Fabio Rosa and Solar Power in Brazil Aportnalysis Report
The assignment takes a deeper dig into the budgeting metrics of the two companies Fabio Rosa and what Nau that are chosen in this aspect. Thus, the bottom line of this particular project is determining the pricing policies, added value, marginal and full costing, and the contribution analysis concerning the two companies. The difference in marginal costing determines the various aspects of a variable costing system where costs change with that of output. On the other hand, the case scenario of Fabio Rosa is into delivery of electricity to Brazilians who have low incomes. The second phase of the study talks of an innovative clothing company Nau who are having its deeper roots in the world of clothing companies.
Fabio Rosa and Solar Power in Brazil
The company Fabio Rosa has gained its reputation in the world of electricity. It has played a greater role when it comes to the supply and distribution of electricity at affordable prices to the rural areas of Brazil. It has been prevalent in the distribution of electricity in the backward areas of Brazil. It has provided services to millions of Brazilians catering to the needs of large factories, cities, and towns that are situated in the Brazilian region. Thus, Rosa aims to make use of the existing technology. It has innovated methods that can reduce the cost of technology in the long-term scenario. Thus, it has been assessed that the project Rosa has been ruling the electricity market that is prevalent in Brazil.
As per the market research study, the large business families who are operating in Brazil are getting benefited by the use of sources of renewable energy. The project of Sun Shines for All (TSSFA) mainly provides energy solutions at affordable prices. The energy provider aspects have been dealt with clearly in this part of the study. They have introduced ways in the case of development of the newer model of businesses which can help the rural people of Brazil to get easy access to basic needs of electricity. Hence, TSSFA can reach out to the masses and can easily meet the needs of the customers which are ever-increasing and demanding in the day-to-day operations of the business scenario (Palkina, 2017). The execution of the project TSSFA has yielded results in leaps and bounds, benefitting a huge number of people. It has put its widespread implication serving the needs of greater households by innovating newer products. As a result of which, the rural areas of Brazil have access to electricity at a much reasonable cost. On the other hand, the maintenance and installation of the solar panels are being outsourced. Moreover, the financial implications of the solar development foundations need a considerable amount of funding from the bodies of the Solar Development Foundation (SDF). The funds that are received from STA and SDF have been used for research and development and the purchase of solar panels. Along with that, the funds are used for the different phases of the TSSFA project. It has innovated ways to enhance the various aspects of efficiency and reduction of costs. The sizes of the solar panels must be taken into account considering the various set of implications that are set as a result of maintaining sustainability (de Carvalho, Lu & Moulin, 2014).
The strategies of pricing that are introduced have been playing a detrimental role in the process of generating revenue. For this, the cost information of the solar panels is needed to be taken into consideration. Moreover, the key concepts of costing that are determined in this case are variable cost and total cost. This has helped in determining the unit and the total contribution system. A relationship between the output of the firm and the total cost of producing the particular level of output is being determined in this case of study. The amount of contribution can help deal with the sales forecasting system. The cost and design cost has been ascertained with the help of different channels of distribution. Moreover, the decisions for pricing can be possible for making better decisions. Hence, determining the various strategies for pricing can be detrimental in initiating the various sets of business decisions in the long-term implications of the business. A direct proportion is created between the unit output of the firm and the amount of cost that is needed for the sole purpose of producing the total cost (Spann, Fischer & Tellis, 2014).
Concerning the different proportions of the case scenario, the major pricing objective that was determined in this aspect was to raise the standards of family income. In this way, they can purchase products at the most affordable price. Thus, the family can afford to purchase the solar panels at a reasonable market price. Thus, the business model that is used in this prospect determines the various implications of pricing policies and strategies that are used in this particular case analysis (Lee & Lee, 2015).
The product pricing policy and strategy that are applied were mainly dependent on the target market scenario that is assessed as follows:
- The prices of the fluorescent lamps along with the electrical outlet of a higher voltage. The leasing value was assessed at the rate of US$ 10/month which was exclusive of the installation fee.
- A correlation was created in the process of tariff pricing that can provide a greater impact over the different tariff pricing systems (Du & Chen, 2017).
Rosa was searching for more cost-effective purposes for the installation of the solar panels that are used in this aspect. This can induce proper product mix in the long run implications of the business functioning system. Moreover, Rosa plans to offer a greater range of products that are mainly, compatible and affordable. This includes small televisions, radios along with water heaters.
The various implications of added value or value added mainly refer to the differences between the prices of the product along the services. This also contributes to the various costs of production. The perceived value is determined with the help of the nature of the customers and their purchasing power in the long-run aspirations of the businesses. This gives greater implications for the various perceptions of value. The value or the prices of the solar panels can be reduced or increased depending on the prices or the value of the products. Nevertheless, it can provide a greater degree of competitive advantages in the long run functioning of the businesses. The value-added aspects determine the cost of production or the prices that are set by the competitors. Along with that, it has created a profound effect on the overall gross domestic product (GDP) of the company. The value-added implications are detrimental to the fact comprising the operating income and changes in inventory (McMullen & Bergman, 2018).
