Predicting the market performance and the financial performance of an organization is a crucial step. This step makes it easier for the companies to evaluate the market and make a decision about the position of the company. Future plan is basically a document which outlines all the strategy of the company and the tactics which would help the company to achieve the goals in near future. This plan is basically prepared for a particular period of time. These plans cover all the details of an organization and evaluate the current trend in the market to forecast the future in better manner (Horngren, 2009). For instance, in marketing plan, all the market related activities such as cost of the product, gaols of the company and action steps are evaluated and a plan is prepared which would be implemented by the senior level managers of the company to manage the performance of the company.
In the given case study, the market position and the financial position of Tassie B. the second year performance and further on has been evaluated on the basis of last year performance and the current changes which has been done by the owner of the firm for the better performance and grab the better market opportunities. The main products of the company are Tassie Lager, Lonnie Lager and Hobart Lager.
Brett Lee is an entrepreneur who has left his job to start his own business. He started a brewery which offers the beer directly to the pubs, hotels and the restaurants. The brewery firm mainly produces 3 types of beer which are Tassie Lager, Lonnie Lager and Hobart Lager. In the case, financial data and the plans of the company of 2017 has been given and one the basis of that a marketing and strategic plan of next year has been prepared. The case explains that in the first year, company has generated enough profits and thus the owner of the firm believes that the profit would be enhanced from the next year. The case also briefs about the environmental factor and other production details of the company. In the case, Brett has asked for few questions which have been discussed as below:
Breakeven point is a tool which explains about the total unit and the sales in dollar level where the cost of the company is equal to the total revenue of the company. This is the point where the company is at “no loss no profit” position. This position explains that the company has reached at a point where no loss would be faced by the company as well as no profits have been generated by the company (DRURY, 2013). It is a helpful tool which evaluates the sales price, variable price and the fixed price of an organization and evaluate about the performance of the company.
On the basis of the break even calculations in Tassie B, it has been found that the company is producing 3 products and thus the weighted average contribution of the company has been evaluated. It explains that the weighted average contribution per unit of the company is $ 154.58. On the other hand, total fixed cost of the company is $ 3,08,763.85. It leads to a conclusion that the breakeven point (in sales) of the company is 1997.39 units. It explains that the company should at least sale 1997.39 units in the market to achieve the level of no loss no profit.
Existing product:
On the basis of break even analysis, it has been found that the company should at least sale 1997 units in the market to achieve the level of “no loss no profit”. However, the current sales units of each product of the company is 1151 units, 458 units and 632 units of Tassie Lager, Lonnie Lager and Hobart Lager respectively. It explains that the Sales of each product of the company are higher than the BEP point. In addition, on the basis of allocation of cost to the each product of the company, it has been found that the total variable cost of each product of the company are $1,72,696.60, $87,546.84 and $1,04,894.74.
It explains that lowest variable cost is of product Tassie lager which is $ 150.04 and the highest cost per units is of Lonnie lager which is $ 191.95. It explains that the company should sell the product Tassie Lager more in the market as the breakeven point of this product is higher than the other products (Zimmerman and Yahya-Zadeh, 2011). If the company would spend some more amount in the advertisement and the promotion of the Tassie Lager than the BEP level would be achieved by the company quickly as well as the profitability generation capability of the company would also be enhanced. The target profit of the company for 2018 is 1,00,000 out if which $ 33,333 would be kept by the firm as retuned earnings for the future position of the company.
The Brett is advised to initiate new advertisement tactics and the new market campaign to promote the product, Tassie Lager. It would help the Brett and the firm to enhance the sales of the product (Blocher, Stout and Cokins, 2010). The sales of the product would directly lead to the company towards the better performance and the position of the company as the breakeven point of this particular product is higher in the market and thus it could impact on the total profitability level of the company.
On the basis of the excel workbook, it has been found that the total sales of the company is 2241 units which explains that the company has not used the full capacity of the machinery to produce and sell the beer. The excel work book further explains that the total sales of the company was $ 7,11,000 in 2017 and the company is expecting the target profit for 2018 is $ 1,0,000 out if which $ 33,333 would be kept by the firm as retuned earnings for the future investment of the company. The craft beer industry of Tasmania briefs that there is more than 20 craft brewer in Australia. However, the people of Tasmania like the taste of Brett’s bear and thus the demand of the beer has been enhanced in the market.
On the basis of excel workbook it has been found that for meet the demand of the customers, it is required for the company to enhance the machinery capacity utilization. Currently, the company is not utilizing the full capacity of the machinery to product beer. But with the increasing demand, company is required to utilize the full capacity (Garrison, Noreen, Brewer and McGowan, 2010). With this, the foxed cost of the company would be same and the variable cost of the company would differ according to the sales production of the company.
On the basis of the reasrch on Tasmania craft beer producing industry, it has been found that if the marketing campaign of Tassie Lager would be successful than the sales price of the product would be similar and the number of production and sales unit would be enhanced to 1151 units to 1250 units (Dunn and Kregor, 2014). Further, the other products of the company has been evaluated and it has been found that the number of production and of both the other product would be enhanced and the company would manage the same level of the of the sales price per unit to manage he performance in the market and the enhance the profitability level of the company.
The industry evaluation explains that the other brewing companies are in the market is afraid of all the three products of the company. The marketing advisor explains that the company should install new machinery after 3 years to enhance the production level of the company which would directly enhance the total revenue and the total profitability level of the company. On the basis of the current evaluation on 2018 market position, it has been found that the marketing cost of Tassie Lager has been enhanced to $ 13,821 to promote the brand in the market so that the customers of the brand could be enhanced (Palmer, 2009).
