Washburn case dissertation


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1 What factors are most likely to affect the demand for the lines of Washburn guitars bought with a first-time any guitar buyer

The purchase price is the significant factor with this type of buyers, as the retail price falls, the demand will increase and vice versa Top quality is also one factor for this customer, the buyer may choose to resell following your guitar lessons. They may feel that quality can help them to perform better bought by a advanced musician who would like a personal model Quality is the significant factor mainly because good quality will certainly produce great sound Reputation brand is additionally the major aspect for these customers because the instrument play a significant role to them The above mentioned are more essential than price, therefore price is not difficulties factor for this type of customers 2 Intended for Washburn, precisely what are examples ofshifting the demand shape to the right to get a larger price for the guitar collection (movement in the demand curve) An example of changing the demand competition to the directly to get a bigger price is the item with insensitive, inelastic cost, that is the Washburn signature various guitars.

Product with inelastic demand, price will simply has a minimal impact on the necessity.

pricing decisions concerning moving along a demand curve

As the price drops, the quantity demand in the guitars boosts. If the price are below $345 for the newest product, the demand curse will shift along to more quantity marketed. 3 In Washburn’s factory, what is the break-even stage for the brand new line of guitars if the price tag price is BEP = FIXED COST/PPRICE “VARIABLE COST


32, 000/(349-204)=186 Products


38, 000/(389-204)=156 Models


32, 000/(309-204)=232 Products

(d) if Washburn achieves the sales focus on of 2, 500 units at the $349 retail price, and what will its profit be? Earnings = ($204 X 2, 000) ” 38, 1000 = 370, 000

4 Imagine the combination with Parker leads to the charge reductions expected in the case.

Then simply, what will always be the Set cost 35, 000. 00

forty percent reduce in rent (5, 600. 00)

Fresh FC thirty-two, 400. 00

Varying cost one hundred forty five. 00

Less 15% (21. 75)

New VC 123. 25

new break-even point by a $349 retail selling price for this line of guitars 32, 400/(349-123)=144 Products

(b) new revenue if it sells 2, 000 units?

Profit sama dengan ($226 Back button 2, 000) ” 32, 400 = 419, six-hundred

5 If for competitive reasons, Washburn eventually must move every its creation back to Asia, which particular fixed and variable costs might be lowered

If the assumption is definitely China, the suburban living standard is usually low and many of the manufacture will proceed to this area. For fixed price, the hire and quality control software will be reduce. For changing costs, labor costs will be lower. what additional set and adjustable costs may possibly it be ready to incur? Ideal to start costs will certainly expect to incur as competent worker may be new and required training. For varying cost, shipping and responsibilities costs will incur


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