business

Clever ways for firms to increase prices

Clever ways for firms to increase prices

Supermarkets and other retailers often seek ways to increase the price without losing customers. They have a few different options, depending on the good and its price elasticity of demand. In recent months, many supermarkets have managed cost increases by shrinking the size of the packet. Prices stay the same, but the price per gram of chocolate goes up. However, this practice of shrinkflation has come under scrutiny from the media and often leads to negative headlines when ‘exposed’. Ways to increase price of goods If demand is price…

The decline of Yellow Pages

The decline of Yellow Pages

For those born in the digital age, a paper copy of business listings may seem something of an anachronism. Why leaf through a telephone directory, when you can search online and get more information at the tips of your fingers? Yellow Pages have announced that their paper directory will cease publication in 2019, and it will be replaced solely by a digital service. I received a copy through the post yesterday. It is very thin compared to the directories I remember…

Effect of the exchange rate on business

Effect of the exchange rate on business

Readers Question: What are the effects of the exchange rate on UK businesses? The exchange rate will play an important role for firms who export goods and import raw materials. Essentially: A depreciation (devaluation) will make exports cheaper and exporting firms will benefit. However, firms importing raw materials will face higher costs of imports. An appreciation makes exports more expensive and reduces the competitiveness of exporting firms. However, at least raw materials (e.g. oil) will be cheaper following an appreciation. Effect of depreciation in the exchange rate If there is a depreciation…

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…