Lastly, on the basis of the above evaluation and the market position of the company, it has been identified that the changes into the sales units and the sales price would lead to the company to the more profitability stated. In current year, the profitability level of the company was lower but the forecast of profitability of 2018 explains about greater profit. It evaluates that if the company would utilize all the capacity of the machinery and enhance the promotion campaign than the profitability level of the company would be higher (Argent, 2017). It suggest to the Brett to produce more beers as it would lead to the firm towards a better position and with these the success story of David tucker, which has impressed the Brett to leave the job and start his own business, would take place again.
The Tasmania Beer industry explains that all the firms are using the pure water to produce the beer. According to an evaluation, it has been recognized that for producing a beer of 250 ml, 1 litter is water required. It explains that the Brett would also pay for2500 litter water in 2018 to produce 2500 bottle of beer (Walker, 2012). On the basis of this evaluation, it has been found that the company is using the environmental sources at a great level whereas; company has not planned any corporate social responsibilities and the sustainable policies.
It suggests the Brett to look over the issues again and make better decision about the position of the company. The company should plan better corporate social responsibilities in which the sustainable policies for the society must be prepared and the performance of the company must be enhanced (Henderson, 2009). The Brett should evaluate the other company’s sustainable policies such as a competitor of the firm is using the loyalty program in which $ 1 would be donated by the company with the sale of per unit of the beer for the society education and development.
Further, the company is also advised to use the material which could be reused and if those materials are dumped into the soil than it do not harm the environment of the country. However, it has been found that there is few material of the company which cannot be reused and can’t be dumped by the company anywhere (Byrom and Lehman, 2009). For it, company is required to take a place out of the society and must be dumped the material in such a manner that it could not harm the society (Lindgreen and Swaen, 2010).
Company is required to propose a new budget for the management of the waste product. These innovative changes would lead the goodwill of the company to a great level (Schwartz, 2017). The better the position and the sustainable strategy of the company would be, the better it would lead to the company to the profitable state, On the basis of the evaluation, and it has been found that new strategy would be helpful for the company (Lindgreen and Swaen, 2010).
The above evaluation explains that the estimated water usage of the company is 2500 litre whereas the waste material of the company is also harmful which cannot be disposed anywhere as it would harm the society at huge (Lukman, Glavi?, Carpenter and Virti?, 2016). Thus, the company is required to propose a new budget for the disposal of waste item of the company. On the basis of industry evaluation, it has been found that the $ 8,000 must be proposed by the company for the management of the water and the waste material of the company (O’Donohue and Wickham, 2008). This waste material must be dispose off by the company in a better way.
The company is advised to use the material which could be reused and if that material should not be reused than the waste materials are dumped into the soil than it will not harm the environment of the country (Kroehn, Maude and Beer, 2010). However, it has been found that there is few material of the company which can’t be dumped by the company anywhere. For it, company is required to take a place out of the society and must be disposing of the material in such a manner that it could not harm the society.
Conclusion:
To conclude, the Brett is required to look over all the issues of the firm and must take the better decision about them according t the industry and the society. The report explains that the profitability level of the firm was better in 2017 but the forecast performance of the company is way better than the performance of 2017. Little changes into the operations of the company would lead to the company to a better performance. The break even units of the company are also lower which could be achieved by the company easily and then company could make few changes into the marketing mix to enhance the profits.
Further, it has been identified that the company must use the recycle material which could be reused and Unrecyclable material dumped into the soil. If the waste material of the company can’t be dispose off in soil than the company must take a place out of the society and must be disposing of the material so that society could not be harmed. The company must propose a new budget for the environment cost.
References:
Argent, N., 2017. Heading down to the local? Australian rural development and the evolving spatiality of the craft beer sector. Journal of Rural Studies.
Blocher, E.J., Stout, D.E. and Cokins, G., 2010. Cost management: A strategic emphasis. Includes index.
Byrom, J. and Lehman, K., 2009. Coopers Brewery: Heritage and innovation within a family firm. Marketing Intelligence & Planning, 27(4), pp.516-523.
DRURY, C.M., 2013. Management and cost accounting. Springer.
Dunn, A. and Kregor, G., 2014. Making love in a canoe no longer?: Tourism and the emergence of the craft beer movement in California. CAUTHE 2014: Tourism and Hospitality in the Contemporary World: Trends, Changes and Complexity, p.189.
Garrison, R.H., Noreen, E.W., Brewer, P.C. and McGowan, A., 2010. Managerial accounting. Issues in Accounting Education, 25(4), pp.792-793.
Henderson, J.C., 2009. Food tourism reviewed. British food journal, 111(4), pp.317-326.
Horngren, C.T., 2009. Cost accounting: A managerial emphasis, 13/e. Pearson Education India.
Kroehn, M., Maude, A. and Beer, A., 2010. Leadership of place in the rural periphery: lessons from Australia’s agricultural margins. Policy studies, 31(4), pp.491-504.
Lindgreen, A. and Swaen, V., 2010. Corporate social responsibility. International Journal of Management Reviews, 12(1), pp.1-7.
Lukman, R.K., Glavi?, P., Carpenter, A. and Virti?, P., 2016. Sustainable consumption and production–Research, experience, and development–The Europe we want. Journal of Cleaner Production, 138, pp.139-147.
O’Donohue, W. and Wickham, M., 2008. Managing the Psychological Contract in Competitive Labor-Market Conditions. Journal of Global Business Issues, 2(2), p.23.
Palmer, C., 2009. ‘” The Grog Squad”: An ethnography of beer consumption at Australian Rules football matches.
Schwartz, M.S., 2017. Corporate social responsibility. Routledge.
Walker, A.C., 2012. A history of the Tasmanian wine industry(Doctoral dissertation, University of Tasmania).
Zimmerman, J.L. and Yahya-Zadeh, M., 2011. Accounting for decision making and control. Issues in Accounting Education, 26(1), pp.258-259.
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