Free Cvp Analysis Business Plan Sample
Introducing the Scenario
Cost Volume Profit (CVP) is an important financial based strategy used by the companies in all over the world in order to have a powerful relation among the volume and profit of production. Any change in the cost volume does have a strong and direct linkage with the overall financial position of an entity. It is required to run the CVP analysis on Clipboard Tablet Company (Abrams, 2004).
As per the scenario, Clipboard Tablet Company is a manufacturer and distributors of different models of tablets. The names of the tablets are X5, X6 and X7. The names of the models launched by the company depend entirely upon their performance and progress. From the analysis, it is also found that X6 tablet is in the market from last two years and has been attracting large number of customers towards it. The model of this table is well organized and perfect and performs effectively as compared to its price.
Targets of the Company
Management officials are very much concerned with the operational efficiency of the company as it is the only thing through which they can optimize their operations (Abrams, 2006). Without any doubt, the core theme of every organization is to increase the shareholder’s wealth with positive attitude and those organizations which have the power and guts to accomplish the same would be more productive as compared to the companies which are unable to maintain their shareholders (Abrams & Vallone, 2005).
Directors are entitled to take timely and powerful action to attain effectiveness in the market and increase the wealth of their shareholders. From the analysis, it is clear that Clipboard Tablet Company has invested a large amount of their savings in acquiring the shares towards the company to make productive and active. There are two different types of shareholders associated with Clipboard Tablet Company known as Internal Shareholders and External Shareholders (Covello & Hazelgren, 1994). The company is targeting to satisfy the needs of both of their shareholders. Clipboard Company is one of those companies of the world which have a positive mindset towards their employees, as the company is trying to value their employees through giving the intrinsic and extrinsic rewards. Apart from that, the company has a positive attitude in terms of providing interactive and powerful training to their employees.
Cost Volume Profit Analysis is basically a type of analysis in which an organization is suppose to manipulate the amount of its fixed and variable cost to attain significance accordingly (Covello & Hazelgren, 1994). The lower the direct and operational cost, the higher will be the profit of the company. From the excel sheet, it is clear that the total budget of Research and Development (R&D) of the company is $ 2.4 million, which proportionate to 33% of the total budget of the company. The target profit of the company is $ 3.5 million through which the company will become able to have a Return on Sales (ROS) of 13.64%. The amount of fixed cost of the company is $ 7 million that needed to be decrease in order to accelerate the pace of economic profit of Clipboard.
Strategies lie at the heart of an organization, and no organization can attain effectiveness without making, transforming and executing powerful strategies (Covello & Hazelgren, 1998). Clipboard Company which is intending to launch a new product in the market has to revive their strategies in order to strengthen their operations.
Strategies of Price Changes
Pricing is the most important factor that associated with an organization, and without powerful pricing strategies an organization cannot attract potential customers towards the products (Covello & Hazelgren, 1998). Clipboard Company has a powerful and renowned name in the market in terms of manufacturing and distributing tablets. The company used COMPETITIVE pricing strategy while launching X4 and X5 in the market. But, afterwards the level of competition has increased heavily in the field of manufacturing tablet. The company is recommended to use PENETRATION Pricing Strategy while launching X6 Tablet in the market in order to give a tough time to the existing as well as new companies in the industry.
Research & Development Cost
Research and Development (R&D) is yet another important factor that associated with an organization to become powerful and interactive in a given market. High association towards R&D will bring the things favorable for the companies (McKeever, 2012). Clipboard Company spent $ 24,000 in the year 2011 on R&D. The management is recommended to increase the amount of R&D before the physical launching of X6 in the market, as it is the only way from which the company can sustain in the industry in such a highly competitive environment.
It is very important for Clipboard Table Company to discontinue all of those products which are unable to give any sort of future economic benefit to the company. Discontinuation of such products may have some inefficiency within the operations of the company, but in the long run it will be essential for the company.
The entire analysis is revealing that the CVP analysis certainly help out the company to play with different scenarios, and selects the most suitable one for the entire operations of the company, and Clipboard has to consider the CVP analysis before launching X6 Tablet in the market.
Abrams, R. (2004). What business should I start?. Palo Alto, Calif.: Planning Shop.
Abrams, R. (2006). Successful business research. Palo Alto, Calif.: Planning Shop.
Abrams, R., & Vallone, J. (2005). Business plan in a day. Palo Alto, Calif.: The Planning Shop.
Covello, J., & Hazelgren, B. (1994). The complete book of business plans. Naperville, Ill.: Sourcebooks Trade.
Covello, J., & Hazelgren, B. (1998). Your first business plan. Naperville, Ill.: Sourcebooks.
McKeever, M. (1986). Start-up money. Berkeley, CA: Nolo Press.
McKeever, M. (2012). How to write a business plan. Berkeley, CA: Nolo.
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