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2. A company intends to compete on an existing company that sell running shoes at BD 145 per pair. The company believes that they
2. A company intends to compete on an existing company that sell running shoes at BD 145 per pair. The company believes that they are better of using a market penetration strategy that will allow them to sell a pair of running shoes at a lower price of BD 140 and can sell 5000 units at this price point. The initial investment for such product line is BD 300,000. Management expects to have 20% return on initial investment. (10 marks) Requirements; a. What will be the desirable cost per unit for the proposed product using cost targeting technique? (5 marks) b. Explain what will happen to the company if it sells below the desired cost per unit. (5 marks)
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