Business_Proposal_Week_4

Business Proposal University of Phoenix Economics Eco/561 Business Proposal Laptop computer technologies are the cutting edge of business and academic tools. With the advent of laptop computers business owners, students, and private citizens can take their businesses or academic projects as well as personal or social networking anywhere. However, the rechargeable battery power source is strictly limited with regard to time of available use after each recharge. Modern day rechargeable battery technologies are available with the use of solar power for a many things with the exception of laptop computer batteries. The following proposal will illustrate the need for and the feasibility of Hewlett Packard manufacturing a laptop technology that integrates solar power with the existing electrical power to include a solar power rechargeable battery backup. This proposal will further illustrate the need for Hewlett Packard to integrate this solar power technology into the current laptop technologies of i3, i5, and i7 models, and continue to integrate solar power into evolving laptop technological advancements. This proposal will also highlight how the company may increase revenue and how concepts of marginal cost and marginal revenue increase or maximize profit. When a company introduces pricing, and non-pricing strategies, and increases in product differentiation, minimizing costs of the product. Increasing Revenue: There are three ways a business can increase revenue. (1) A company must increase the number of new clients or customers. (2) Increase the value of each sale made to a client or customers with courtesy, and knowledge or technological innovations and advancements. (3) Increase the number of times that client or customer buys from the company (Doyle, 2005). Price is not always the answer, when company offers a lower price to the consumer he or she may look at this as a problem with the equipment the company is trying to sell. The consumer who values a company will pay a price reflecting the company’s skills, experience, and the company’s true worth. This is true of the Hewlett Packard organization started in 1939 and incorporated in 1957. Hewlett Packard beginning in Palo Alto, California, by two electrical engineers Bill Hewlett and Dave Packard in 1939 proves a company’s true worth. (“hp history," 2012) Hewlett Packard continues to thrive as a leader in computer technology because of their ability to serve the consumer with varying up-to-date products and technological advancements as well as knowledgeable customer service representatives. Profit-maximizing quantity: To understand profit-maximizing one must understand marginal analysis. Marginal analysis is the study of changes in profit. For example if business owners increase sales, expenses increase as well. Expenses are in the form of variable costs such as labor, commissions, shipping, and raw materials. When expenses increase to an amount that no longer maximizes profit the marginal profit becomes negative. This is the point at which a company needs to determine when, where, and how expenses could be decreased and revenue could be increased to optimize sales and maximize profits. For example, Hewlett Packard sells 80 solar powered laptops for $6,000 instead of $5,000. Marginal profit for 80 laptops is now $1,000. The company still has to find its new profit maximizing quantity. If selling 100 laptops results in a total profit of $6750, marginal profit is only $750, and the company still has not reached the profit-maximizing quantity. The company sells 120 solar powered laptops resulting in a total profit of $650 and the marginal profit is a negative $250. The new profit maximizing quantity to sell is 100 laptops (Huter, 2012). In order for the company to maximize profits’ they need to sell 100 laptops. Please note graph below explaining the above information. Marginal cost and revenue: With marginal cost and revenue, Hewlett Packard must identify their market structure. For example, Hewlett Packard is an oligopoly structure implying the marginal revenue is less than the average revenue and price, which decreases with larger quantities of output. Marginal revenue equals change in total revenue divided by change in quantity ("marginal revenue," 2012). Pricing and non-pricing strategies: Non-pricing strategies have more of an effect on the consumer. Non-pricing strategies include advertising, enhanced service quality, and extensive warranties and special offers (Kimmons, 2012). Pricing strategies can be complex one should consider several factors that may affect a business. Such factors include competitors and their existing products, consumer demands, and suppliers (Kimmons, 2012). Hewlett Packard should consider pricing strategies, such as membership or trade pricing discounts, closeout or product bundle pricing. Membership or trade pricing rewards the loyal or usual consumers of the company. This consists of reducing the price of services or goods for the individual who regularly purchases from the company. This gives an incentive to come back to the company and continue to purchase products or services from this company. Bundle pricing and closeout pricing is useful when products are no longer in season. For example, selling an older laptop for a lower price relative to the market price is typically an effective pricing strategy. However, pricing strategies for patented technological advancements not held or possessed by competitors is not an absolute necessity. If a company such as Hewlett Packard holds a patent on an item, such as a solar powered laptop computer technology with an accompanying solar powered rechargeable battery everyone wants and no other company has, he or she can set the price at an optimum range to maximize profits. Hewlett Packard is an oligopoly so competition is limited. Entry barriers: As stated above, one example of a barrier to commercial entry is an existing company holding a patent on a new product or merchandise thereby giving said company a monopoly or sole proprietorship on this merchandise or technological advancement. Product differentiation: If Hewlett Packard manufactures the first solar powered laptop and a solar powered battery backup they will be the first computer company to complete this endeavor. This would continue to put Hewlett Packard on the cutting edge of technology and technological advancements currently and in the future. Product cost minimization: One way of minimizing product cost is to develop manufacturing techniques decreasing labor and material cost. Another means of cost minimization is mass production. This is to say the more a product is manufactured the cheaper it is to make, which in turn allows a company to pass the decreased price on to the consumer. Six additional ways are possible to reduce cost they include negotiation, specifications, inventory, sourcing, administration, and terms and conditions. Negotiation involves discussions with new or existing suppliers leading to cost reduction. Specifications involves using other brands of products instead of name brands this can reduce cost. Inventory involves reducing the amount of inventory saving space and avoids deterioration of any inventory. Sourcing involves changing a supplier unless the consistence of quality is excellent. However, sourcing should be avoided as quality is better when handled by the best supplier. Administration involves achieving computerization. Using the Internet, procurement cards, and blanket orders will contribute to efficiency. Finally, terms and conditions involve payment discounts and avoid costly legal problems, and protect the company from supply failure (Hough, 2010). The above chart shows GDP and the linear trend, post-2000. GDP falls below the trend in early 2006, and is about 14% below trend in the first quarter 2012. Remember the HP trend is about 1% below GDP (Williamson, 2012). Market research reveals there are 14.4 million college students and 17.5 post-secondary students in the United States, totaling 31.9 million people ("College students," 2012). The majority of these individuals use laptop computers. This is nearly 32 million potential customers. This number does not reflect the amount of mobile business personnel, or social networkers who also use lap top computers on a regular basis and are perspective customers. The business world and private sectors are accepting solar power technologies as the wave of the future. The time to develop and introduce this technology is now. References Doyle, B. (2005). How to increase revenue. Retrieved from http://ciamos.com/client-magnets/how-to-increase-revenue.html HP History. (2012). Retrieved from http://www8.hp.com/us/en/hp-information/about-hp/history/history.html Hough, H. (2010). Six proven ways to reduce cost. Retrieved from http://purchasingnegotiationtraining.com/purchasing/six-proven-ways-to-reduce-cost/ How many college students are in the United States' (2012). Retrieved from http://www.cia.gov/library/publications/the-world-factbook/geos/us.html Huter, S. (2012). How to calculate the profit-maximizing quantity. Retrieved from http://www.ehow.com/how_6713701_calculate-profit_maximizing-quantity.html Kimmons, R. (2012). Pricing vs. nonpricing strategies. Retrieved from http://smallbusiness.chron.com/pricing-vs-nonpricing-strategies-14166.html Marginal Revenue. (2012). Retrieved from http://www.amosweb.com/cgi-bin/awb_nav.pl's=wpd&c=dsp&k=marginal+revenue Williamson, S. (2012). HP filters and potential output. Retrieved from http://newmonetarism.blogspot.com/2012/07/hp-filters-and-potential-output.html