Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

SmartBingkai Enterprise operates five custom framing outlets. The five outlets offer a variety of services including matting prints and mounting print; framing photos, paintings,

image text in transcribedimage text in transcribed

SmartBingkai Enterprise operates five custom framing outlets. The five outlets offer a variety of services including matting prints and mounting print; framing photos, paintings, posters, and prints; and sales of posters and frames. About 85% of the business is the service of matting, mounting and framing of photos, prints and paintings. The main goals of the founder, Dato' Hamzan are growth and profitability; growth now and profitability later. He sees the business as a commodity-business in which other frame shops provide essentially the same services, and the competition is on price and quality. From his seven years in the business, he knows that any frame outlet's work has to be high quality or it will lose customer promptly. Therefore, he maintains quality as a necessary component of his business, and uses price and customer services to gain competitive advantage. The strategy has worked well for Dato' Hamzan as he has been able to grow from a single outlet five years back to five outlets at present. The additional outlets are managed by his extended family. To achieve a competitive price, Dato' watches his costs carefully and limits the amount of profit margin that he expects from each customer transaction. He looks for only an 8% markup over the total costs of the service. This policy has meant that initially his take home profits were not great, but the low price has enabled him to attract customers and to grow the business. Total profits have increased as the business has grown. To enhance his low-price approach, he has devised efficient techniques to provide his service, and he instructed his employee to follow his techniques to be very efficient to their time and use of materials. He also has a profit-sharing plan that rewards each outlet employee when cost-per- service declines at that outlet.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Financial Accounting for Business

Authors: Thomas Edmonds, Christopher Edmonds

1st edition

978-1260299441

Students also viewed these Accounting questions

Question

that the most commonly reported value is Wilks lambda

Answered: 1 week ago