Thomas Money Service
Creating a plan to increase revenue, achieve ideal production levels, and adjusting variable and iced costs to reduce costs could help this situation. Businesses must be adaptable with the environment and marketplace, and In Thomas Money Service’s case, must adapt quickly to survive. Assumptions Made The company exists in monopolistic competition, allowing easy entry Into the marketplace and a selling strategy based on attributes (McConnell ; Bruce, 2005). * Large supplies of contractors In the area are available for work. Constant-cost industry, so the entry and exit of firms does not affect resource prices (Mcconnell ; Bruce, 2005). Increasing Revenue The company has several options with the assumptions listed above. Some of these items include starting a new construction division, making payment arrangement for delinquent loans, and focusing on building equipment. Each of the Items has benefits and concerns. But each might help the company’s current situation. One option is to start a division of construction that provides all of the labor, equipment, and materials from start to finish.
This will target hospitals and nursing homes since these groups still have a demand for new alluding. This would be a service similar to what Home Depot or Low’s does for consumers who purchase their products and have them Installed. Thomas Money service could be the lesion or project manager that works directly with the hospital or nursing home that purchased the service. Another option is to make payment arrangements for people with delinquent loans. This would help reduce repossession costs and allow companies and consumers to adjust to demand changes In the economy.
This may not be an option for all companies, such as ones hat have closed or are completely out of work, but for those who are anticipating work soon. Offering this option would also allow some companies and individuals to save their credit scores. Focusing more on building equipment than forestry equipment would be extremely beneficial for the company because there is more potential for sales of building equipment. This could also involve loosening requirements for building equipment loans as long as they purchaser can prove they option depends greatly on demand and manufacturing costs.
Achieving Ideal Production Levels Manufacturing 11 units has the second to lowest average fixed cost, average variable cost, and average total cost. Although it is not the lowest in each category, the variation between the three categories and the number of units is the smallest. Adjusting Fixed and Variable Costs Advertising in less expensive areas can reduce advertising costs. Cutting the Super Bowl and sports advertising and focusing on Internet and email campaigns would allow for more exposure in targeted areas. Negotiating shipping agreements with local companies or larger ones could help reduce this fixed cost.
Several items can be adjusted in order for a company to survive. Adjusting to changes in the marketplace can be one of the biggest challenges for companies, and those who do not struggle to continue operating. Even though profits declined for the first time in company history, being proactive and making adjustments to the way Thomas Money Service does business will help the future of the company. Creating a plan to increase revenue, achieve ideal production levels, and adjusting variable and fixed costs to reduce costs will help reduce losses and ultimately help the company become profitable again.