Problem: Among the Three Alternative Courses of Action, Choose the best Alternative Courses of Action and explain why. state advantages and disadvantages.

I. SYNTHESIS

Refreshing beverages such as fruit shake and smoothies have become the quickest way to beat the heat, especially during dry season. Over the last two years, Pearly Shake has become known as a quench thirst for people living near Galas Market. Claimed to be the only flavored shake business located in the area with its affordable beverages ranging from 25.00 for the regular size shake and 30.00 pesos for large size shake with a topping of your choice. Pearly Shake offers variety of flavors (in powdered form) such as bubblegum, double-dutch, strawberry, vanilla, chocolate and ube.

According to Ms. Analyn Lim, owner of Pearly Shake, her business makes 15,000 to 17,000 average sales per day.

As what the owner have said a micro-scale business do not require much investment, an entrepreneur can start his own business with a small capital. Nowadays, customers have high tend to consumption product of milk and sugar but they have few choices to choose from so I set-up Pearly Shake try to create the demand for my customers.

In addition, Analyn Cheng employs three personnel for her business. She pays them 250.00 per day inclusive of free breakfast, lunch, and dinner. The establishment is open from 10:00 am to 7:00 pm, Monday to Sunday. Ms. Cheng usually travels from Galas Quezon City to Divisoria, once a month to buy powdered shake flavors, straws, plastic cups, sugar, cream, whole milk.

VII. ALTERNATIVE COURSES OF ACTION

To properly cite the correct costing strategies of the business, Analyn will be addressing a lot of problem of that she is facing. To help her address these issues, the researcher has come with the following alternative courses of actions:

Alternative Courses of Action 1: Analyn can fully improve the cost of Pearly Shake by introducing cost-based pricing where the price includes the cost of ingredients and cost of operating the business.

Cost based pricing is the easiest way to calculate what a product should be priced at. The owner can do it by:

include a profit percentage with product cost

add a percentage to an unknown product cost

blend of total profit and product cost

Alternative Courses of Action 2: Retain the pricing system of Pearly Shake.

If Analyn retains the same costing system she must know the current practices as to mark-up, discount, and other terms of sale, in relation thereof, price is very important for entering a market and the cost of the whole marketing mix. Price setting must consider the kind of competition in the target market and the cost of whole marketing mix. It is the responsibility of the owner to estimate customer reaction to possible prices.

Alternative Courses of Action 3: Pricing below the competition

If Analyn decides to adopt a low-end competitive pricing strategy against her indirect competitors. Pearly Shakes profit margin per sale is going to be less; therefore, she need to focus on reducing costs.