business

Optimal name of companies and search engine positions

Optimal name of companies and search engine positions

I saw this skip for hire and it made me nostalgic for a pre-internet era? Why. Before the internet, most people would order a skip by looking through the Yellow Pages (a telephone directory for companies – ordered by type of business. For something like ‘skip hire’ – It’s the kind of business where you didn’t have much information to go on. There are certainly no reviews ready to read. It was a case of ringing up companies on a landline and…

Cash reserves of companies

Cash reserves of companies

In recent years, major companies have seen a significant rise in cash reserves. These are profits which are not re-invested or distributed to shareholders, but effectively saved. The largest cash reserves are found amongst major US IT companies, such as Apple, Microsoft and Google. These cash reserves have significant implications for economic welfare and income distribution in society. Some economists see these cash reserves as effectively deadweight welfare loss. The $2 tn of reserves sitting in unproductive ‘offshore’ accounts, rather than being reinvested into the economy. Net cash reserves Note: net cash reserve…

Problems of declining industries

Problems of declining industries

Economies are constantly evolving. Industries which once employed many people and were very successful can later become uncompetitive and unprofitable. The UK has seen the rise and fall of many manufacturing industries. Industries such as, cotton, wool, coal and ship-building were once key aspects of the UK economy, employing thousands of people in dense areas, but over time they lost their former dominance and now are just shadows of their former selves. For example, the UK coal industry used to employ over a million men in 1920. Today, the…

Evaluate methods to avoid product failure?

Evaluate methods to avoid product failure?

Product failure is when a new product is launched but fails to gain sufficient sales and market sales, resulting in a net loss for a firm. To understand product failure, it is good to look at a few examples of product failure. (Top 20 product failure here) Some of these examples, give very simple methods to avoid product failure. Colgate frozen foods – Lesson: Don’t mix brands Colgate is one of the strongest brands of toothpaste. The simple logo is indelibly associated with brushing…

Private label brands

Private label brands

Private label brands (or own brand labels) are products sold by a retailer with its own packing, but manufactured by a third party. For example, Tesco sell ordinary branded items, such as Heinz baked beans, but also sell their own ‘Tesco Value’ baked beans. Tesco will license a manufacturer to produce baked beans and then sell the product with it’s own label. The big advantage of private label brands is that they do not include specific marketing costs; also, if a supermarket has an exclusive deal, average transport costs can…

Niche products

Niche products

A niche product is a product targeting a specific section of a larger industry and market. Niche products are often (but not always) more expensive than more generic products. Because niche products are fulfilling a particular specialist demand, we find that demand tends to be more price inelastic. This enables a firm selling niche products to generate a higher mark-up and profit margin – this can compensate for the lower volume. Niche products can be provided by  multinational companies, but they also give a better chance…

The battle for market share in UK supermarkets

The battle for market share in UK supermarkets

The UK grocery market has become increasingly competitive in the past few years. It is a good example of an oligopoly becoming more competitive. Certainly the growing strength of discount giants like Aldi and Lidl have really shaken up the market and diluted the cosy oligopoly previous enjoyed by the likes of Tesco and Sainsbury. To further add interest, Pound shops are also gaining market share and nibbling away at the margins of the big supermarkets. For consumers it is largely good news…

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Discuss why firms grow in size

Most firms seek to become bigger – increasing sales and market share. Firms can grow through internal expansion, external growth (merger) or diversification into related industries. The motives for increasing in size can include: Greater sales lead to greater profit, making the firm more attractive to shareholders Successful, growing firms are likely to increase salaries / pay bonuses to managers. Increasing output enables economies of scale, greater efficiency and lower average costs. Increased prestige for managers seeing the firm become more influential and powerful. Greater risk diversification, e.g. when growth comes from product diversification. Growing…