Business_Proposal

ECO/561 July 18, 2011 Joe Krupka Ross Business Institute Business Proposal This business proposal will introduce a new educational program to be offered at Ross Business Institute. Ross Business Institute is a small vocational retraining school that currently offers Accounting and Computer Repair training programs. This proposal will describe a new program teaching the skills necessary for a student to succeed as an Administrative Assistant in today’s work force. Taking into consideration the state of the current economy and the number of displaced workers offering a new program will increase the student base and increase revenues of the school. The demand in the market for affordable and concise materials is great and this proposal will address that demand. This program will be one year in length and offered at a cost of $10,500, including all fees, courses, and books. The courses will be offered during the same hours as the current programs, which means it will not require additional resources for electricity or location. The only additional resources required would be an instructor. This program has the ability to increase revenues as the costs to run this program will not be much more than the school is already paying out to run the current programs. The program will generate total revenue of $10,500 per student and the cost per student will be $2,675, this brings the net profit per student to $7,875, thus creating an increase in revenues. In order to achieve this increase, the program will be marketed and advertised to the high school students as well as displaced workers through the many programs offered at the unemployment offices. Maximizing profits quantity is calculated by understanding marginal analysis or studying the incremental changes in profit. The quantity is determined by analyzing the shift of the marginal profit from positive to negative. The quantity level for this program will be at six students, each additional student The market structure of an educational facility is perfect competition. Perfect competition is defined as a business characterized by a large number of small firms, identical products sold by all firms, freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology” (Glossary.EconGuru.com, 2008). Fixed and Variable Costs Fixed costs at RBI include items that are constant despite the amount of services offered. Some examples of fixed costs are copy machines, student computers, instructor salaries, leasing costs and utilities. Variable costs for RBI are represented by costs that fluctuate and change based on the quantity of services and number of man hours required to produce this program. Examples of variable costs at RBI could include supplies and materials, overtime expenses and office supplies. Increasing Revenue RBI has evaluated and determined profit-maximizing quantity in the educational arena is dictated by maintaining competitiveness as well as looking at the highest revenues. Maximized profits are determined based on the calculation of marginal costs and revenue of the school. Marginal costs are the increase in costs that is caused by increasing the one more item. In our case, it would be the cost associated with adding additional students to the program. With this information, determining maximized profit at RBI can be calculated by finding the marginal profit, which is the marginal revenue minus the marginal costs. Pricing and Non-Pricing Strategies Price barriers into the market for RBI include both pricing and non-pricing strategies. There are some distinct characters of our program that sets it aside from the competition. Marketing and advertising are handled with care and target audiences such as high school juniors and seniors, displaced workers and new workers just entering the work force. Our non-pricing strategies emphasize the need for workers in this industry. According to myjobsource.com, administrative positions are expected to grow. Office automation will continue to be introduced and will make administrative assistants of the future much more productive. The pricing strategies used by RBI will be determined by calculating the fixed and variable costs of the program and taking into account the objective of profit maximization. In comparison to the educational institutions in this area, RBI is a higher end school and we are able to minimize the costs for the program by offering the classes at eh same time as other classes already offered at the school. Our staff has over 42 years of collective experiences and our school is located in an area that has a higher demand for opportunities such as the new administrative assistant program. This business proposal shows the assessment of the pricing strategies, marginal cost and revenue, demand for the product and profit maximization that is possible with the introduction of this new program. References: Bureau of Labor Statistics. 2004. Secretaries and Administrative Assistants. Retrieved from http://nyjobsource.com/careers/secretary.html#outlook. eHow.com. 2011. How to Calculate the Profit-Maximizing Quantity/ http://www.ehow.com/how_6713701_calculate-profit_maximizing-quantity.html#ixzz1SWhaMs7n. McConnel, C., Brue, S., Flynn, S. , (2009). Economics. Principles, problems and policies. (18th ed.). : McGraw Hill Company.