Marginal vs Full Costing - Contribution Analysis
The marginal costing analysis that was determined for the process of marginal costing has helped analyze the fixed and managerial costing aspects. The cost units and cost centers are mainly determined considering the total cost and pricing policy of the products about whom it is discussed in this point of study. On the other hand, the decrease and increase in the total cost of the product have helped determine the production run of the breakeven point of the company (Toptal & Çetinkaya, 2015). The pricing strategy of the solar energy panels has been implemented in a manner that can help in gaining rapid strides in the long-run implementation of the business processes.
The contribution analysis has been dealt with in a manner that has been helpful in the process of estimating the selling prices of the different ranges of products that are discussed in this particular case scenario. The break-even volume of Fabio Rosa and solar power systems has been determined in this particular research analysis concerning the distribution of solar energy in Brazil. The unit contribution prices that are assessed in this particular point of study have been evident in making better investment and financial decisions for businesses. The quantitative analysis that is determined for analyzing the breakeven point has been playing a major role in determining the initial cost of marketing its product with different variations in the fixed costs of the businesses.
Price Setters vs Price Takers
In the general sense, the concept of price taker deals with the fact that the company can accept the prevailing prices in the market scenario that are determined for its products. It will not have any market share of its own and can be indicated with the help of the downward-sloping demand curve. This can be aligned with the Fabio Rosa and solar power energy that exists in Brazil. This can be assessed with the various amounts of sustainable products that are determined in this purpose of study. The financial projections can be dealt with to determine the return on investment for a particular project (Wu, Xu, Chu & Zhang, 2017).
On the contrary, the price setter enjoys the power of setting the different types of prices for a particular product or a service. This can deal with the marginal revenue system which can regulate the different considerations of the pricing system. This will create a greater degree of uniqueness for the different solar products that are analyzed in this particular point of study.
Skimming vs. Penetration
The marketing strategies of pricing skimming and penetration have been instrumental in analyzing the status of a product and determining its marketing status accordingly. The pricing penetration policies mainly assess the low-priced products with the sole objective of achieving a greater level of market share. It can achieve a greater market share in this process. Fabio Rossa has been successfully implementing the goal and policies of price penetration. This can increase the demand of the consumers in the long term scenario (Zhang, Chiang & Liang, 2014).
In contrast to it, the different pictures of price skimming aim to maximize the profitability of the company by the process of charging a higher degree of pricing. After that, the prices are mainly lowered which can be helpful in the procedure of attracting the customers who are targeted. The price skimming strategies can make use of the different technological aspects that can help in dealing with the demand implications of the businesses.
What is Nau?
Nau is the first apparel company that has been built from scratch. The clothing is sourced through fiber and is only made through the most environmentally friendly products. It is also sourced most socially. Reynolds is one of the major shareholders of Nau and is laying out a new vision for the new clothing purpose and getting to know about the different working processes in the market. The stores are planning to educate the customer about the procedures through touch screen computers. In this context, the purchasing would be shown up within a few days through the mailing process. In this context, the following points will help in illustrating the different methods that the company would need to establish to provide efficiency in the working context. The points are pricing, added value, marginal vs full costing and its contribution analysis, Price setter vs price takers, and skimming vs penetration.
Pricing is a process by which a business sets the price through which it will sell its products and services. It can also be said to be a part of the business marketing plan. To perform effectively a company needs to make good pricing strategies to compete in the market. The different pricing strategies that are being conducted in the market are as follows:
- Pricing in a premium way: Under premium pricing the costs of the products are set in a higher manner than the competitors (Armstrong, Kotler, Harker & Brennan, 2015). About the case study What Nau? It also relates the pricing strategies in the same way. It is working and trying to perform effectively and in a premium manner.
- Pricing under market penetration: This pricing strategy aims to attract buyers and also offers the products at a lower price on different goods and services. The new companies are using new techniques to draw the attention of the buyers to stay in the market. In this case, the different products that are being used in the company are being done through different market penetration procedures.
- Economy pricing: The wide range of businesses that make economy pricing aim and attract customers and try to be price-conscious as well. In this context, What Nau? is also making it effective to work and effectively maintain its pricing strategies. Under this the strategies that are being made through production and marketing of the pricing strategies that are being made in the company.
- Price skimming: This is the process under which a business maximizes its sales on the new product and involves setting higher rates during the introduction of the product. The company then lowers the prices and helps the small companies to gradually appear on the market (Kotabe & Helsen, 2014). What is Nau? also recommends the pricing skimming process under which the pricing strategy of the company is being conducted effectively and leads up the performance and the price of the products by lowering its rate and performance in the market.
