Thomas Money Service
Revenue, Cost Concepts, and Market Structure Proposal
Thomas Money Service, with 70 years of service, is a strong consumer and equipment finance company specializing in building and forestry equipment. The company has been struck with the recession, and profits have declined for the first time in the company history. This 30% decline in profits has resulted in job losses and could lead to additional negative impact if nothing is done about the situation. Creating a plan to increase revenue, achieve ideal production levels, and adjusting variable and fixed costs to reduce costs could help this situation. Businesses must be adaptable with the environment and marketplace, and in Thomas Money Service's case, must adapt quickly to survive. Assumptions Made * The company exists in monopolistic competition, allowing easy entry into the marketplace and a selling strategy based on attributes (McConnell & Bruce, 2005). * Large supplies of contractors in the area are available for work. * Constant-cost industry, so the entry and exit of firms does not affect resource prices (McConnell & Bruce, 2005). Increasing Revenue The company has several options with the assumptions listed above. Some of these items include starting a new construction division, making payment arrangement for delinquent loans, and focusing on building equipment. Each of the items has benefits and concerns, but each might help the company’s current situation. One option is to start a division of construction that provides all of the labor, equipment, and materials from start to finish. This will target hospitals and nursing homes since these groups still have a demand for new buildings. This would be a service similar to what Home Depot or Lowe's does for consumers who purchase their products and have them installed. Thomas Money Service could be the lesion or project manager that
Thomas Money Service, with 70 years of service, is a strong consumer and equipment finance company specializing in building and forestry equipment. The company has been struck with the recession, and profits have declined for the first time in the company history. This 30% decline in profits has resulted in job losses and could lead to additional negative impact if nothing is done about the situation. Creating a plan to increase revenue, achieve ideal production levels, and adjusting variable and fixed costs to reduce costs could help this situation. Businesses must be adaptable with the environment and marketplace, and in Thomas Money Service's case, must adapt quickly to survive. Assumptions Made * The company exists in monopolistic competition, allowing easy entry into the marketplace and a selling strategy based on attributes (McConnell & Bruce, 2005). * Large supplies of contractors in the area are available for work. * Constant-cost industry, so the entry and exit of firms does not affect resource prices (McConnell & Bruce, 2005). Increasing Revenue The company has several options with the assumptions listed above. Some of these items include starting a new construction division, making payment arrangement for delinquent loans, and focusing on building equipment. Each of the items has benefits and concerns, but each might help the company’s current situation. One option is to start a division of construction that provides all of the labor, equipment, and materials from start to finish. This will target hospitals and nursing homes since these groups still have a demand for new buildings. This would be a service similar to what Home Depot or Lowe's does for consumers who purchase their products and have them installed. Thomas Money Service could be the lesion or project manager that