Dansk Minox Case Study Essay

difficulty A/S Dansk Minox is a company based in Copenhagen, which specializes in branded vacuum-packed meat and early(a) food products. Through consumer survey, the company found that there was a large untapped market for a Complete meal product which included sliced pork along with a vacuum-sealed bag of personnel casualty abstract salad. After long discussions among the marketing and finance departments, the complete meal pack was introduced at a price of $ 8.20 per pack of 1 kg. It sold only 30 tons as against the budgeted sales of 85 tons. The problem facing the company is that whether it has to stop further production of the complete meal product or establish a new consumer price of $ 6.85 per pack, in ball club to boost sales. Considerations and AnalysisIn order to decide the course of action we may look at the following facts and considerations.Consumer impairment 8.20 6.85Retailer Price 5.72 4.78Variable Cost 3.49 3.41Volume Sales (in kgs) 30000 85000Advertising Costs 0.3 0.3Impact on Profit 41,400 90,950As we can see, impact on profit is higher when 85000 kgs of complete meal is sold at $6.85/kg, kinda than selling 30000 kgs at $ 8.20/kg. Now, another point to note is if production expenses are to be revised to $ 1.20/kg, then on a full hail basis, the complete meal would cost. ingrained unit cost (new) = Total unit cost (old) Production expenses (old) + Production expenses (revised) Total unit cost (new) = 4.64 0.54 + 1.20 = $ 5.30And Profit per unit would be = Retailer price Total unit cost (new) = 4.78 5.30 = (-0.52) (i.e) there would be a loss of $ 0.52/kg, on a full cost basis, when the complete meal is sold at $ 6.85. Conclusion and RecommendationsThe point to be focused here is that though the new product might sell 85tons at a revised price of $ 6.85 per pack, it will incur losses on a full cost basis. Also it is not feasible to lower the production costs any much because, the resources of A/S Dansk Minox which were alter for me at processing were now processing Vegetables. This is not their core competency and hence they would incur more costs in performing activities that they do not specialize in. Furthermore, the need for a single packet boat containing sliced pork and red cabbage salad is itself questionable because the same packs are also individually purchasable and these individual packs are of better quality because slice pork is Dansk Minoxs speciality and red cabbage salad is its competitiors specialty.Hence, it is recommended that Dansk Minox stop further production of complete meal (because red salad is not its core competency) and shorten on selling its standard packs, which are in fact having a significant boost in their sales or the management can look to collaborate with the best red cabbage salad do company and together give the customers the best quality of complete meal at the best price. The concluding decision would however be dependent upon managerial discretion and organizationa l guidelines/objectives.