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Saint MBA565 final exam




Question;1.;Buzz can be created in a variety;of ways, for example, advertising. Explain how advertising can be used to;generate buzz. What are some of the dangers of this method? (Points: 100)Question;2.2.?Listen, elasticity is important,? said the director of the;aquarium, ?but we borrowed $21.6 million (for 20 years, other fixed costs are;$10,000 per month, total fixed costs per month are $100,000) to build the;aquarium last year. We need to set a price of $16 to be able to pay our debt;since variable costs are four dollars per person, and we use a standard markup;of 300% of variable costs (current price is $12). I've already reduced my;promotion budget to pay the debt. If last month's attendance is any indication;(only 10,000 customers), we will have to raise prices and maybe eliminate;promotion. We can estimate elasticity when the debt is paid, although I don't;think it is important since we are the only aquarium within 150 miles.;Furthermore, there are 4,000,000 people in the metropolitan area. If 50% of;them visited the aquarium once (at $16 per person), we could pay off our debt;immediately.?;Do you agree or disagree with the director's approach? Explain.;Note: The aquarium is open 30 days per month, eight hours per day. Do not limit;your answer to price alone.Secondary data (comparable city?s aquarium)Question 3.3.Gobi;Inc. has sales of $40,000,000. The contribution margin is 40% and the fixed;costs are $3,000,000. The variable cost per unit is $12. The company is;considering two different strategies for increasing their profits;1.;Spend;$2,000,000 in advertising, the results is expected to increase the;company?s sales by 25%;2.;Reduce;the price by 20%, the price-demand elasticity is -3.0;Which of the two strategies will;generate the highest overall profits? Show all calculations! (Points;100)


Paper#47028 | Written in 18-Jul-2015

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