Finance Question

This assignment is composed of 2 elements

1.Price change recommendation

Background

Cost changes: a reduction in production capacity and foreign exchange has resulted in an overall cost increase of 30%.

Government regulations: a regulatory change has reduced how many consumers can buy the product at any given time by 50%. Several firms have hired lobbyists to overturn the regulation. While they have assured you that the regulation will be lifted, it’s unclear whether that will happen next year.

Consumer demand: sales dropped last year. They have recovered some, but it’s unclear whether they could decline again.

Prior to these 3 changes, the profitability of products varied from -20% (some products were sold at a loss) to 80%.

Please make a recommendation on how much to increase or decrease prices.

How to fill in the template

 On the left-hand side column, enter as many regions (see example), products, or business unit as you wish.

Other columns

1. ’2022 sales: The total sales must tie with the numbers reported by the company. Enter the sales for each segment. Use segments published by the company, it’s easier that way.

1. Price change: enter the percentage price change.

1. Full-year impact in $ million: calculate the full-year basis impact, that is, if the change is implemented January 1st. For example, for sales of $100 million with a 10% increase, the impact is $10 million ($100 million *10%).

1. Proposed Effective date for price change. Indicate the proposed date for your price change. For example, if the increase happens on June 30th, the impact will be for only half a year.

1. Impact $ Million. Calculate how much delaying the change beyond January 1st will cost. In the example above, if the change is for half a year, then the impact is for $5 million instead of $10 million.

I have added an excel template to make it easier for you.

Note: when you open the excel template you must update the year to the one for which you are entering the sales. For example, if you are entering sales for 2022, you need to change it from 2020 to 2022

Watch a video on how to use the excel template here

______________________________________________________

2. Communication to customers

Please write a note to your customers or consumers, informing them of the price change. Each student submitting the assignment must complete this part on Brightspace.

The note can be an email, a letter, a graphic, a video etc. See the tips on how to communicate price increases and examples from previous students.

To make it easier for the rest, please start a new thread under the topic created for your company.

If you want to present in class:

1.Follow the overall instructions and

2.Submit your communications to customers 2 days in advance. That will make it easier for you to collect responses from customers by the time you present.

Response from customers

All students must respond to at least one price increase communication from any team other than their own. This includes students who are not submitting the assignment but adding a comment on the Blog instead. The deadline to submit the response before class starts. Help the student presenting and yourself by doing this part as soon as you see another student has posted a communication.

How would you react if you get a communication like that? Please do reply, as a consumer or client.

Remember that you are doing the same thing to others. This exercise will give you an opportunity to see it from both sides.

This is a “safe place”, let’s practice among ourselves.

I will not get involved in the discussions. However, I will be happy to discuss it as a fellow businessperson or consumer. Just email me.

What you need to submit

Required

• All students. A reply to the price increase communication done by others. At least one response for each team other than their own. Those who are writing a comment on the Blog should also respond to at least one of the price increases from other teams.

For those submitting the assignment:

1. The PowerPoint template with the numbers and comments

1. A communication to your customers on why you are changing prices on the discussion section of Brightspace.

Note: the companies shown above for illustration purposes. You need to create a new thread with the name of your company. Read how to do it on the Instructions document on Brightspace.

For everyone

Question to students presenting the assignment. Each member of the same group/company must post at least one question before class starts. The question must be posted on the discussions page on Brightspace. The student presenting must start a new thread (please see below). Students who don’t post a question will lose 1 point. To answer a question, click on the title of the post.

• In summary:

1. Upload the price increase for your company on Assignments

1. Post the price increase communication to customers on Discussions in Brightspace

1. Go through the price increases of other teams and reply as a consumer to each of the 3 groups.

1. Ask a question to the team member who is presenting from your group.

Questions asked about the process for this Assignment

To make it easier for you, I’ve copied below the relevant paragraph from the Instructions document posted on Brightspace. Please read the entire document, as shown on the first point of this assignment

How do I create a new thread?

To create a new thread.

Option 1

click on:

And then on the blue box

Option 2: click on any of the assignments and then add a topic. For example, for the Pricing Assignment (number 2):

Click on Pricing

And then add a topic

If I am not going to present during the class, do I need to include the answers from my classmates on Brightspace in my PowerPoint? Or, I just need to include the price change chart and reasonings in my PowerPoint and finish the second part of the pricing assignment on Brightspace.

You will not be able to get feedback from others until your post the communication on Brightspace. For that reason, it’s only required to post it if you are going to present.

If you do want to post it, you can always go and collect some of that feedback and resubmit the assignment, but you do not have to do it. I only look at the last assignment that was submitted.

I am not presenting; how could I get feedback from customers? Do we also have to do the communication with the customer part? 

Yes, as shown on point 2 in the beginning, you must post your communication on Brightspace:

2. Communication to customers

Please write a note to your customers or consumers, informing them of the price change. Each student submitting the assignment must complete this part on Brightspace.

All students are required to give feedback to at least one student in each company (point 3 above). Thus, you should get back from others.

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