Thomas established the business when the economy was in arecession and at that time he had recognized a need for affordableservices and goods. Back then, consumers were price sensitive,salaries were low, and discretionary income was falling. Thomaslead the local market and started providing food goods that werepriced relatively cheaper than comparable products sold bycompetitors. Thomas does acknowledge though that his products wereof a slightly lower quality, nevertheless he was meeting clients’needs.
The formula proved successful for Food Master and the companyexperienced tremendous growth during the recession. While rivalswere losing sales, Food Master gained a strong loyal following,capturing a greater share of the market, and opening new stores.Thomas’ strategy of cutting costs at the expense of quality workedwell, and he was very pleased with the results.
Presently, the economy is expanding, consumers are enjoyingprosperity, unemployment is shrinking, and real disposable incomeis rising. The shift in the business cycle is obvious, and nobodyfeels the cycle better than Food Master. You meet with Thomas andsuggest that the time is right for a repositioning strategy to keepthe current customers satisfied and to continue to growprofitably. Thomas agrees and, as a starting point, asks you toproduce a summary of the sales breakdown by product type.
- The Economic Outlook Is Changing And Food Master Is Facing Tough Decisions Thomas Is Thinking About Shifting The Produc 1 (17.32 KiB) Viewed 11 times
Explains what is meant by the business cycle
Explains what is meant by normal, inferior, and luxurygoods. State why businesses must care about the type of productsthey carry.
Analyzes Food Master’s current situation and recommend thebest course of action.
Product Type Normal goods Inferior goods Luxury goods Current percentage of Sales 15% 80% 5%