- Psychology pricing: It is considered to be the pricing strategy under which the price remains a major concern for consumers. This pricing strategy refers to the technical performances that are being used by the marketers. This encourages the responding methods of the customers and also helps in effectively performing the work. In this context What is Nau? is providing the pricing performances to encourage the responding performances of the pricing efficiently. In addition to this, the different psychology pricing strategies used by the company will help in making the customers into the company and perform efficiently.
- Bundle pricing: It is a process under which small companies sell their products at lower rates and then consumers will face the dilemma if the products are purchased individually. This bundle pricing can also be said to be efficient as this will help in increasing the value and perception of the customers. In this context the company which What Now? would need to provide its products and services in bulk. This will provide the customers to know about the quality of the product.
In this context there are different advantages and disadvantages related to pricing strategies that will be discussed in the following points which are as follows:
- It helps in attracting more customers to prefer the product
- With the use of different pricing strategies, it becomes easy for the company to set and achieve a higher sales target
- It makes a good customer base
- It may also get an efficient advertisement from the market
- In the context of achieving more preferences, it may happen that the company will start producing low-level products.
- May fail to maintain the wants of the customers
- In the context of gaining the preferences of the customers different procedures may be used but unable to achieve the customer base required.
- Advertisements do not sustain the falling share price of the company and this may hamper the performance of the company in various ways.
It is said to be the process during which the original price of the product and services and the selling price differences are determined (Zhang, Sogn-Grundvåg, Asche & Young, 2018). The price is determined by the viewpoint of the customers and the price that the customers are willing to pay and is based on the perceived value. In this case if What Nau? is willing to make its product reach the customers then it may need to consider the added value process and set the price as per the preferences of the customers. In general, a company always needs to attain simple steps before determining the prices. These steps are Surveying the preferences of the customers, determining the market value, considering the highest price point, and providing the customers the value for their money. Considering these points will provide efficiency in the working procedures and make the work effective in various ways possible.
In this context to use the value-added context a company would need to consider the advantages and disadvantages that may arise in this concern as follows:
- High returns for the investors
- Survival for the companies
- Increase in attractiveness and prospective investors
- To measure the value is unknown
- Segmenting the customers according to their preferences
- Hard to know the customer’s perception
As per the provided benefits and demerits it may need to be the duty of the What Nau? To Establish an efficient value-added procedure and start efficiently working on the process. This process does contain negative and positive aspects.
Marginal vs Full Costing - Contribution Analysis
Marginal costing: it is the change in the opportunity and also helps in raising the costs when the quantity is also on the incremental side (Schoonveld, 2016). It is also said to be the variable cost that is being charged to the costs of the units produced and the fixed costs are being written off against the full aggregation contribution.
Full costing: It is considered to be the accounting method that is being used to determine the end-to-end costs of the production process. Fixed manufacturing costs are the main difference in the process. The alternative for full costing is absorption costing.
In this point, there are differences between marginal and full costing processes, which can be shown in the following points and will be helped efficiently.
|Points of difference
|Variable costing is being applied under this method.
|Fixed costs are being applied in this costing method
|The profitability of the individual will appear under the marginal costing
|Profitability will appear under this costing method
|The profits are being measured under this process
|Gross margin profit is being measured under this process.
Price Setters vs Price Takers
Price setters: price setters are the individuals who set up the price of the product by surveying the preferences of the customers in different ways possible. It helps in describing the points under which the social surplus of the preferences is being maximized and combined with the use of utilities of the firms.
Price takers: A company must accept the prevailing prices in the market and the products that it produces. This is said to be the transactions that enable the effect of the market price.
A price taker emerges in the market due to the following points which are as follows:
- Selling of identical products
- A large number of sellers and buyers
- There are no exit or entry barriers
In this context, the differences between the price setters and takers are as follows:
|Products that are being produced in the company are unique.
|Under-price takers the products that are being produced. .
|Under this, the competitions that are being done are less in numbers. This means that the price settings are being done without facing many problems (Winer, 2017).
|There is an intense competition between the price takers. This is because the settlers made it difficult to deal with the price.
Skimming vs. penetration
Price Skimming: It is the strategy under which, the market sets the higher price for a product and then lowers the prices of the products as time passes. It is a temporary process that helps in managing the skimming process of the product.
Pricing penetration: it is the pricing strategy under which the price of the product is set low through which the company gets through its wide reach as time goes on. The strategy works on the different expectations that the customers would need to switch to the new brands due to the ineffective low price of the product.
|Point of difference
|The company under this process has a chance to grow in the market (Davcik, & Sharma, 2015). This is because the prices that are being set up are low at first and then set up high and in this way, the preferences of the customers also rise.
|Under This, there is more chance of the company losing the preferences of the customers. This is because of the difference in the low price of the products.
|Under these prices, the door is being left open for the customers to undercut into the market.
|Pricing penetration may help the customers to cut into the market with the low price benefits.
The assignment provides information about the different pricing strategies that Fabio Rosa Solar Power and Waht Nau? use this makes it easy to the illustrative points that provide efficiency in the different pricing works that have been pointed out in the study. Choose 'Assignment Help' for the best services.
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