BUSINESS ECONOMICS COURSEWORK Essay Example | Topics and Well Written Essays - 2000 words

BUSINESS ECONOMICS COURSEWORK - Essay ExampleWith damage-plus set, the firm can just cast up the price. Price increase is possible due to the fact that at some point, the harvest-timeion be of a product may not be clear in advance. This literally may have momentous advantage in cases of supply contracts.Although cost-plus set strategy may have advantages, it also has unusual drawbacks which include the following ignoring the demand, image, and market positioning favouring historical accounting costs rather than replacement look on applying standard output level to allocate fixed costs offering few incentives for efficiency, as costs are passed off to customers ignoring the role of customers and the value they drive and creating a competitive disadvantage using just costs (Brickley, Smith & Zimmerman, 2009 BPP Learning Media, 2009, p.302 Holden & Burton, 2010). Perhaps, the most striking of all of these is on how the costs are clear passed off to customers. Cost-plus pricin g may therefore not that competitive in a grocery store where there are new entrants, especially those willing to compete with price by and lowering blue their price offerings to generate a market share or acceptance. At some point, cost-plus pricing may trigger a less affinity (less demand) for a certain service or product offering in the long run as competition arises.Cost-plus pricing is a safer pricing strategy on the part of Bhagat Incorporated due to production costs that may not be clear beforehand. It is a natural practice that when a manufacturing company set the price of a good, the cost of labour is always taken into account (Brickley, Smith & Zimmerman, 2009 Krauss & Johnson, 2006, p.211 Campbell, 2003, p.167). Labour costs are categorised each direct or indirect (Sears, Sears & Clough, 2010, p.46). The indirect labour costs can be reduced (Appelbaum, 200, p151 Roderhorst, 2009, p.80). If Bhagat has so much increase in its indirect labour costs, then this could be