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These are sample problems from an exam - attached is are the case facts. I need to start answering the following questions. I am looking for some solid cost accounting strategies:
1. What has been happening in this market? How is Sealed Air doing?
2.What arguments can be made for introducing an uncoated bubble? What would the CEO think of these arguments?
3.What would be the major problems to overcome if Sealed Air were to introduce uncoated?
4. Propose an introductory marketing program which overcomes these problems.
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COST ACCOUNTING STRATEGIES FOR THIS PROBLEM
First, in every cell the cost accounting strategy tries to calculate the cost of packing, shipping and breakage and reaches the conclusion that Air Cap is more economical than the other product which the company is using and so the company should change over to Air Cap. However, this strategy does not work always as can be seen in the case of College-Craft Glassware. Also in case of Ford authorized Parts New England Distribution the sales person of Air Cap managed to show that the company would be spending only 10% of the money it spent on peanuts, if it used LO-22. Yet the potential customer was not interested. The Air Cap strategy worked in case of National Electronics Wholesalers Inc. because they wanted the returned parts to be in good condition. This is again being justified by the case, as a costing perspective but it may not fully be so. The company may be genuinely interested in getting the products back. Noritake Dinnerware (Japan) began using SC-120 and it did not want large damage rates.
WHAT IS HAPPENING IN THE MARKET?
There are several new competitors in the market and they are introducing new products, like uncoated bubbles for which complicated cost accounting analysis don't have to be shown to prove that they are cheaper. These new competitors are claiming.
1. Their products are cheaper.
2. They lower the cost directly and not in an indirect manner.
3. They provide the same level of protction which is being offered by Air Cap
4. These competitors are being believed.
5. The customers are accepting the new products because the companies have to pay less cash for these products.
6. They are increasingly feeling that Air Cap is outdated and is too expensive to use.
7. That Air Cap is not a product for their business.
8. It is only some businesses which are over worried about their products and its packing who are willing to shell out extra money for the Air Cap.
ARGUMENTS FOR INTRODUCING UNCOATED BUBBLES? CEO'S OPINION
1. The need for the customers is that of uncoated bubbles.
2. The customers are looking for the bubbles that look good and are not very expensive.
3. To protect the current market of Sealed Air Corporation from getting eroded.
4. To prevent competitors from getting a stronghold in the market pioneered and dominated by Sealed Air Corporation.
5. To maintain the level of sales revenue/ increase the sales revenues and realize greater profits.
6. The CEO may take exception to providing inferior products to the customers.
7. However, being market oriented means not just providing good products to the customers, but also providing. those products which the customer needs. In the segments that have been earmarked "Sealed Air Corporation is not successful" the reality is that Sealed Air Corporation is not fulfilling the needs of those customers.
MAJOR PROBLEMS TO BE OVERCOME IF SEALED AIR WERE TO INTRODUCE UNCOATED BUBBLES
1. The repositioning of the brands Sealed Air Corporation is the first problem.
2. The difficulty with convincing the customers that the company which had always harped on the benefits of Air Cap is now selling low cost bubbles.
3. The problem of competing on price. The new customers of Sealed Air Corporation will expect it to offer competitive prices of Air Bubble, however, given the current state of Sealed Air Corporation it seems unlikely that it will be able to supply uncoated bubbles at lower prices
INTRODUCTORY MARKETING PROGRAM.
1. High value, low price and high profit with high volumes should be the new lesson for Sealed Air Corporation
2. The uncoated bubbles should be of higher quality than those of competitors,
3. The uncoated bubbles should be priced lower than those of competitors.
4. The company should reduce its cost of production and eliminate unproductive overheads.
5. The company now has to face the reality of cost competition. Whereby it can earn profits by producing large volumes at lower prices.
6. The company should introduce the product with a focused campaign of advertising in trade bulletins and sales efforts.
7. The sales persons should stress the lower price of Sealed Air Corporation product along with the high value provided by it.
8. The company has to turn more customer oriented whereby it serves the need of the customer and ...
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