QUESTION NO 1:
(A). Identify factors that affect budgeting process at Network Computing Devices, Inc.
- The first factor is the general economic condition that will influence industry demands and seeks for computer products, that’s mainly may due to; products and related merchandise amount, customers’ palate and priorities along with their anticipations and revenue. Sometimes financial and economic problems and crises could appeared around the world and that may result in a decline in company products orders that requested by the customers. Economic conditions are considered to be sound or positive when an economy is expanding, and are considered to be adverse or negative when an economy is contracting (http://www.investopedia.com, 2014). The company here need to be aware and very careful from these problems not to harm their budgetary planning along with not to lose the competition against others.
- Next one is the market acceptance of new products that presented by the company and its competitors. Marketing acceptance defined by (http://www.businessdictionary.com, 2014) as; condition in which a good or service satisfies the needs of a sufficiently large number of customers to continue or increase its production or availability. Products are required to be suitable with current practices and correspond with customers’ sitting conditions. Companies also in need to find the particular markets that be content with new inventions and bypass substantially or financially hazards that may come with. Also they are required to avail an unfilled customer demands. In many cases some companies generate and distribute new product that had new and special specifications in particular markets, but these products are not desirable and suitable i...
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...or more competitive in those markets. For example; for most of the 1990s, the U.S. dollar appreciated against most of the other world currencies. As the dollar increased in value, U.S. companies doing business in other parts of the world saw their profits, earned in other currencies, decrease when converted to dollars (Folsom & Boulware, 2009, p. 172). This problem is more famous in the third world countries that had weak to medium economic situation and suffered from improve or decline in the value of their local currencies against the US dollar in some particular periods. The company here are required to do some special arrangements to deal with that condition every time is happen. For instance; they can reduce their prices or make some discounts when this situation take place to remain compete in the markets against other local or even international organizations.
For example, on March 30, 2015 the exchange rate between the Canadian and US dollar was $1.2690/US$, and on March 31, 2015 the exchange rate was $1.2677/US$. Due to the fact the US dollar appreciated against the Canadian dollar, the revenue recorded on the consolidated statements of earning would be at a higher value on March 31st than it would have been on March
PC industry is affected by two opposite forces: technological advance that pushes the industry forward and the industry sensitivity to economical stagnation (if the economical situation is bad customers won't upgrade their computers).
Capital requirements to set up an assembly line to produce PC's are also relatively low, estimated at roughly a million dollars (Rivkin & Porter,1999 pg. 5) which means that virtually any firm can enter the market easily. Despite sky rocketing demands for PC's, PC producers are unable to capitalize due to increasing number of competitors. The PC industry is also affected by environmental turbulence due to price fluctuations of its components. Constant innovation in PC technology causes older components to be rendered obsolete and prices of older versions to plummet. PC producers who are stuck with inventory of obsolete products incur high costs of dumping these components.
The smaller table shows how strongly the local currency is either undervalued or overvalued against the US dollar. These valuations can be used to predict the appreciation or depreciation of a particular currency. Therefore it could be a reasonable factor to consider for the financial managers. Knowing how a particular currency would move in the future on the foreign exchange markets could prevent the managers from making decisions that might lead to a loss because of the fluctuations of currency in which most of the corporations transactions are settled.
The company is still experiencing growth, but has a potential for expansion in making allowance for production costs and new products upon which the company depends. Economy is a key factor for IBM growth. The company should introduce marketing strategies that appeal to capital conscious individuals. The future of the company depends on their understanding of production costs and marketing strategies. In order to achieve the goals, the company will need to develop aggressive external forces . The company will face challenges, such as rising production cost that may affect their customer base and the company profit.
...f you know that currency that you are dealing with fluctuates by about 3 percent per year to USD, then you could easily charge 3 percent more for the product or services you offer in that country, in the USA particular to my example. By charging 3 percent more, you will get a baseline price if the currency will decline by 3 percent, and if the currency declines less than 3 percent ,the company will get an extra income. No one knows the best practices on how to mitigate the exchange risk, but still every company has some strategies that they can implement to decrease the risk and increase the profit. Overall, the foreign currency exchange risk is just something that every business should be able to deal with in a global economy, as long as they are not afraid to accept strategies that sometimes will take a little longer to see the results or they can failed in fact.
Product. Companies that follow this approach try to create a consumer product or service that is supposed to be unique or better than that of the competitor 's. Uniqueness or some upgrades in the product were believed
The appreciation of currency implies the loss in its value, in relation to the currency of another country, or several currencies. Market forces, which tend to increase the exchange rate, are responsible for the depreciation of the US dollar, which is the currency of focus in this discussion (Zhang). Whenever there is a depreciation recorded in terms of the US dollar, the value reduces such that one will require more US dollars to make a purchase of a unit of the other currency with which it is exchanging, such as the Euro. In the event of the depreciation of the US dollar in relation to the Euro, the US dollar’s competitiveness increases. The reason for this increased competitiveness is the fact that the price of the goods from the United States will appear cheaper to the nations that use the Euro such that the exports level will
As customer is the core focus of the marketing and all activities depend on the customers. The organization aims to understand the needs of the customers, then develop the strategy of the marketing of the specific goods and this strategy is from development of the product to sales of the product. After the sales has begun, a market suvey will be conducted in order to understand the feedback of the product and then it would be known that further changes need to have for further development. Since there is a lot of competition in the manufacturing business in the market, so the process of development of products is ongoing and changes in the already manufactured goods are required
Today’s products in the market targets necessities of tomorrow’s market. The product which is performing low today may become competitor tomorrow. This will occur when technology development is in much faster pace than what a customer is expecting. If the performance or value proposition offered by competitors has improved throughout the years the choice will be positive to product which is reliable. The companies which monitors and back tracks the needs, usage and trends of their mainstream consumers will catch the success changing the aspects of being along with competitors in the market.
Economic risk is another type of exchange risks companies have to consider when dealing globally. Changes in exchange rates are bound to affect the relative prices on imports and exports, and that will again affect the competitiveness of a company. An UK exporter dealing with companies in the US would not want the US$ to depreciate, because it would make the exports more expensive for the US market, thus the company will loose business.
Overall, the computer industry is relatively attractive. The potential for future growth is high but new competitors must face the threat posed by already established, well-known brands. There are relatively few substitutes for computers and the power of suppliers and buyers is low. New companies would likely be able to successfully yield a profit. Companies have been relatively successful in this industry throughout its history. It is important that all firms in the industry are able to keep up with ever changing cutting edge technology, however.
One must look at the economic environment and how it will affect the launch of the product. One must look at:
emerging or new market. It can originate from new technology or new market opportunities (Eliashberg, J., Lilien, G. L., & Rao, V. R. 1997). Literature defines product development as exploiting an untapped market opportunity and turning it into a value product for customer satisfaction. Development and introduction of a new product requires extensive research on understanding customer needs, market structure, emerging trends and analysing the internal & external competitive market environments. To evaluate customer satisfaction previous researches provide strong relationship between customer satisfaction and product quality, product features and value for money. ***
The foreign exchange market is one of important mechanism in the international business because foreign exchange is an intermediary for all nations in term of the growth of the economy. There are many functions of foreign exchange market in the global economy. In the international business, it uses the foreign exchange markets in four ways. First, the pay...