NCI corporation Assignment Example | Topics and Well Written Essays - 500 words

NCI corporation - Assignment Example This is the margin NCI corporation already had the capability to produce for the casket market. On the other side, the traditional margin for manufacturing the caskets was about 23%. On average, 23% is the operating margin NCI Corporation previously incurred for the new product. The increase in the number of discounters in the casket market results to reduced prices of caskets. , the margin increases with the increase in the casket suppliers in the market. The discounters such as the wholesalers, retailers, and other manufacturers do not incur the similar costs incurred by the funeral homes. Therefore, they sell the caskets cheaply and still make a profit because there are low production costs involved. In addition, the discounters sell caskets in large scale thereby enjoying the economies of scale. The number of caskets, I will sell to the different target purchasers depend heavily on the respective buying price the target buyer will offer. I will provide 50 Caskets to the funeral homes. This will be the highest number of caskets I would like to sell. To the retailers, I expect to sell around 60 caskets while the wholesalers will get around 100 caskets. To achieve the figures, I assumed a constant 40 % margin and particular profits for each purchaser target. For instance, I assumed $ 500,000 profit in the case of funeral homes, $ 180,000 profit in the case of the retailers and $ 250,000. In addition, I assumed $ 50,000 net income, $ 120,000 capital expenditure and investment return worth $ 250,000. 1. There are various risks associated with NCI’s entry into the casket selling. First, the firm risk losing all the retrenched workers. Secondly, involvement in the new business is risky since neither Roger nor his adviser knows about the marketing of the products. Lastly, the firm risks getting customers for her products since nobody in the business knows the targeted consumers for the caskets. 2. The firm’s sale will increase at the rate of diminishing