company can use commission rates, flexibility, and agency arrangements to control A’s performance. In the second part, the research examines the foundations and structures of the new international joint venture that is on the verge of entering with SAPumps. It looks at how inventory will be treated, customer relations and the contract structure as well as marketing and distribution of the final products. The issue with Agency B is a very complicated one. Agency B has the sole agency rights for RRP in South Africa. This makes them the only agency that can source for projects in South Africa for RPR. If care is not taken by RPR, it could get involved in a breach of contract with Agency B if it goes ahead to sign this contract with Agency A. If this happens, Agency B will be entitled to claims for damages. Secondly, if RRP goes ahead to sign this contract with Agency A, granting it exclusive rights without a proper care with regards to the agreement with Agency B, Agency A will not get access to the exclusivity it desires. This could also pose legal problems for Agency A and B in their operations in South Africa. This arrangement is a principal-agency arrangement in an international context. A principal-agent relationship exists when a party pursues to direct the actions of the opposite party to his own ends for mutual benefits like shareholder-manager and employer-employee relationships (Jager, 2008).