Decision Point: Determining Current Profitability in a Competitive Market

Now that you've begun publicly pushing back against reports that you've formed a cartel with Hanvil Inc., you need to start figuring out a way to increase profits. You know the margins are tight, so this won't be easy, especially with new firms rumored to be entering the market.

You decide to do this in steps to provide a clearer vision and direction for your team. You need to do the following:

Make sure you have an accurate picture of your profitability right now.

Figure out a short-term strategy to increase profits.

Figure out a long-term strategy to deal with new competition.

To get started on step 1, you task your team with collecting all the current market data to figure out Sonable's present profitability. They report back with the following:

Average price of Sonable hearing aid: $2,000

Current annual sales at that price: 1 million units

Average total cost at this output: $1,200

What is Sonable's current annual profit that you present to your team?

Select an option from the choices below and click Submit.

$2,000,000,000 $800,000,000 $1,600,000 $800